Saturday, October 19, 2013

Y2K Deja Vu: Blow-off Top

Those who say that there is no comparison to Y2K, either were not around then or have their eyes closed now...

One Chart to Rule Them All
Bitcoin - The Tulip bubble of the current era
A mere 1700% gain (vis-a-vis the dollar) in one year (S&P in background)
Currently in an a-b-c retracement on low volume...

The Nasdaq 
Gapping up to full vertical. Been there, done that...

No Earnings: Been there, done that too...
The number of IPOs this year at 140, is running 46% higher year-to-date than last year. It's the highest number of IPOs since 2007. Unfortunately, stock issuance (aka. "Supply") peaks with the market. Also, many of the recent IPO stocks are running massive losses and yet gained 100% on the first day of trading, highly reminiscent of late 1999 and early 2000. One stock, "FireEye" (FEYE), gained 90% on its first day trading, yet runs a loss equating to 75% of revenue.

Lucky Number 1000
Priceline was the first S&P company to break 1000, today Google did as well due to the fact that it "beat" earnings estimates. It gained $41 billion in market cap in one day. And the truth is that as recently as this past June, the consensus earnings estimate for this current quarter was $11.19/share, however, the estimates had steadily fallen to $10.36, so it "beat" with $10.74. Revenue estimates had also fallen. You can't make this shit up. The casino is in total lunatic mode:

New 52 Week Highs 
Shot up today, as many momentum stocks went full vertical. However, 52 week highs are still lower than a year ago when the market was much lower:

Chinese Internet and Small Cap Stocks - "Best Quality"
Chinese internet stocks are going ballistic: YY, Baidu, QIHU, SOHU, Jinko Solar, Vipshop holdings, Sina, just to name a few:

Vipshop (I don't even know what the fuck these names mean):

The New Four Horsemen of Tech:
The original four horsemen of Tech during the 1990s were: Microsoft, Intel, Dell and Cisco. The next four horsemen during the 2000s, were Amazon, Google, IBM and Apple. The new four horsemen are Facebook, Tesla, LinkedIn, and Netflix. I think you see where I am going with this - we seem to have evolved somewhat of a quality control problem here with stock leadership. The average price earnings ratio for these four companies is ~537, not including Tesla which is running massive losses. All of the previous tech leaders (except Amazon) had historically massive earnings power.

Neither Tesla nor LinkedIn made new highs this week, but Facebook and Netflix both did...

Just over a year ago, this company was considered the biggest failed IPO in history, losing $50 billion in market cap from high to low. Here it is going in gap-up vertical mode.

Full Casino
There are too many parabolic stocks to even show, however beyond tech there was a hodgepodge of other stocks that went full vertical as well. Chipotle, Krispy Kreme, Sturm Ruger and casino stocks:

Las Vegas Sands - from $2 per share left for dead in 2009, to $70+. People can't afford to eat, but they can still gamble...

Left for Dead Horsemen
Of course, not all is well under the surface. A few of the previous tech horsemen i.e. the ones with real earnings are no longer keeping pace. IBM missed earnings and revenue this week massively, and the stock was crushed. Wall Street attributed the "miss" to company-specific issues, even though eBay missed as well. I guess these companies didn't pull a Google and manage expectations lower, as the magicians on Wall Street expected:

Apple - the most beloved stock in human history - kindly reminds us where all of this is inevitably heading, since trees never grow to the sky:

And the Dow, which contains real (blue chip) stocks with real earnings, reminds us that the real economy is by no means keeping up with this madness, since it's the only major stock index that did not make a new high today: