With the memory of a troubling correction in the Dow still painfully fresh, it's remarkable that the technology-heavy Nasdaq may just be days away from breaking the 5,000 mark on its way to even higher ground.
The catalyst for the Nasdaq's meteoric rise may be as mundane as investors plowing tax refund money into biotech and Internet names, chasing what could be the next
high-flyer, said Scott Bleier, an investment strategist at Prime
Nasdaq bolted through the 4,700 mark Wednesday on biotech
strength to log its 13th record of the year. It has gained 700
points in just eight weeks and is up 17.5 percent in 2000.
"But I don't think 4,700 is really the number. I think the
number is 5,000," said Bleier, chief investment strategist at
Prime Charter Ltd. "I think Nasdaq can hit 5,000 in only a
couple of days. It doesn't need a whole lot of time, considering
we're at 4,780.
"That is such an incredible level of performance, not only
relative to itself but to its peers and the other indices," he
Gains in biotechnology stocks have boosted the tech-driven
index to unprecedented heights in 2000. On Wednesday, the Nasdaq
composite index surged 1.86 percent, or 87.39 points, to close
at 4,784.08 on record volume of 2.24 billion shares.
The Nasdaq biotech index itself has climbed an astounding 73
percent so far this year, making it Nasdaq's best performing
sector. On Wednesday, the gauge flew to 1,528.71, a new high and
a gain of 3.55 percent.
"Everybody wants to own the same stocks and money managers
being forced to jettison the old line and buy the new age,"
Bleier told Reuters late Wednesday.
"There are no earnings worries to burden many of these
stocks," he said, noting that investors are buying many of the
hot new biotech and Internet names based on hopes of future
earnings and corporate successes, not real-time successes.
That recurring rally in once-ignored, small-time stocks, has
also lifted the Russell 2000 index to new highs while the
blue-chip Dow Jones industrial average has lagged. The Dow is
down 11.82 percent this year while the Nasdaq is up 17.56
percent and the Russell, up 16.56 percent.
"Nasdaq has changed the structure of the market. People
want to know what the Nasdaq is doing, not what the Dow is
doing," Bleier said. "When they ask about the market, they
want to know what Yahoo!, Qualcomm, and JDS Uniphase have done.
People want the next 30-point gainer.
"Is it going to end at some point? Yes. When? I don't know.
Do we need to be in on this? Absolutely," he said.