Last night, when laying out Bank of America’s case on how much higher this “one final meltup” can push Wall Street, we observed a topic that has gained particular prevalence in recent weeks: following the latest snapback from its September lows, instead of comparisons to 2007, the latest fad is to compare equity index chart to those in late 1998, early 1999 in the aftermath of the LTCM bailout, and just before the dot com bubble took off in earnest.

As a reminder, this is what BofA said:

It could simply be 1998/99 all over again. After all, a “speculative blow-off” in asset prices is one logical conclusion to a world dominated by central bank liquidity, technological disruption & wealth inequality.

Back then, as could be the case today, a bull market & a US-led economic recovery was rudely interrupted by a crisis in Emerging Markets. The crisis threatened to hurt Main Street via Wall Street (the Nasdaq fell 33% between July-Oct 1998, when LTCM went under). Policy makers panicked and monetary policy was eased (with hindsight unnecessarily). Fresh liquidity combined with apocalyptic investor sentiment very quickly morphed into a violent but narrow equity bull market/bubble in 1998/99, one which ultimately took valuations & interest rates sharply higher to levels that eventually caused a “pop”.

The most vivid example of why the blow-off top of 1998/1999 is now being cited as the potential scenario, is the following Nasdaq chart: “The 1998-2015 analogy, for what it’s worth, is working for the Nasdaq, which is currently bouncing hard, and leading the rally, after an 18% plunge. (Although it is not yet working for biotech which is consolidating after a 35% crash”

Yet one place where the 1998/1999 analogy has so far failed to materialize, is crude oil. As BofA notes “despite the strong ECB & China policy action is conspicuously not rallying yet…in 1998-99 oil acted on the “first-in, last-out” principle, but eventually EM/global growth pushed oil much higher in 1999.”