It won't end until the money flows reverse. There are very few times like now, when money flows to stock mutual funds stop completely. Right now, all new money is going into cash and bonds. Not only that, but total margin debt peaked just as the Nas peaked, and has been steadily declining. Stocks can't go up as long as that continues.
Looks like we're going to co-celebrate the Nas 5K anniversary, and hold a Nas 2K wake. The Nas is now all the way back to the July 1998 peak, and we are at the top of the range where the Nas stalled for most of 1997 and 1998. The whole bubble has been given back, (assuming you use end-of-1998 as the start of the bubble, not 1995). The S&P 500 is about at Fair Value (forward PE = inverse of yield on 10Y Treasuries = about 20). Your target of 1800 on the Nas isn't very far away. Sentiment certainly is very bad.
So, I'm thinking it's time to start buying the dips again, cautiosly. I'm still going to sell the rallies, however, for a while, and maintain puts/shorts to balance my longs. |
