Let me preface this post by saying this is really more of a curiosity than anything actionable but I found it rather interesting. My last post focused on the possibility of 2015 being another 1999. This post looks at one indicator that may suggest 2015 rhymes better with 2000.
There has been a fair amount of talk recently about the fact that we have seen a couple of powerful short bursts of buying power that have resulted in the stock market surging 3% in only 2 days time. It happened coming out of the mid-December lows and again over the past couple days (and coming out of the October lows, too):
As @ukarlewitz points out (guys’s a must follow on Twitter), this is not a very common occurrence during bull markets:
SPY – this didn’t happen even once between May 2003 and May 2007 https://t.co/fQCmBYY2Xr
— Urban Carmel (@ukarlewitz) January 9, 2015
And as I responded, it happened at the peak of the internet bubble in March/April of 2000:
It’s pretty remarkable how closely these patterns fit, actually. They start will a selloff which evolves into a scary powerful rally to new highs. Then another selloff quickly followed by a matching 3% rally in 2 days.
In 2000, stocks were unable to make a new high on the second attempt. It will be very interesting to see if stocks can manage the feat this time or if history will rhyme and this will end up being a signal that volatility is staging a comeback after another long absence.