The Bubble Has Popped

Indeed.  It's over.  The bull market that started in March 2020 has ended. least according to David Einhorn.

My friends, I'll say it clear
I'll state my case of which I'm certain
I've lived a life that's full
I traveled each and every highway (Not via a Tesla)
But more, much more than this
I called the top.... my way....

The top is in?  Perhaps.  Even I can't say for sure.

Up until September 2nd, 2000  every single top call has been ripped to shreds.  Destroyed.  Gone.  Shorting this market has been a fools errand.  Just ask those who have been shorting TSLA all these years......hmmmm.

In Einhorns letter he states:

"Bubbles tend to topple under their own weight. Everybody is in. The last short has covered. The last buyer has bought....."

Everybody is in?  The last short has covered?

a few sentences later he states:

"We have adjusted our short book accordingly including adding a fresh bubble basket of mostly second-tier companies and recent IPOs trading at remarkable valuations."

So the last short hasn't covered (Einhorn is short)?  And everybody isn't in (Einhorn is short)?

And he also remarks on the 2000 bubble.....

"On March 10, 2000, nobody knew that it was the top. Even by September 2000, it wasn’t "

Yet he sees the top being September 2nd 2000?


The top may very well be in.

Clearly from a long term chart perspective that megaphone topping pattern on the S&P500 looks rather ominous.

and yet nearly every bearish chart patternmsince the dawn of man has been a bullish one  in disguise.

If everyone is long/covered their shorts... why are there so many market crash, market top callers out there?

From my perspective.  If you think the market is a bubble... and has topped.  How long the market are you?

If you think the stock market is ripe for a 20-40% decline how long the market are you?

My thought remains new record highs are coming.   I don't know when, but they are coming.  And you know what?  Calling for new all time highs has been right 100% of the time.  Until that changes I think this bubble is going to keep bubbling on.

Will there be ugly sell offs?  Absolutely.  Trading for upside hasn't been as easy as those uber bearish folks suggest.

What were interest rates at in 2000?

Was the FED buying Corporate bonds in 2000?

Were Central Banks around the world hell bent on supporting asset prices in 2000.... forever?

Did the money supply explode 30% higher in 2000?

and interest rates have been trending lower for 40 years!!!

I know the bearish folk like to mock the 'its different this time' statement.

But it is.... far different.

While you could say the stock market is a bubble.... I think in relative terms its not.

We have historically low interest rates.  A central bank hell bent of keeping asset prices aloft.  And a massive growth of money supply.

While the recipe is there down the road if/when inflation rears its head, for a market collapse.  I don't think we are there yet.  $SPY $400?  $SPY $500?

Again like Einhorn said... no one saw the top in 2000.  In 2020 and all the years prior... the top and bubble calls are all over.  Many of the calls come on a monthly basis from the same financial professionals.

And yet the market keeps heading higher.

I don't think it will be any different this time around.

-I shorted the stock market and all I got was a gift box full of short shorts....

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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