Evidence For Super Bubble Theory SPY/Nikkei 225 Index 2023
1. I see record amounts of shorts opening still open, call selling, put purchasing speculators are shorter than 2000 / 2008 / 2020 combined.
FRED raises rates to this level and yet nothing budges on a large scale so what's going on?
2. Take a look at the Japan Nikkei 225 Super Bubble during 1980s - 1990s, I use a (MA 23) on the Nikkei and double it (MA 46) for the SPY as that represents a similar trend forming.
3. Next take a look at the RSI for both charts when the bubble exploded in Japan the RSI completely reset to baseline. SPY RSI did not reset during the last selling period.
4. Further take a look at the aggressive angle drop of the Nikkei 225, when the show was over it was not a sideways moving bump it was straight down vertically.
5. Could it be the dead cat bounce? negative take a look at the Nikkei dead cat bounce a sharp minimal rise followed by another vertical fall, the current "bounce" is nearing all time highs and going sideways not straight up that would indicate "puts" "shorts" covering.
6. If this is a super bubble we should see short covering and capitulation to the upside over the next months and the market will grind vertically up suckering everybody back into the markets.
7. If I'm correct and this is a Left shoulder forming of a bigger head and shoulders that would put the SPY near 600-800.
So the counter speculative bet would be to be long here till the SPY reaches that maximum velocity vertical move with a peaking RSI, this would be betting against the entire market being short, followed by once the market starts to get bullish and calls are bought and longs are open and the "Super Bubble" narrative is not a crazy term but the normal term, its time to reverse go short and sell everything.
I follow Michael Burry as an interesting person who called a similar scenario from a book and I'm starting to wonder was he early again a few years of the peak
FRED raises rates to this level and yet nothing budges on a large scale so what's going on?
2. Take a look at the Japan Nikkei 225 Super Bubble during 1980s - 1990s, I use a (MA 23) on the Nikkei and double it (MA 46) for the SPY as that represents a similar trend forming.
3. Next take a look at the RSI for both charts when the bubble exploded in Japan the RSI completely reset to baseline. SPY RSI did not reset during the last selling period.
4. Further take a look at the aggressive angle drop of the Nikkei 225, when the show was over it was not a sideways moving bump it was straight down vertically.
5. Could it be the dead cat bounce? negative take a look at the Nikkei dead cat bounce a sharp minimal rise followed by another vertical fall, the current "bounce" is nearing all time highs and going sideways not straight up that would indicate "puts" "shorts" covering.
6. If this is a super bubble we should see short covering and capitulation to the upside over the next months and the market will grind vertically up suckering everybody back into the markets.
7. If I'm correct and this is a Left shoulder forming of a bigger head and shoulders that would put the SPY near 600-800.
So the counter speculative bet would be to be long here till the SPY reaches that maximum velocity vertical move with a peaking RSI, this would be betting against the entire market being short, followed by once the market starts to get bullish and calls are bought and longs are open and the "Super Bubble" narrative is not a crazy term but the normal term, its time to reverse go short and sell everything.
I follow Michael Burry as an interesting person who called a similar scenario from a book and I'm starting to wonder was he early again a few years of the peak
The only play here is to lower rates and start extreme YCC and QE for government debt. This will introduce even more stimulation and cheap credit forcing the DXY lower making any QE less effective.
Worst part about being the reserve currency? there's nobody to bail you out.
Welcome to Weimar Germany combined with Japan 1989.