January closed out with monthly losses for the major indices, and with the old adage, “As January Goes…,” the thought was that February would prove just as challenging. After all, there was the Greek Crisis, tensions in the Middle East and the ongoing conflict in Ukraine. Also on the “worry” radar was that the Federal Reserve might have made it clear that interest rate hikes might be coming sooner rather than later, which was yet one more variable that could rattle the stock market. Worries about earnings season and potentially weak economic numbers were also possible factors that could rock the apple cart for stocks.
February turned out to be a rock-solid month, though, and even though this past week saw the major indices finish mixed and flat for the week, the overall month was one to remember. When the closing bell rang on Friday, we locked in monthly gains of 5.5% for the S&P 500, 5.7% for the Dow and 7.1% for the Nasdaq. Now that is not a bad showing for a month that started with investors worried about a lot of things, and it just goes to show that even at six-years old, this bull still has a lot of gusto to it. Bulls are hoping that March will bring us more of the same, so instead of “In like a lion, out like a lamb,” maybe March could be “In like a bull, and out like a bull.”
One of the February developments that may have helped give stocks a “green light” was the rise in oil prices. As we all know, oil prices had fallen for seven-straight months, as the price of oil fell by more than 50%. The buzz was that the oil price decline might be signaling a global GDP slump, which was an ongoing worry that had been keeping the stock market in check through the end of January. Well, the price of oil reversed in February, and it actually gained around 18% for the month. Bulls are hoping this means that the global GDP fears will ease, and that in turn, could be great for stocks.
Greece was another big concern as we headed into February, and the newly-elected, left-wing party in Greece seemed hell bent on railing against the EU. Negotiations and deal-making came down to the last minute, but in the end, Greece received a four-month extension to figure out its economic mess. This was a “classic” EU maneuver that we have all grown so accustomed to over the past six years, and seeing the Greek Tragedy get avoided was basically “par for the course.” The ECB will probably “extend and pretend” until the end of time, so get ready for more of this type of action for whatever EU country is in trouble next.
The week closed out with stocks slightly lower on Friday, but we did see record highs in the S&P 500 and the Dow this week, as well as a fresh, 15-year high for the Nasdaq. Bulls were hoping to see the Nasdaq knock out the 5,000 level on Friday, but the tech-heavy index only got as high as 4,989, before fading late in the day. There is always next week, though, so the tech bulls will be chomping at the bit for Nasdaq 5,000, as well as its March 10, 2000 intraday, all-time high of 5,132. It is hard to believe it has taken 15 years for that index just to get back to breakeven!
This March marks the 15th anniversary of one of the biggest manias the financial world has ever seen. For those who remember, it was sheer madness back in 1999-2000. The dot.com boom was in full swing, and the rationalization for the runaway prices in tech was that these new Internet companies represented a new type of valuation model. Forget profits and revenues, the buzz words back then were “eyeballs” and “stickiness.” The hardware side of the Internet boom was driven by Intel (INTC), Cisco (CSCO), Qualcomm (QCOM) and Dell (DELL). And of course, the other powerhouse names included Microsoft (MSFT), Amazon (AMZN), eBay (EBAY) and Yahoo (YHOO). Google (GOOG) was just a startup idea.
What was most mind-boggling, though, were some of the crazy “concept” companies like Pets.com or the many, many dot.coms with no revenues and no profits. Many were just zany ideas with a .com thrown on the end of a name, and quickly rolled out and launched as an IPO to the hungry investment masses. It was crazy, and it all peaked on March 10, 2000, when the Nasdaq finally topped out and began to fall. When the bear market in tech finally ended in 2002, the Nasdaq was down more than 70%. Here we are now, 15 years later, and we are back near the 2000 highs. Could this mean we are nearing another top? Who knows! But, oh, what a ride that was back then!
That said, the Gorilla wishes each and all a wonderful and restful weekend. We kick off March on Monday, and the bulls are hoping for a repeat of the sort of strength we saw in February. February was such a solid month that a repeat is going to be a challenge, but given all of the good financial news we have been seeing, the bulls remain optimistic about March, as well as the rest of 2015. Again, have a great weekend, and we will be back in action on Monday.
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