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MARKET SNAPSHOT: This Is The Chance Of A Stock-market Hangover

By Mark DeCambre, MarketWatch

Wall Street partied like it was 1999 on Thursday.

The Dow Jones Industrial Average DJIA, -0.20% S&P 500 index SPX, -0.08% and Nasdaq Composite Index notched record highs on the same day for the first time since Dec. 31 1999.  Friday’s action wasn’t as ebullient, but the Nasdaq Composite COMP, +0.09% still managed to carve out another all-time closing high of 5,232.89.

So, what’s next for this stock market?

We all know how things ended up in 1999, as the dot-com boom was at its peak. Stocks rose. In fact, the tech-heavy Nasdaq, which was teeming with hyperinflated stocks like Pets.com, rallied for three months, gaining about 24% to a peak of 5,048 on March 10, 2000, before the dot-com craze soured.

From March 10, 2000, the Nasdaq gave up more than a third of its value to hit 3,321.29 on April 14, 2000, according to FactSet data. Thereafter, a lot of volatile trade would follow, which would swing the Nasdaq up and down. Ultimately, it was the start of an ugly downtrend for the index — and stocks overall.

John Kosar, chief market strategist at Asbury Research, says that at this point in the market’s cycle the risks of a tumble in stocks might outweigh the rewards of a further clamber higher.  From Asbury Research’s Friday report: Our work continues to suggest that near term downside risk currently exceeds upside potential, but that the minor pullback we are expecting is likely to provide a better buying opportunity later on this quarter as numerous indexes and influential individual stocks target an additional 6% to 14% advance, overall, during the next one to several quarters. It will take contracting investor assets amid increasing volatility and a confirming negative shift in monthly momentum next week to confirm that the decline we are expecting is under way.

Read the rest of this article on MarketWatch.com.

Asbury Research subscribers can access the reports and accompanying charts that were used as a source for this article by logging into the Research Center.