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.
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