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Wow... I did not see that before... This NASDAQ scenario looks exactly like were currently in late 1999.
Same momentum levels, duration at those momentum levels, and everything.
If the past repeats... Nasdaq 100 blasts through .com bubble highs... Then collapses... Everyone who went through the .com bubble is going to be feeling a lot of deja-vu.
I don't really expect that much of an explosion though. The memories of the .com bubble bust are a reminder of the past, and should dampen peoples propensity to go into full flat out mania like that. A lot of traders/investors in tech still remember those days.
I agree with you mean, its like we're re-living the 1920's all over again. I'd give it about 10 months from now, but honestly I hope its not till 2016... but an 8 year run is not hopeful on such a bad economy.
Actually... Current markets are kinda paradoxical. A bad economy is bullish as it means no interest rate rises, LoL...
Also, this bull market would have never happened without the 2008 crash. The 2008 crash generated intense psychological fear of market drops in our policymakers. This fear is driving their continual market supporting actions.
You could say this is a fear driven bull market. That's why it behaves so strangely compared to natural bull markets. Volume behavior is different at tops and etc...
You have to remember though... Investor confidence in our central banks and policymakers can be fickle. Their actions only help markets as long as people keep confidence and believe in their leadership.
Investors could easily start to become disillusioned with the continual micromanagement and market support measures. Optimism could start to fade away in a couple years even with continual market support measures. This is why the "shock and awe" tactics recently came out of Japan. Investors over there were starting to become disillusioned, so it requires even more insane actions to keep investor confidence up!
European markets were getting ready to slide right into a bear market recently before these new global support programs went into play. ECB balance sheet expansion in the EU, Japan central bank actions, etc...
It's a well timed save that will probably only give EU markets about a year or so more time before danger of investor confidence collapse arrives again, then... More extreme measures will be required to keep investors together.
Why wont it happen? because there is still too much money in the market. In late 1999's we were bleeding cash on all fronts. (Uneducated speculative cash is bleeding)...
We are still flush with cash and the hope that other countries will come in with fresh cash will keep us buoyed until it runs out. It will still take some time for sentiment to dry up as well. Even then, you still have all those "it always will go up, just buy it" people who think that there will be a repeat of the 1900's, while not factoring in the evidence that the next 30 years is the recovery period of the upcoming pullback.
I'm excited though, the higher the VIX goes the better! Bring on the bears, bring on the bulls, just stop going sideways!
When investors lose all sense of caution and jump into the market willy nilly it generates a speculative bubble that blows up in their faces. That event creates a psychological fear anchor in their memory to not jump into a fast rising market.
However, once that memory has faded... Then there is risk of a massive speculative overshoot in the markets again. You can see this in short term trading too. If there is a massive ramp one day that blows up... The market will act more cautious for a while. You won't see another parabolic rally for quite a while afterward.
For every single parabolic top in the markets, there is generally 3-5 rounded tops or more.
In modern markets on the major indices... It's more like ten rounded tops for every parabolic top on the daily charts.
People just are not going into full out manias like they use to! Investor psychology has changed. These markets are more central banker sentiment micromanaged than natural. I think that is the best explanation for the strange lack of parabolic rallies.