Is The Market Starting To Look Like 1999 Or 1996?

Today the Nasdaq market (QQQ) is getting hammered and since it has been up over the last few years, despite poor underlying fundamentals, it sort of reminds me of the market of 1999. I have my Clients 49% in cash because market participants (especially the corporations themselves, through stock buybacks ) are buying stocks with little consideration of the fundamentals,  and are buying at any price, like they did in 1999.

This quarters earnings season, which kicks off tonight with Alcoa (AA) reporting after the bell, will give us some keen insight into how the underlying economy is doing on Main Street.  If we were to see a majority of companies missing their estimates, then we may very well be on the verge of  a serious correction.

 I have not gone more to cash this week, as I believe that Wall Street Analysts have lowered the earnings bar again, like they did last quarter. With companies themselves borrowing money at historically low interest rates and buying back shares in droves (in order to reduce share count, to manipulate earnings) it should be an easy task for the majority to beat again this quarter.  Therefore if they don't, then this market will surely look like 1999 all over again, if not late 2000. But if companies were to actually beat in large numbers, then its a whole different story and I will be forced to go more to stocks as I did in 1996.  Here is an excellent video that explains what is happening in more detail.