Visualizing the conditions for a major rally - substantial enough to be called a new bull market in techs - isn't difficult at all really, if that's what you'd like to do.
First, take your own and the general public's apparent disdain for technological innovations - the "upgrade fatigue" that is said to afflict businesspeople and consumers alike - and compare it with the unbounded enthusiasm that still existed at (and just before) the market top.
Compare class action lawsuits against Meeker and Blodgett with Bezos being chosen man of the year.
Compare CEOs and analysts who see nothing and know nothing and have only bad news with CEOs and analysts who knew everything and it was all good.
Compare dot-com billionaires and freeloading dot-commerazi with dot-com refugee food banks.
Now that you've become a little more contrarian, you can then, if necessary under the slogan "I believe it because it's absurd," proceed to do the following:
Presume that the US economy will recover more or less on schedule. Presume that Europe and Asia will inevitably also recover, and that the developing world will follow - and that the whole world will want and need to upgrade. On this note, presume that capex spending (borrowing) can come back as soon as a few CEOs decide to click the icon, and a bunch of other CEOs grow afraid of falling behind. Presume that a resultant upsurge in the stock market will re-ignite speculative interest (greed - accompanied eventually by a new flood of margin borrowing) on the part of the investing masses.
Presume that XP and what it symbolizes (a fully integrated, stable, dependable, user-friendly internetted environment) are the wave of the future, and can and will be embraced - along with next-generation cell-phones, PDAs, smart appliances, and so on (everything that everyone finds so boring and overdone right about now).
Imagine that all the famous dark fiber is lit, and that many more miles still will have to be laid (to the home, in particular), and that new routers and chips will need to be produced and sold to equip the ever-more dense and complex and (user- and profit-friendly) networks needed for new and enhanced applications. Presume that college graduates won't accept dial-up, and will consider DSL and cable modems a weak, hopefully temporary compromise. Presume that music- and video-on-demand and video-telecommunications become normal expectations.
Presume new inventions and innovations. Presume that the biotechs fulfill their promise. Presume that new IT-augmented energy and environmental technologies come on-line as part of a worldwide infrastructure upgrade, and that existing public companies as well as new ventures will scramble to take advantage of it.
It you want a market-technical rationale, presume that a valid (massive, year-plus) falling wedge can be drawn on the Nasdaq with a bottom boundary beginning at the April-May 2000 lows, a top boundary at the Sept 2000 high, and an apex projected around Labor Day 2001, about at the April 2001 low - which latter would in this scenario amount to a false breakdown (not unusual in the formation), that in turn led to a breakout in May, and a typical if somewhat extended "throwback" that's still in effect (and could still go much lower without much analytical import).
The minimum target for such a breakout would be Nasdaq 4000 or so.
In short, just get out the old songs and re-arrange them, and just assume that the bears (especially the end-of-everything group), even if they get to throw another party or two, will again be as wrong as they usually have been (until whenever they're right again), and that the bulls will again be as right, and that the one thing that no one dares to believe anymore is the one thing that's true, and that THAT's what's hidden behind the fog of in-"visibility going forward"...
Was that really so hard? |
