AI summary
Summary of article:
The collapse of the Nasdaq has raised concerns about an AI bubble, but analysts believe that the current trend is still different from the peak of the Dakang bubble in 2000, and market sentiment has cooled significantly.
Tech Stock-BasedNasdaq The composite index fell 748 points or 2.9% on Friday (30th), the biggest one-day decline since June 5. The decline in October was also the deepest in more than a year. Has the artificial intelligence (AI) bubble finally burst? MarketWatch columnist Mark Hulbert analyzed that the current situation is different in many ways from the peak of the DACOM bubble in 2000.
Herbert pointed out that this decline looks very much like a bear market trend because in the pastUS stocks Such deep one-day declines happen frequentlybear market Duration. According to Ned Davis Research, since the launch of the Nasdaq Composite Index in 1971, 42 of the top 50 single-day declines (84%) occurred in bear markets. Since only 25% of all trading days since 1971 have fallen during a bear market, this means that the probability of a day falling during a bear market is more than three times that of a normal trading day.
Herbert said this inevitably raises concerns about whether the current situation is similar to the peak of the DACOM bubble. Many investors thought that the Nasdaq would collapse almost immediately after reaching its all-time high on March 10, 2000. If so, recent market action is obviously very different, as the Nasdaq is currently only 7.8% down from its all-time high set on October 6, far from even a “correction” (down more than 10% from recent highs), let alone a collapse.
He also pointed out that the Nasdaq did not fall precipitously immediately after peaking in March 2000. Instead, it remained roughly stable for the first three weeks after peaking before falling rapidly.
Herbert believes that compared to the peak of the Dacom bubble, there is one thing that is more optimistic today: The investment newspaper focusing on Nasdaq’s timing operations has significantly reduced the recommended shareholding ratio in recent weeks and shifted to cash. From a contrarian perspective, he sees this as an encouraging sign, as market tops often come with an overly optimistic, strongly bullish environment.
The Nasdaq News Investor Confidence Index (HNNSI) compiled by Herbert shows that this bullish sentiment was very high at the peak of the DACOM bubble and continued to increase three months after the index peaked in March 2000.
In contrast, the index has fallen sharply recently, falling 76 percentage points to 6.2% over the past three weeks, indicating that these timing operators have generally recommended selling their holdings.
Whether Herbert’s analysis is correct and whether investor confidence can support the stock market will emerge in the coming weeks.
Summary FAQ
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Because the Nasdaq fell 748 points in a single day, a decline of 2.9%, and its performance in October was the worst in more than a year, which was reminiscent of the bear market and the bursting of the technology stock bubble, it was compared to the Dakang bubble in 2000.
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He pointed out that the current Nasdaq index is only 7.8% below the high point of October 6, and has not even recovered; And after peaking in 2000, it did not immediately collapse. It consolidated for 3 weeks before falling sharply, and the trend was not quite the same.
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The HNNSI confidence index has fallen 76 percentage points over the past three weeks to 6.2%, indicating that investment newsletters for the time being operate have significantly lost their weight and have turned into cash. Market tops are often accompanied by extreme optimism, and now the mood has cooled and is less extreme.
