Not very likely. We've seen a very strong earnings season. Economic report after economic report suggests the Fed is done with its interest rate hike campaign. There are too many non-believers in the market's advance, just take a look at the short-sellers. Lots of cash sits on the sidelines - on corporate balance sheets and in money markets. Applied Materials reported earnings this week and indicated they had reduced the outstanding number of shares in their float by 10% due to an aggressive share buyback plan. We are seeing increasing interest among private investors in taking public companies private. These are clear signs that equity valuations are cheap. As interest rates decrease, and we've witnessed this over the past few months on the ten year treasury bond yield, earnings become more valuable and multiples naturally expand. But this rally has added fuel. It's the supply and demand relationship. Applied M aterials is just one example of many companies who are aggressively buying back their own shares, thus reducing supply. Notice the attention recent IPO's have received. There is a thirst for equities. Short-sellers have all but guaranted there will be demand to fuel this rally. A few weeks back, I posted an article describing the "axis of normal returns", then showing visually where the NASDAQ might be headed in the next couple years. I was hugely bullish then and I remain so now. Yes, the NASDAQ has advanced over 20% off its recent bottom, but history suggests there could be much more to this current rally. Look at the chart below. I deliberately ignored the 1999-2000 melt up and focused on other time periods where we've seen an uptrending NASDAQ. Notice many of the other "straight up" moves have jumped by considerable percentages. The NASDAQ's current move pales in comparison.
