Anatomy of an Economic Bubble
In short, there no longer are any Growth or Value Stocks, there are only Liquidity Priced Stocks, the price is everything, nothing is tied to it. Growth is being siphoned off as money flows into Speculation and Value has no meaning.
Later today as the Bubble gets to the Bursting point, we will update and add some charts that we have shown here before. You are watching a historic event unfold.
This is the most exciting thing that I have seen since 1987. In 2000 and 2008 there was a real economic crisis. But in 1987 and today there is nothing but tom foolery, a sense that everyone knows how to profit from the craziness.
Pulling from yesterdays comments here is Chart 1, the broad Macro confirmation pattern.
This chart includes 10 asset factors, all indexed to 1.00 on February 24, 2021, which is the date that the final Top started building. Since then we have seen a lot of rotation, investors and traders moving around, selling bottoms and buying tops, but the sum total, we have been in the roll over since that date.
- A vertical yellow line in the chart marks that important February 24, date.
- The Dashed red line is the average for the data for the past 82 days since February 24th.
What you have here is a chart that includes the S&P, The NASDAQ 100, the Dow Jones, 30 year bonds, 10 year bonds, High risk bonds, Gold, Real Estate, Commodities, and Bitcoin, all equally weighted. This allows one to smoothly watch the pattern unfold. You can do your own analysis. For me the inside the Bubble dates that standout are May 10th and June 1st, the dates of the high and the date when the 21 day average dipped below the 50 day.
This chart is as of 11:00 AM CDT 6/23/21. We will keep tabs on this chart and update. The two channel lines encompass the area of the top, the left shoulder, head, and right shoulder. A close below the lower channel line or a close below the May 19 level are on the list of important things to watch.
More charts on various parts of the Bubble will follow over coming days.