As we approach a new year after one of the craziest years in the stock market, traders that can adapt and be flexible will be rewarded just as in the past. What is so stunning about the year 2000 has been the rapidity of the decline in so many stocks in the technology sector. However, it does fit into the theme of stocks going down faster than they go up. And stocks were going up way too fast. One of the most valuable resources of information on the stock market is CNBC. This may come as a surprise, but the reason is fairly simple. Sentiment. CNBC has become a valuable component of the contrarian's tool kit. Not only because we've lately seen a shift from the overly bullish sentiment for most of this year, but it could signal a short-term turn in the market.

As stated in my profile, I am a contrarian, first and foremost. When stocks are rocketing higher, I like to sell. When stocks are cratering, I look for excuses to buy. This is only a general guideline, so its not something that's followed religiously. But stocks are more attractive when the price is lower, not higher. A wholesale revaluation of the tech sector is occurring before our very eyes, which is much overdue. Some of this is creating great values for small cap stocks that are trading below cash with incentives to go private or liquidate. I'll cover that in another article which will be written up before the year is over.

For most of the year since March, each leg down in the market was viewed as a time to buy instead of staying on the sidelines. But December 20, 2000 seemed liked a short term turning point for this market. It brought back images of October 8, 1998. That's around the time when the Fed intervened with a 25 bp rate cut between meetings due to the financial blowups occurring during those times. Now those 2 time periods are completely different, with commodity deflation two years ago, and commodity inflation occurring right now. But what stands out was the sentiment during those times. You had gurus like James Cramer getting super bearish at the bottom, no one thought the market could come back from the beating it took in the fall. Yet the market went up almost everyday for the rest of the year from that point forward.

Fast forward to December of 2000. Fundamentals are weakening. Tech stocks are blowing up left and right with vicious earnings warnings from the likes on INTC, MSFT, LU, MU, CPQ, DCLK, FDRY, etc. Guilt by association hammers stocks that are even remotely related to these stock blowups. Much of this was happening while every recovery was met with a guy like Joe Battipaglia hailing it as the bottom. The sentiment remained bullish. Until December 20. That's when the tide started to change. Stocks went lower with a thud as sellers overwhelmed the high beta tech stocks with big orders. The Nasdaq volume was impressive, 2.78 billion shares. Bottom calls were harder to find. The next day only went up slightly. This was not a V-bottom. Thus, everyone was skeptical. And there remains a lot of skepticism about this recent bounce. Not nearly the levels of 1998, but enough to provide fuel for those switching camps to the bull side again to rally the Nasdaq higher from current levels. But that's where the similarities to 1998 end. In 1998, a bubble had not burst. Fundamentals weren't so weak. There was more fear. In 2000, the mania ended, fundamentals are getting poor, and growth has slowed as the law of large numbers begins to catch up with a lot of the bigger tech companies along with a down cycle in tech spending.