Nasdaq 100 on pace for best January since 1999

The Nasdaq 100 Stock Index is on pace for its best January since 1999 despite warning signs from the likes of Microsoft Corp. and Intel Corp. and another expected interest-rate hike from the Federal Reserve. The Cboe Volatility Index sank within striking distance of a 10-month low on Friday, signalling less angst in the market. Meanwhile, options trading on megacaps last week showed demand hasn’t jumped for protection against a selloff.

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Nasdaq 100 valuations return to pre-pandemic levels

The P/E ratio of the Nasdaq 100 has returned to pre-pandemic levels. In theory, that would indicate all the steam has been let out. But think back to the conversations investors were having in late 2019 and early 2020. It bore a resemblance to the same issues being talked about now: extreme valuations, a slow down in growth, a tight labor market and a prolonged rally thanks to Fed support.

If those concerns were surfacing at pre-pandemic valuations, then returning to those levels doesn't necessarily bolster the bull case as is the instinct to do. (Especially with the same issues.) Instead, it signals there may be more selling as markets recalibrate.

Growth spurt sends Nasdaq 100 near record versus the Dow

“The dominant theme in recent months has been growth, not quality” in U.S. stocks, according to Ari Wald, Oppenheimer & Co.’s chief technical analyst. He drew the conclusion in a weekend report that compared the Nasdaq 100 Index with the Dow Jones Industrial Average. 

The ratio between the two U.S. equity benchmarks closed a week ago at its highest level since March 2000, according to data compiled by Bloomberg. The milestone followed a 16% rally from this year’s low, set May 10. Faster-growing companies are poised to sustain their strength, Wald wrote, as the dollar rises and inflation slows.

Nasdaq 100's rebound fails to carry over to IPOs, SPACs

Nasdaq’s biggest companies are close to completing an eight-week reversal that newly public U.S. companies can only wish for. The Nasdaq 100 Index’s close Thursday was just 0.4% away from a record set on Feb. 12. Initial public offerings have been left behind, as the Renaissance IPO Index trailed its Feb. 12 record by 15%. So have special purpose acquisition companies, as the Indxx SPAC & NextGen IPO Index was down 23% from a high on Feb. 16. SPACs were “the one area of excess to show no sign of recovery at quarter end,” Michael Shaoul, Marketfield Asset Management LLC’s chief executive officer, wrote Thursday in a report comparing the three indexes.

Gold hardly looks precious when compared with Nasdaq 100

Gold appears far less precious these days than shares of Apple Inc., Microsoft Corp. and their peers among the biggest Nasdaq-listed companies. Comparing the metal’s price with the value of the Nasdaq 100 Index shows as much. The ratio between them closed Wednesday at the lowest level since February 2001, according to data compiled by Bloomberg. Wednesday’s reading was down 42% from a high set last March, as a bear market in U.S. stocks ended. Preferring gold to the Nasdaq 100 “looks painful,” J.C. Parets, editor of the All Star Charts blog, wrote Wednesday in a Twitter post with a similar chart.

Nasdaq-100 displays bubble-era strength in a bear market

As U.S. stocks entered a bear market, a trend since the start of the preceding bull market gained momentum: Nasdaq’s biggest companies beating the S&P 500 Index. The Nasdaq-100 Index rose Monday to its highest level relative to the S&P 500 since March 2000, according to data compiled by Bloomberg. The ratio climbed 9.1% from Feb. 19 through Wednesday, a period in which the S&P 500 tumbled 34% from a record. Relative strength in the Nasdaq-100 “tells us that we probably aren't out of the woods yet," Jonathan Krinsky, chief market technician at Bay Crest Partners LLC, wrote Sunday in a report.