Nasdaq 100 Marks 2nd Best 6-Month Performance In History! 🥳

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In a stunning day for the U.S. stock market characterized by Apple Inc‘s (NASDAQ:AAPL) surge back to a $3 trillion market cap, the Nasdaq 100 Index marks a triumphant journey, putting it on track to finish the quarter with a remarkable 39% gain.

This half-year performance is the second-best in the index’s history, dating back to its inception in 1985.

Investors and tech enthusiasts are taking note of an astounding rally, with the Nasdaq fully recouping the losses caused by the 500 basis-point rate hikes that the Federal Reserve has implemented over the past fifteen months.

The Nasdaq 100, which is tracked by the Invesco QQQ Trust (NASDAQ:QQQ) is now back to levels seen in March 2022, effectively ignoring both the impact caused by the Federal Reserve’s hawkish stance and current market expectations of further hikes in 2023.

Strong recovery to the top

Although there is a general feeling of euphoria, a concerning historical parallel has emerged. 

Surprisingly, the Nasdaq 100’s performance in the first half of 2023 has only been surpassed once before, in the second half of 1999, when it gained 61%.

Handsome returns so far

That was when the sky seemed to be the limit. The Nasdaq 100 had its heyday at the end of 1999 and then hit the peak of the dot-com bubble in March 2000.

The first half of 2000 marked a flat performance for the index, before ultimately succumbing to the ravages of the bubble burst over the next two years.

The ensuing downturn served as a painful lesson of the dangers of unchecked exuberance and unsustainable valuations.

Although financial markets don’t always exactly replicate historical patterns, the words of Spanish philosopher George Santayana ring true: “Those who fail to learn from history are doomed to repeat it.”

The striking similarity between the Nasdaq 100’s recent surge and the gains observed during the dot-com bubble suggests a need for investor caution.

Trade #1

Traders were pricing in an 84.3% chance that the Fed will hike rates by 25 basis points to 5.25%-5.50% range in its July meeting, according to CMEGroup's Fedwatch tool, down slightly from the 89.3% on Thursday.

Hawkish remarks from Fed Chair Jerome Powell and strong economic data earlier this week boosted bets the Fed would keep hiking rates, but stock markets took comfort in signs of strength in the U.S. economy as inflation cooled.

Weekly option trades summary 

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