What Expiring Bubbles Look Like
The comments below are an edited and abridged synopsis of an article by Gary Tanashian
There was the Nasdaq bubble; the copper bubble; the uranium bubble; the peak oil bubble; and the silver bubble.
That brings us to the current headline bubble du jour. But wait, it’s not vertical and volume is not building. What is the meaning of this?
Maybe this one is going to expire of its own bloat, as volume continues to be less interested. It’s been supported by panic monetary policy every step of the way and, since 2016, a heaping layer of fiscal (political) policy as well. Daily charts show the approaches to, and the crack at the top of, the respective bubbles. The SPX is excepted of course, because it has not cracked.
A monthly chart shows that SPX has gone up in 3 major phases with what could be the final one in process now. The current rally looks vertical. RSI is diverging negatively, unlike some of the momo volume bubbles of the past. But again, Tanashian’s thesis is that the bubble is in the extreme policy propping it literally from 2008 to the current day.
It will stop where it stops. Tanashian’s targets have been 3,200 and 3,300, which the SPX has made. There’s another up higher. But among the things he would be looking for on the daily chart is a short burst of volume and a short burst of parabolic activity. It may happen, or “the pig may just roll over of its own bloat (legacy and current policy is bloated beyond comprehension in support of this monolith to the folly of man).”
Tanashian’s website has been on the right side of this rampage since it began on Christmas Eve, 2018. The charts included give clues about what he will be looking for going forward, because when this Godzilla gets mad, he’s not going to rampage through Tokyo. Been there, done that. He’ll have another city built too high on false hopes to deal with.