by KuntFuckula
I was looking at historical data (week-to-week) on Yahoo Finance for the Nasdaq from Dec ’00 – Dec ’03 during the DotCom Bubble, and here’s a quick synopsis of what I saw and it made me think about where we are today:
The Nasdaq hits its ATH at 2936 during the week of Dec 11th ’00. It hits its initial bottom during the week of Sep 24th ’01 at 1459–a roughly 50% drop from the prior peak (2936 x 0.5), but then rallies over the next several months via a massive bull trap until it hits another peak of 2075 during the week of Jan 7th ’02. This represents a roughly 40% rally (1.4 x 1459). The second (real) bottom occurs during the week of Oct 7th ’02 when the Nasdaq closes at 1135–a roughly 60% total loss from the initial ATH of 2936 during the end of ’00 (2936 x 0.4). The 40% rally between bottoms was a massive bull trap that wiped a lot of people out who got FOMO and thought the market was recovering from the initial crash of Sep ’01. The Nasdaq didn’t get back to the 2900’s until February of *2012*, well after the GFC of ’07/’08.
The pattern could play out similarly with the current market cycle with respect to the first crash happening in Oct of ’22 after markets hit ATHs at the end of ’21, then a bull trap going into the first half of 2023 off of the back of AI hype, and then a 2nd harder crash kicking in sometime either in the 2nd half of this year or the first half of next year. Am I crazy to think that this recession cycle could be playing out very similarly to the 2000-2003 recession cycle?
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