Briefing.com predicts the bottom was Friday or thereabouts:
Market Outlook, 17-Apr-00
Crash. Correction. Bear Market. Whatever. The Nasdaq plunged 25.3% in one week. Call it what you will, but we'll just call it pain.
We could spend the rest of this piece guessing what will happen Monday and the rest of next week, but what's the point? No one has any clue what will happen on Monday, period.
What we can do is put last week in perspective. Let's go to the time machine for that. October 19, 1999. The Nasdaq is at 2,688.18, and someone tells you that in the week of April 10-14, 2000, there will be a crash in the Nasdaq. And that crash will take the Nasdaq all the way down to....3,321.29. Crash? A 23.6% gain in six months is a crash?
Here's another perspective, and it's illustrated by this week's bonus graph that appears above. If you look at the Nasdaq percentage change relative to its 1998 closing level, starting in 1999 and continuing through the present, it is clear what has occurred. We had a very impressive rally underway through mid-October, with year-to-date gains of over 20%. Then the bubble began to inflate, until the increase reached an incredible 130% by March 10 of this year. That bubble has been popped, but the Nasdaq is still up 51% relative to its Dec 31, 1998 level. If we never had the bubble from October-March, we would consider the current level of the Nasdaq to be a triumph. Instead, it's a crash.
Having provided that perspective, it's also important to note that there has been some real pain felt in the market over the past two weeks, and it hasn't just been felt by those who jumped in at the top of the bubble (though they have clearly suffered the most). It is also important to note that in tech-land, some sectors have been obliterated. Forget tallying up longer term gains -- anyone who ever bought these sectors and owns them now is hurting. Big-time.
B2C is a laundry list of new 52-week and all-time lows. Just consider this list of stocks that are now below $5: AWEB, ASFD, BYND, COOL, CDNW, FOGD, GDEN, PLRX, and, almost unbelievably, ETYS, which ended Friday at 4 3/4. B2B has been similarly pummeled; CLIC, FMKT, ITRA, ETSM, and SQST all hit new lows. The same was true of online brokers, e-finance, online music, a slew of Internet content companies, and ISPs. In literally hundreds of Internet companies, there are no gains left for anyone who invested post-IPO.
So how is the Nasdaq still up 51% over the past 15 1/2 months? Look to CSCO, JDSU, QCOM, YHOO, AOL, ORCL, SUNW, and many other big cap Nasdaq companies. Though well off their highs, all of these companies are still well above early 1999 levels, and of course their huge market caps give them greater influence in the Nasdaq index.
Some might read this observation negatively. One possible conclusion is that these stocks are the next to melt down, and certainly the high valuations of all these companies make that a possibility.
But we actually see some positives here. Most tech stocks have given it all back and more. There is no excess, no froth, no nothing. Can they fall further? Yes. Until you're at zero, you can always fall. But compelling valuations are beginning to appear for many battered Nasdaq stocks, and nothing can lead to a market bottom faster than a good value.
We won't even try to game Monday -- Friday might have been the bottom or it might be another couple hundred points lower, but we are comfortable saying that the end of this bloodbath is near. And that it can't come soon enough. - Greg Jones |
