Mr. Sensitive

November 1, 2013

FSX Friday Update

Filed under: Uncategorized — lbej @ 16:58

Is the stock market becoming (or is it already) an asset bubble?  I still say no, but I heard something interesting on ‘Fast Money’ (my favorite show on TV) that struck me as immediately plausible and frightening.  To paraphrase, the melt-up in stock prices over the past year or so—the 30% gain in the Nasdaq in particular—feels a lot like 1999.  I actually remember that year in the 1990s bull market, and it is similar: the upward momentum is relentless, all dips are being bought, and tech darlings are leading (TSLA, PCLN,AMZN,FB,LNKD, plus pick your biotech—GILD, CELG,BIIB, and even FSX member REGN).  Small cap speculative stocks like Tesla and LinkedIn have become midcaps and midcaps like Priceline and Gilead have become large caps.  Something that tends to be forgotten about the Nasdaq bubble that burst in March of 2000 is that the last 1000+ points of that monster run—the height of the insanity and the most corrosive phase of the speculative pile-on—happened in the first two months of 2000.  The Nasdaq closed out 1999 at just over 4,000, having ended 1998 at 2,200 and nearly doubling over twelve months.  After that run there was a sharp pullback to 3700 in the first week of January 2000—fund managers taking profits and repositioning after a performance-chasing gallop through November and December.  And then the market went parabolic, soaring 35% in two months to reach its bubble peak above 5,000 in the first week of March 2000.  That last explosive surge of untethered greed was what transformed a technically-overextended bull market with legitimate fundamental drivers into a bubble.  Overextended markets always correct—pulling back 10-20% to flush out the excess—whereas bubbles always burst.  The Nasdaq plunged from above 5,000 in early March 2000 to 3,300 just a month later.  After a brief oversold bounce during the summer, the swoon resumed and the Nasdaq closed below 2,300 at the end of 2000.  The Index broke below 1,700 in early April 2001 before enjoying another shallow summer rebound.  After the 9/11 attacks the Nasdaq plunged to 1,400 and then bounced once more into year-end 2001, briefly climbing back above 2,000.  Then the final, grinding, crushing phase of the collapse began in earnest, as internet and telecom companies reported record losses and bankruptcies and the Nasdaq slid lower and lower to its bear-market nadir just above 1,100 in October 2002.  In total, the Nasdaq Composite Index had fallen 90% over two-and-a-half brutal years.  The Nasdaq closed above 3,000 for the first time in November 1999, punched through 5,000 just four months later, and closed above 3,000 for the last time in November 2000.  The tech-heavy Nasdaq did not close above 3,000 again until March of 2012.  That’s what happens when a bubble bursts.  If markets go parabolic at the start of 2014, that’s what will happen again.  We’re not there yet, but the pieces are in position.

While the broader market averages were mixed, the Family Stock Index shaved off 1.8% to close back below 17K.  Yet at 16,950, the FSX is still up 26% for the year and less than 2% away from its all-time high.  Not much to complain about there.  Breadth was terrible this week (decliners over advancers 19-5), but I’m not reading too much into it.  I’d still be less surprised to see FSX 18K before the end of the year than a retracement back below 16,000.

Advancers

  • Zondro (ZQK) +11%.  After this week’s divergent price action, Zondro (+97% year-to-date) is once again nipping at Ruby’s (+106%) heels.  Not literally, of course—Zondy’s not a nipper.  If he was, Brinky would be down to eight fingers, max.
  • Mario the Younger (MAR) +2.7%.  Mario was trailing the FSX for almost the entire year, but he’s put together several weeks of market-beating returns to pull nearly even with the index as a whole (+23% for MAR vs. +26% for the FSX).  Whether he catches the up to the pack or not, he’s seemingly left me (TGI +10% YTD) in the dust.  Maybe I should consider a career in computer golf or golf computing, whatever it is Mario does.
  • Dustin (DST) +1.3%. Or maybe I should focus on the real thing.  Dustin, the golfingest member of the FSX by a wide margin, is up 41% in 2013 and I can’t remember the last time he failed to post a positive week.    The problem is that I hate golf and golf hates me, so I guess I’ll stick to literary futility and poopy diapers.

Decliners

  • Lee (TGI) -2.5%.  Literary futility and poopy diapers.  I think that pretty much covers it.
  • Nicole M. (COLM -3.1%) and Marcus (MCS -3.8%).  We’re going to meet some new FSX members in the coming months, and the market is weighing in on likelihood of resemblance.  As I’ve already demonstrated, Franco-Nordic gives way to Italian fairly easily, especially in girls, so Marcus has got no shot.  Jodi Ann looks a lot like Lady Gaga when Lady Gaga’s not trying to look like an alien, so that’s how I imagine little Josie (yikes) will look.  Nicole is Italian, of course, but there are degrees of Italian, and Machi is like the black belt of Italian genetic domination, so she can expect to be raising a little Mario.  Just please don’t name this one Mario, because we’ll be talking about cosmic-level confusion at that point.  Maybe Mario and Nicole have already picked a name, but if not, what about Ronald?  I want to start singing the Star Spangled Banner just thinking about it.
  • Katie (CATY) -4.1%.  Facebook already tags Jenny as Katie and this week it added Reagan to the Katie parade.  If investors are really this disappointed that Brinky actually looks somewhat like me, they need to temper their expectations.
  • Reagan (REGN) -5.4%.  Reagan fell well short of her overall candy goal and the market seems not to have taken into account how unrealistic 180+ pieces of candy was.  She missed on a lot of internal metrics as well, although her results were in line in the crucial Baby Ruth category.  Overall, investors dumping REGN on these Halloween results seems like an overreaction, and I’d be buying Reagan on this pullback.
  • LULU -6.6%.  Lulu, in contrast, I would dump.  I’d dump her in the trash can, in fact, if not for the whole claws-and-teeth situation
  • Nicole E. (NICE) -6.8%.  Nicole misses our Team DW video conferences.  Well, I was already thinking we should schedule one for next week, so this could be a real buying opportunity if you’ve had NICE on your stock shopping list.
Name Ticker 11/1/2013 Change
Brinkley BCO $31.49 -0.53
Charlotte ICE $195.35 -0.65
Dustin DST $85.24 +1.10
Ghost Marisa MOLXA $38.49 +0.02
Icarus FAST $49.39 -1.24
Jenny JNY $15.57 +0.26
Jodi Ann JOY $56.65 -1.44
Justin SCI $18.09 -0.45
Katie CATY $24.51 -1.05
Lee TGI $72.17 -1.82
Lisa LNCE $29.45 -0.15
Lucas LEI $1.13 -0.02
Lulu LULU $67.85 -4.81
Marcus MCS $14.19 -0.56
Mario T.E. MGEE $55.84 -1.38
Mario T.Y. MAR $45.71 +1.22
Namilita NL $11.40 +0.11
Nicole E. NICE $38.79 -2.81
Nicole M. COLM $67.18 -2.17
Reagan REGN $285.79 -16.45
Ruby RJET $11.71 -0.52
Wilson WILC $7.13 -0.04
Winston ED $58.41 -0.18
Zero ZAGG $4.68 -0.18
Zondro ZQK $8.36 +0.80

 

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