(Photo by Andrew Burton/Getty Images)
Tech heavy NASDAQis beginningto look like the last days of the dotcom bubble back in the early 2000s. Popular stocksare failingto make new highs, sellingisin the news, and the “buying in the dips” mentalityis beginningto fade away.
For the last two years, NASDAQ was the right place to be. The Powershare QQQ Trust hadgained 43 percent compared to 28.10 percent of SPDR S&P 500. Popular stocks like NVIDIA Corporation and Applied Optoelectronics fared even better, gaining 669.10 percent and 217.10, respectively.Investors hadbeen cheering market reports that confirmed the momentum behind these stocks. Sell-offswererare and followed by quick comebacks, as any minor market pullbackwasseen as an opportunity to buy more shares in these companies.
But in the last month, this pattern seems to be breaking down. NASDAQ has been trading lower and so are popular stocks. NVIDIA and Applied Optoelectronics have been selling off, though they reported very good revenues and earnings growth. Applied Optoelectronics, for instance, reported a 112.10 percent jump in quarterly revenues, and a 4271.10 percent jump in quarterly earnings, but it has lost more than one-third of its value.
To some, this game brings back memories of the dotcom era, when investors would cheer every corporate report that confirmed market momentum. Popular stocks doubled and tripled inamatter of days or even hours, and market minor market sell-off would be followed by new market peaks. Until investors stop cheering corporate reports,that is,and minor sell-offs turned into a major sell-offs, bursting the dotcom bubble.
Company | 1-month performance | 2-year performance | Qtrly Revenue Growth | Qtrly Earnings Growth |
NVIDIA Corp (NVDA) | -4.35% | 669.10% | 56.20% | 112.80% |
Applied Optoelectronics (AAOI) | -36.69 | 217.10 | 112.40 | 4271.10 |
Powershares QQQ Trust | -2.78 | 43.04 | --- | |
Source: Finance.yahoo.com 8/21/17
To be fair, market valuations today aren’t as stretched as they were back in 2000. In fact, Applied Optoelectronics PE is very low for a technology company.
Company | Forward PE |
NVIDIA Corp | 40.36 |
Applied Optoelectronics | 10.58 |
Source: Finance.yahoo.com 8/21/17
Still, technology rallies are momentum driven. At least for popular stocks. And momentum comes and goes with cheap money and Washington politics. That’s why investors should keep an eye both on Washington and the Federal Reserve to avoid being in the wrong side
of the market.
">(Photo by Andrew Burton/Getty Images)
Tech heavy NASDAQis beginningto look like the last days of the dotcom bubble back in the early 2000s. Popular stocksare failingto make new highs, sellingisin the news, and the “buying in the dips” mentalityis beginningto fade away.
For the last two years, NASDAQ was the right place to be. The Powershare QQQ Trust hadgained 43 percent compared to 28.10 percent of SPDR S&P 500. Popular stocks like NVIDIA Corporation and Applied Optoelectronics fared even better, gaining 669.10 percent and 217.10, respectively.Investors hadbeen cheering market reports that confirmed the momentum behind these stocks. Sell-offswererare and followed by quick comebacks, as any minor market pullbackwasseen as an opportunity to buy more shares in these companies.
But in the last month, this pattern seems to be breaking down. NASDAQ has been trading lower and so are popular stocks. NVIDIA and Applied Optoelectronics have been selling off, though they reported very good revenues and earnings growth. Applied Optoelectronics, for instance, reported a 112.10 percent jump in quarterly revenues, and a 4271.10 percent jump in quarterly earnings, but it has lost more than one-third of its value.
To some, this game brings back memories of the dotcom era, when investors would cheer every corporate report that confirmed market momentum. Popular stocks doubled and tripled inamatter of days or even hours, and market minor market sell-off would be followed by new market peaks. Until investors stop cheering corporate reports,that is,and minor sell-offs turned into a major sell-offs, bursting the dotcom bubble.
Company | 1-month performance | 2-year performance | Qtrly Revenue Growth | Qtrly Earnings Growth |
NVIDIA Corp (NVDA) | -4.35% | 669.10% | 56.20% | 112.80% |
Applied Optoelectronics (AAOI) | -36.69 | 217.10 | 112.40 | 4271.10 |
Powershares QQQ Trust | -2.78 | 43.04 | --- |
|
Source: Finance.yahoo.com 8/21/17
To be fair, market valuations today aren’t as stretched as they were back in 2000. In fact, Applied Optoelectronics PE is very low for a technology company.
Company | Forward PE |
NVIDIA Corp | 40.36 |
Applied Optoelectronics | 10.58 |
Source: Finance.yahoo.com 8/21/17
Still, technology rallies are momentum driven. At least for popular stocks. And momentum comes and goes with cheap money and Washington politics. That’s why investors should keep an eye both on Washington and the Federal Reserve to avoid being in the wrong side
of the market.
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