Dogecoin is up 400% this past week. The IPO of Coinbase renders its CEO an instant $17 billion, now that’s some coin! Robinhood brokerage is unable to process all the client crypto trades. Goldman and Morgan handily beat earnings estimates. Crude oil nears $64 on expectations of greater demand as more venture out from the Covid Lockdown. The high-flying NASD 100 doubles in one year. The pullback the last two months resets the index for more gains.
The ‘hemline indicator’ posits that fashions are more revealing during stock market manias. Indeed, even mainstream Yahoo.com has featured Elizabeth Hurley and Salma Hayek in their skimpiest bikinis. And positive sentiment, hello Buzz Lightyear, extends to infinity and beyond. Richard Branson is planning consumer space travel. SpaceX boss Elon Musk has said the next major flight test of the Mars bound Starship craft will take place next week. The Pentagon confirms photos of ‘unidentified aerial phenomena’ captured in 2019. This is an echo of American landing on the moon subsequent to the DJIA reaching 1,000 for the first time in 1966. The movie 2001 A Space Odyssey suggested lunar travel, much as is being discussed today.
Mathematically speaking, a rally might be arithmetic with a slope of 1.5x. A mania exhibits a geometric scope, the slope is raised to a power, not just a multiplier. Such events are rare. The first in modern times was Tulipmania in Holland in 1636. The South Sea Bubble occurred in England in 1720. The United States has endured numerous ups and downs such as the Panic of 1907 and the Roaring 20s followed by the Crash of 1929.
Ralph Elliott postulated that markets move in a three step one-way, two step the other fashion. Both the NASD and the NDX appear to be in their fifth wave up. That suggests a top in the next few months. Parabolic increases usually collapse in a near vertical move down, a mirror of the move up. Last week I suggested several potential worries but all that is over looked as the markets celebrate Coming out of Covid.
Add to the list Russia incursion on the Ukraine and China’s continued expansion into the South China Sea. A retired admiral just published a book titled 2034 predicting a war between China and the US.
As commodity prices boom, bond prices advanced yesterday the opposite of what one might think. Expect a bond rally for some weeks retracing the first quarter rise in interest rates.
Or as Hal Holbrook remarked to Charlie Sheen in Wall Street, enjoy it while it lasts, cause it never does.