3 or 4 Bubbles ??
Here we are, the last day of an eventful week. Of course, the big question is what happens in Ukraine. In doing a bit of research on the subject, I have come to the realization that the biggest battle is here at home, does the US have the willingness to fight for Democracy, or does Trump’s Authoritarian influence move beyond the Republican base. The US and NATO have stated that they will not overtly help Ukraine fight the authoritarian Putin, That would appear to me as a signal that all is not well here at home.
Moving on to the markets. Over the past few year’s you have heard a lot from me on the various bubbles. Of course, you can go back to the Macro start of current bubbles with Bernanke’s QE2 in October 2011, but in more recent memory we have had a succession of bubbles, Bubble 1.0 August 2020 to February 2021, Bubble 2.0 February 2021 to August 2021, Bubble 3.0 August 2021 to January 3, 2022. Now the question, is there a Bubble 4.0? There is a lot of evidence pointing to that possibility. The Funny Money Driver is still working, nothing has changed with the Fed Balance Sheet.
If there is to be a 4.0 Bubble, it probably started either on January 24th or February 24th depending on how you look at the Ukraine War retest. I am trading modestly on the long side during this SPX 4200 to 4600 trading range, the average price during this range is around 4350 and a key level that would confirm that this is a bubble bottom, would be a close above SPX 4444. In the meantime, the market is in a defensive posture as the trader types are trading for the 3.0 Bubble to be the definitive Top, with a coming Crash is focus. A prominent futures forecaster, Larry Williams, is touting a Crash on this coming Monday as it is 55 days from the January 3rd top and that period signaled the 1929 and 1987 crash. We will see if history tracks that close.