This is not a Stock Market Bubble, it is a Bubble Economy built on Quicksand
We saw a little sell off in the market yesterday and the craziness of the thinking was interesting to say the least. CNBC visiting guru Jim Paulson said it all when he said “we may have made a major top” and then was asked if he is selling his stocks and said “no”. What does that mean?
Maybe what is rolling around his feet is the fear and knowledge that the FED has created an artificial market, a base of quicksand, and that the real Bubble is in Deflation responding T-Bonds. This bubble is a function of cheap money that for years has allocated liquidity to non-producing functions and is in essence breeding deflation.
Keep in mind that a recent investor poll showed a fear of missing an upside breakout of stocks as the biggest risk for a majority of investors. In that vein we continue to watch the The Three Horseman, the three stocks that hot money has been pushing during May, searching to breakout the stock market to new majestic highs. These three stocks: Goldman Sachs, Starbucks, and Apple are part of our Three Horseman Index. On April 30, 2015 we set this index at 100. It was at 103.71 at the close yesterday. The high was 105.31 last Friday. We would view a quote under 99.00 on this index as significant and will notify you.