Some $COMPX Observations
The June 30, 2000 close is about the same as the close for May 1, 2000 and December 1, 1999. While traders could have made (or lost) a considerable amount of money during that time period, a buy and hold investor is about flat for the year.
That being said, it would appear that some additional correction seems forthcoming.
While I might argure that the growth rate of the trading channel established in 1999 still has a higher slope than the NASDAQ has experienced during any sustained period over the last 5 years, I can imagine arguments to the effect that the rate of growth which has been possible due to technology has not only enabled the last five years to grow faster than and other historical period, but has done so at an accelerating rate. So perhaps 1999 (January - November) is not exuberance but technology.
Establishing a linear regression trend line for this period, (which almost works since the residuals appear to be somewhat normal in distribution although not quite random) and then projecting it forward results in a value of 3500 with a rising trading channel between 3300 and 3725.
While the market did trade in this channel during the last two weeks of May, the historically unprecedented gap up from 3582 on June 1 to 3728 on June 2 took the market above this channel. While the top of the gap was penetrated once by the stick on June 13, the trading channel has been avoided like the plague.
How and when we get there seems more problematic. Looking at a number of indicators, it is not clear to me that they are not, when taken as a whole, fairly inclonclusive.
But that is one heck of a gap. |
