And where it stops, nobody knows! These are the times that make the bulls nervous and the bears excited and yet unable to take action, having been burned in previous weeks by anticipating downturns that never happen.
That is the very condition that MNQH25 is in as February 2025 has ended. Please watch the video! I produced a timestamp list below:
Basic introduction to the Fibonacci expansion level analysis: 0:00 to 1:32
The AB=CD pattern target levels calculations versus actual price levels: 1:32 to 6:13
The other Fibonacci price level analysis runs from 6:13 to the end of the video.
We have been playing with the breach of 22550.50 for nearly 5 months. If weakness continues, then we could see a rollover, but as I mention in the video after 6:13, we could still get through that level to a larger expansion target of 25044, and yet if conditions in the bond market and the stock market crater because of economic weakness, then the market will stairstep itself back toward that 18744.25 previous top and back perhaps even to the monthly VWAP control point of roughly 14988. The market probably doesn’t yet crater back to 12357 unless a real contraction occurs. The real problem with any kind of projection is that no one knows the future. What we do know is where large institutional traders have left their marks on price action, and those levels can leave clues as to potential support and resistance areas.
What Gives Us Pause In Any Bullish Notions At This Point?
As of the latest reports, Berkshire Hathaway's cash pile reached a record $325.2 billion by the end of Q3 2024 (reported in November 2024), with indications from early 2025 data suggesting it may have grown to $334.2 billion by Q4 2024. This increase reflects Buffett's ongoing strategy of selling stocks—like significant portions of Berkshire’s Apple and Bank of America holdings—and holding cash, primarily in short-term U.S. Treasury bills. Meanwhile, U.S. equity markets, such as the S&P 500, have been approaching or hitting all-time highs. For instance, the S&P 500 closed at record levels multiple times in late 2024 and early 2025, with a notable peak around mid-February 2025, driven by optimism over lower interest rates and strong corporate earnings.
Warren Buffett’s value indicator warning it at it’s highest point ever, and it has been used by the “Oracle of Omaha” since 1950.
The Atlanta Federal Reserve Bank has indicated that there would be a contraction in GDP growth in QI 2025 of 1.5%, even though the bank thinks the rest of the year will have positive GDP growth.
To provide some context, I have quoted the FOMC's Summary of Economic Projections:
“To contextualize the Atlanta Fed's projections, the FOMC's Summary of Economic Projections from December 17–18, 2024, provides a longer-term view. The projections, based on the January 2025 FOMC meeting, show the following median and central tendency for GDP growth:
Year Median Central Tendency
2025 2.1 1.8–2.2
2026 2.0 1.9–2.1
2027 1.9 1.8–2.0
Longer run 1.8 1.7–2.0
These projections, accessible at FOMC Summary of Economic Projections, indicate sustained positive growth, with no indication of contraction beyond Q1 2025. This data suggests that the Atlanta Fed's Q1 projection may be an outlier within the year, potentially reflecting short-term volatility rather than a sustained downturn.”
Obviously this is not the superb growth that President Donald Trump wants to provide by expanding our energy sector (probably America’s largest potential economic growth engine currently. What makes things equally problematic is that our debt situation is so critical that we will have to continue to print money until real economic growth kicks in. That means more consumer inflation is coming. If the printing doesn’t occur, bond rates will have to rise to get any investor demand for purchasing them. That will drive the cost of money up for business borrowers, and the economy could continue to slow dramatically. I could write volumes on that topic, but suffice it to say, it will be quite dicey for business growth in tech or anything else if capital is hard to obtain.
Do We Have Any Right To Be Bullish At This Point?
Believe it or not, we do, though realize that against the issues the Federal debt crisis creates, things could get sticky as we move farther into budget time at the end of Q3 2025 and the beginning of Q4 2025. Somehow, someway, there has to be credibility and discipline brought back to the Federal government. The infinite CR/government shutdown horse manure needs to end and end soon.
I am going to steal a bit of data from GuruFocus to do that. They aren’t always reliable on an individual stock basis, but their macro analysis of earnings growth tends to provide a consistent set of data over time.
According to GuruFocus:
“The NASDAQ 100's current price-to-earnings (P/E) ratio is approximately 34-35, based on recent data. This indicates that valuations are high but not at their peak, with the historical record high P/E ratio reaching 38.57, likely during the dot-com bubble. While valuations are above the median historical P/E of 23.91 and the typical range of 21.94 to 32.22, the forward P/E ratio of 26.30 suggests that the market expects earnings to grow, potentially supporting further stock price increases.“
MacroMicro sees the forward P/E at 25.62, and a simple ratio analysis would seem to indicate that earnings could grow on average about 30% in 2025, and against the backdrop of budget and debt insanity we are witnessing currently, some expansion in price could occur. There is a good discussion that I am only halfway through with Dr. Ed Yardeni ( a guy I met as an institutional broker in Atlanta and no stiff as a stock analysis) is also somewhat constructive for the 2025 outlook in this video.
Conclusion
It’s anyone’s guess as to which way the NQ will go beyond this point. All I can tell you is to watch trading volume as we move into summer and be aware that budgetary issues and bond rates could screw over U.S. stock indices including the QQQs and the NASDAQ 100.
Given that situation and rather extended market valuations in the entire U.S. Stock Market, using Stan Weinstein’s advice might not be a bad idea. If you have a stock you have doubled your money in, sell half, keep the rest, and keep your powder dry for another position. In that way, you are playing with the house’s money and if you do a thorough analysis of the growth of that stock’s earnings and it compares favorably to its enterprise value and it’s forward P/E, if the time is right, add another position.
If you are buying and holding, you might consider hedging your positions with options to protect the value of the portfolio. The important thing right now is to keep your eyes open and to be prepared for anything. Your government doesn’t give a damn about your portfolio, so you need to be the one that stands in the breach to protect it!
That is all for me for now. The “Of Bullshit And Bitcoin” Series will continue soon. I am putting up the subscription firewall tonight, but all articles will be free to read and if you like them, sign up for a subscription. At some point as I gain momentum, I will tighten up the firewall, but for now, you will still be able to read everything I produce. If you liked what you read, hit the like button. I could help spread the word that this Substack is still open for business.
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