The Year The Nasdaq Dropped The Chalupah!

December 29, 2000
Goran Yordanoff

With the Nasdaq Composite succumbing to relentless selling throughout the late morning and early afternoon, the reality of this year really sank in.
The worst year in history. Period. Closing the day at 2471.98, the Nasdaq Composite recorded a 40% loss for the year. Bulls were quick to call
today’s poor performance “last-day tax selling.” Whatever excuse you choose to use,
it wasn’t pretty. Thankfully, we were able to detect the topping action last night and entered the day ready to enter the shorts we were watching.

Once Juniper exceeded yesterday’s high, the euphoria started to escalate. I got a call from a trader telling me
that JNPR was a “sure thing” to the 200-day MA at 149ish and there was NO resistance until there. My response was
simple: Au contraire, mon frere (I think not, you shmuck). Sometimes, traders put too much emphasis on major moving averages and forget to listen
to the messages that the candlesticks are sending us. Area (A), shown above, is the 50% point of the real body from the candlestick of 12/14 which
was roughly 144 1/4. The high today of Juniper was 144 1/2 before it commenced its death spiral to roughly 124. So as some traders were going
long and looking for a move to the 200-day MA, I was watching the 144 1/4 area to serve as resistance and entered a significant short position. Big red or big green candlesticks of this nature will often serve as
resistance/support. Only candlesticks can show you this.

Let’s now reflect on some of the madness we witnessed this year that will forever live in our memories:
No profits? No problem. David Wetherell, the CEO of
(
CMGI |
Quote |
Chart |
News |
PowerRating), states that he did not want to show a profit too early for his company because the market would
assign a PE (price to earnings ratio) to them. Good thinking. Doing such may have resulted in his firm losing over 96% of their market cap this
year. Er… um…. hold on a second…..

The “Harmon Effect.” Stocks like
(
USIT |
Quote |
Chart |
News |
PowerRating) being bid up to $92 based on being a “Harmon Pick for 2000.” USIT closed the year at 9/32 (that’s 28 cents).

Split runs. Remember the huge split runs we witnessed in the Internet sector? The list is too large to mention, but many tacked on over 100 points
into their respective split dates. Ahhh,.. memories.

Chat rats. The pubescent teens manipulating stocks through chat room postings and
bogus news reports. Millions upon millions were made and lost as a result of this deliberate criminal activity.

Stocks popping 20 points on secondaries. Let me introduce those of you who bought these stocks to the term
“dilution.”

The $20 charge to mail a 40lb bag of dogfood from IPET. Hmm….

Please don’t squeeze the donuts.
(
KREM |
Quote |
Chart |
News |
PowerRating) squeezed shorts like Boston cream underfoot. Let’s not forget about the massive UBID squeeze up to $189 as
well.

Some of my personal heroes like Julian Robertson and George Soros calling it quits, citing insane market conditions. Mr. Soros actually was quoted as
saying, “The music has stopped but everyone is still dancing.” Chilling.

Stocks like Netzero and Efax basing their businesses on the concepts of giving away their services “for free.” I’ll get back to you later on that
one.

The IPO craze. Stocks running up to nosebleed valuations on hype and speculation only to crash down to earth. Anyone remember the hype on the
PALM IPO?

The Popping of the Internet bubble. Enough said.

Some analysts have referred to the sad fate suffered by the Nasdaq as “wringing out the
speculation.” Wow, that’s like saying that Boris Yeltsin enjoyed an after-dinner
aperitif from time to time.

My point in bringing up these events is not to remind us of pain or to give us a cheap laugh. But rather, to reinforce what our job as
“traders” really is: We are not “gamblers” and we don’t require a run-away bull market to
generate our income. If you consider yourself a professional trader (as you must by subscribing to a site like Trading Markets), you realize that this
is a profession that requires the utmost in education, training, research, discipline and dedication. By mastering the tools that are so widely
available to each of us now, we must constantly strive to become better and

wiser traders.

As Nietzsche once said “that which does not kill us makes us stronger.” If you had a great year, congratulations. If you didn’t, take the time to
learn from your mistakes and educate yourself properly so you are better equipped
to trade in 2001. In any environment, be it “up” or “down,” the
“professional daytrader” will thrive.

Have a happy New Year and a healthy and prosperous 2001.

The Year The Nasdaq Dropped The Chalupah!

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources