A Low Price to Pay for a Mega Melt-Up  | BY KEITH KAPLAN
CEO, TRADESMITH |
The market has taken us on a wild ride in 2025. Between Chinese AI breakthroughs, radical shifts in trade policy, the Federal Reserve’s rate-cutting cycle, and now a surge in inflation expectations, the headlines have been all over the place. Stocks are acting as you’d expect – soaring one week, shaking out weak hands the next. All this wild price action has ultimately not taken us far. As I write, the Nasdaq 100 is down 0.2% from the start of the year… And that’s especially painful, considering the 5.7% year-to-date gain we were looking at just a week ago. All this chaos can’t help but make you wonder, “Are we heading for a crash?” If you google that question, you’ll probably find a bunch of mainstream media headlines urging you to stay scared. But I’m here to tell you something quite different: This isn’t the beginning of a bear market. On the contrary, it’s the setup for one of the biggest opportunities of your lifetime. We’re smack in the middle of what my team has taken to calling a Mega Melt-Up. We’ve gone through history and quantified the price action of the past few years. And what we found, shocking as it was, tells us that there’s only been two previous market environments like this one: the 1990s and the 1920s. And both were periods where individual companies rose thousands of percent in very short order. If our research is correct, and I’m confident it is, the volatility we’ve seen this year isn’t a warning sign. Instead, it’s even more evidence that we’re in a Mega Melt-Up… the kind that only comes around once or twice in a lifetime. Three Bear Markets to a 1,000% Gain Yes, the volatility we’re seeing right now actually supports the case for a Mega Melt-Up. Let’s take a quick trip back in time. Like what we’ve seen so far in the 2020s, the 1990s were a boom decade. From 1995 to 2000, the Nasdaq 100 went up 1,000%. But it wasn’t a straight shot up. In fact, there were more than two dozen major pullbacks in those five years… Several of which you could consider an “official” bear market… And each of which would prove a buying opportunity. Let’s look at 1995-1996. Starting in 1995, the Nasdaq 100 started to become a lot more volatile. From July 1995 to August 1996, the Nasdaq 100 posted drawdowns of 9.1%… 10.5%… 14%… 8.2%… and 14.4%. All in the span of one year: 
What else happened back then? Well, in 1995 the Nasdaq 100 rose almost 40%. And the next year, it rose 22.7%. Let’s skip ahead a bit to 1997-1998. We see the exact same thing. Not only did the Nasdaq 100 retreat 20% in late 1997, creating a short-lived bear market… it saw two separate drawdowns of -22.2% and -19.1% within six months in 1998: 
Yet once again, the index went up 21.6% in 1997 and 39.6% in 1998. Finally, let’s look at 1999. Four major pullbacks in the double-digit range, and one final flush of nearly 9% before stocks took off into the end of the year: 
What was the Nasdaq 100’s return in 1999? 101.95%… the highest ever. The big takeaway from this is simple. You can’t have a Mega Melt-Up without massive price swings along the way. This is exactly what we found in our research. Both the ‘90s Mega Melt-Up and the 1920s Mega Melt-Up were marked by a ton of volatility. It’s the price you pay for the kind of extraordinary gains markets deliver in these times. And, when you zoom out, it’s clear that it’s a small price to pay. Now, by comparison, what we’re seeing in stocks right now isn’t anything like what I just showed you. The S&P 500 is 3% off its highs and the Nasdaq 100 is 5% off its highs. They can absolutely go lower from here, and that would not change my thinking on this Mega Melt-Up one bit. In fact, there’s an argument that the Melt-Up we’re about to see could be even bigger than the one in the ‘90s. Why This Melt-Up Could Be Bigger Than the 1990s The 1990s had three powerful forces fueling stocks: - The birth of the internet (what we’ve been calling a General Purpose Technology) and the associated new companies taking advantage of the trend.
- The rise of online trading, making stocks more accessible than ever.
- Easier monetary policy, where the Fed’s interest-rate cuts fueled a consumer credit boom.
These three forces are what we call Melt-Up Multipliers. For a Melt-Up to be truly powerful, it must have these specific three factors. The 1920s saw the same thing, with electrification being the major technological breakthrough… margin lending making it possible for investors to own more stocks than they could buy… and a consumer credit boom powering the economy. Today, we have these same three melt-up multipliers… and one more. - Artificial Intelligence: AI is today’s Internet moment – a technology that’s changing everything, from medicine to finance.
- Zero-Commission Trading & Apps Like Robinhood: More retail money is flooding into the markets than ever before.
- The Fed’s Rate Cuts: The Federal Reserve is slashing rates again, just like it did in the mid-90s.
Oh, and there’s a “wild card” fourth factor… President Donald Trump. Like him or not, his policies are market-friendly… And the last time he took office in 2017, the Nasdaq 100 surged 31.5%. This is the perfect storm for a Mega Melt-Up. But there’s a tricky thing to understand about melt-ups… and especially Mega Melt-Ups… All melt-ups end the same way – in a meltdown. Ride the Melt-Up and Avoid the Meltdown The 1990s Melt-Up ended with the 2000 crash. The Roaring ’20s Melt-Up ended in the 1929 crash… and, even worse, the Great Depression. And yes, this melt-up will end in a crash, too. But that doesn’t mean you should sit on the sidelines. It means you need the right tools to capture the upside – and know exactly when to get out. That’s why we built Trade360, our all-in-one software suite that’s designed to help you make the most out of every market environment. And we recently made two big upgrades specifically to make it the perfect trading tool for a Mega Melt-Up period like we’re seeing now. One is a tool that clearly identifies whether markets are in Melt-Up mode or not… and alerts you when that condition changes. With this, you don’t have to second-guess whether or not we’ve seen a major top. You’ll get an alert that tells you when it’s time to get out before stocks crash. The other is an advanced trading strategy that’s perfectly suited to melt-up environments. Remember all those drawdowns in the Nasdaq 100 I showed you earlier? If we’re seeing all that selling in the benchmark, you better believe we’re seeing it in individual stocks, too. So, we designed a strategy that takes advantage of these short-term, extreme pullbacks in otherwise quality stocks. When prices fall by a certain amount and at a certain pace, the strategy buys in… and sells the stock 21 trading days later. This simple strategy has a near 80% win rate and average gains of around 16% -- counting winners and losers. And it works whether stocks are in a bull market, or a bear market… as it targets those rare occurrences where prices reach irrational extremes. I’ll be going over all this in a free research presentation I’m hosting tonight at 8 p.m. Eastern. That way, I can get you the full details on our Mega Melt-Up thesis and the full breakdown of this new strategy. Not only that, I’ll be sharing 10 stocks to buy and 10 to avoid during the melt-up period… completely free. Click here to automatically save your spot at my free demonstration starting in just a few hours. All the best, 
Keith Kaplan
CEO, TradeSmith P.S. All eyes were on Nvidia earnings last night. And they delivered… Nvidia just delivered another blockbuster earnings report, posting $39.3 billion in revenue and a stunning $11 billion in Blackwell AI chip sales – the fastest product ramp in company history. Despite this, NVDA is down 3% today as I write. But if you ask us, that’s a buying opportunity. Because the same day, Snowflake (SNOW) reported earnings that confirmed the AI boom is far from over. The company beat revenue expectations and forecasted $4.28 billion in sales, thanks to its growing AI-powered cloud services. SNOW is up more than 9% from before the report. These aren’t isolated events. They are proof that AI is driving the next Mega Melt-Up. The biggest gains are still ahead – but only for those who position themselves now. Join me tonight at 8 p.m. Eastern as I break down how to profit from this historic opportunity. Don’t miss your chance to ride the AI wave before it’s too late. Click here to automatically reserve your spot. | 
No comments:
Post a Comment