Research Note 7/22/16: Another tech bubble type run?

I was comparing our current market to the nasdaq run of the 90s and i’m seeing many similarities in the trajectory. From the depths of a market crash both markets trended up quickly, about doubling in 2-3 years time. Then after a year of consolidation, broke out on a higher trajectory for the next 2-3 years before consolidating again. This brings us to 2016 and post a year-long 2015 consolidation. We have since broken out to near highs on the nasdaq and soxx and new highs on SPX. The 90’s run at this point (around 97) breaks out on an even higher trajectory for the next two years, before going onto its final bubble run when everyone and their mother was an “expert” on stocks.

Could this happen again? A few things come to mind that could allow this thesis to follow thru:

  1. Biotech: just like internet stocks took off in the 90s, biotech has the ability to do the same. Novel and unheard of medical treatments are on the way and major advances in this field could propel stocks upward.
  2. Cloud and IoT adoption: Same way biotechs can change the worlds landscape, so can these two things.
  3. Growth in the global economy: For the majority of this market run, the global economy has been growing at only a 2-3% pace. If that pace speeds to 4-5% watch out. Commodity stocks would gain as would the general markets.
  4. Coordinated central bank action: we all know what this could lead to

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