Call this the bursting of the second “Second Dot.com bubble.”
As the Nasdaq has climbed back to his its 2000 highs, a rally in that time fueled by the frenzy of the “First Dot.com bubble’, this latest climb has again featured may internet related stocks, notable long-time leaders like AMZN, FB, and IACI, but also many newcomers. It has been less frenzied this time, so less frenzied that few have even noticed the pattern playing out again.
The trouble is many of the newcomers on this rise have already lost their bubble luster.
With such falling rocks as TWTR, P, ANGI, GRPN, Z and YELP, it is not a happy time after moments of over-blown bullish bubblicious fame on the internet.
None of these stocks are bargain buys with the possible exception of ANGI which at least has begun to base at a level just above the dreaded plunge into oblivion below five dollars (making it, at best, a buy it and forget it until it makes money or shows up again as cash on a sub-$5 stop-loss).
GRPN, seemingly slipping forever, may end up on the final slide to nowhere.
History, in the stock market particularly, does, indeed, come around and around and around…
(Click on the chart for a larger image)
The media headlines Monday said the Supreme Court ruled against the EPA on mercury emissions in coal-fired electric generation, “giving the coal industry a victory.” According to the stocks, now pretty much in free fall again, the media got it wrong.
May be waving good-bye to (BTU), Peabody Energy’s share-holder equity soon.
Nine month ago I argued with somebody on Reddit who was saying BTU had plenty of liquidity and I was wrong about the company’s prospects being dire going forward. I told him to watch the headlines. BTU, down overall from an all time high of 79 to under 2 dollars today, has more dire headlines to come.
P.S. By the way, this is all good news for the efforts to stop and reverse climate change.
(Click on image for a larger view)
The stock market runs up and down on fear, greed and time and, despite massive discussions of fundamentals, not much else.
CNN Money’s “Fear and Greed,” a index made up from a lucky seven market measures does a pretty good job of keeping track of the time it takes for a market to move from one extreme to the other. And most sectors in the market move with it.
Lets take solar stocks as an example since solar is a growth sector and likely will be for the long term, despite short term market swings.
The chart below compares the movements of the Claymore Exchange-Traded Fund Trust 2 – Guggenheim Solar ETF (TAN) to the shifts of CNN’s Fear and Greed Index (TAN is the green line with the diamonds while the fear and greed index is in red).
Generally, they move together so it may be as Warren Buffett advises on the chart to get rich be greedy when others are fearful — like now — and be fearful when others are greedy.
(Disclaimer: What I personally suggest, do, or write about is this blog should not be construed in any way as investment advice. This is my journal of trading and mine alone. Every investor or trader must do his or her own due diligence, and exercise his or her own persistence, discipline and experience before taking any position in the financial markets.)
That said, I am personally going to wait for fear to begin to subside before taking any position in the sector but the time will come and likely it will be soon.
(Click chart for a larger image)