5,000

S&P500 daily at end of day

End of Day Update:

Stocks bounced back from recent weakness as the NASDAQ closed above 5,000 for the first time since the peak of the dot-com bubble. While it is natural to draw comparisons to those go-go days, the underlying economics couldn’t be more different. Fifteen years later we finally grew into those lofty valuations and almost all the biggest tech companies are now boring dividend investments.

But since everyone wants to talk about bubbles, the one thing we all can agree on is they go waaaaaaaaaay too far before bursting. Markets don’t correct after getting a little carried away, they cross state lines and end up in Mexico before slowing down. While it is getting harder and harder to find good deals in this market, there is still plenty of room to go before this market screams of frothy excess.

Shorter-term, recent headline fear-mongering and weak price-action opened the door to wider selling, but bears just couldn’t get it done. When markets have every excuse to sell off, but hold steady instead, we have to respect that behavior and cannot fight it. While bears might ultimately be right, bulls are making all the money. It’s cliché, but I’d rather make money than be right.

I remain concerned about the elevated bullishness, but the price-action tells us this move isn’t done. Watch for either further sideways consolidation before moving higher, or a quick run up before pulling back to support. Tuesday will give us an indication of what the market intends to do next.

Jani