Robert Prechter said back in February that some aspects of this bounce would resemble the euphoria of the all-time top in equities. Well, when I looked at the market today and saw that Amazon has rocketed up to its 2000 and 2007 peaks (albeit on pathetic and waning volume this go-around) and sports a 60+ PE, I got a tingle of that giddy feeling I had when I was buying puts hand over fist on stocks like this two years ago. Back then the whole market looked like this, but there are some great set-ups being formed this summer.
We are now solidly overbought as well as ridiculously overvalued. We may be witnessing the last gasp of the great post-1995 equity bubble.
Source: Yahoo! Finance
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A word of caution: when the NASDAQ runs like this, it can keep on going for weeks, so don’t get run over going short-term short. This kind of momentum should drive the VIX under 20 before long. That would signal near-total complacency in the face of economic fundamentals whose only parallel, and there can no longer be any dispute here, lies with the Great Depression: link to pdf from Sprott Asset Management.
I have bought a lot of puts today. Doesn’t really matter on what — we are back to “all the same market.” This is the silly phase.
I still love GE as a potential disaster in the making, with lots & lots of liquidity in the long-dated OTM puts.
It’s really simple, we needed this comical up in the market to pile up enough energy for the next PUSH down …. what is amazing to me is that people don’t get the manipulation:
1. Lower earnings estimates to really low levels.
2. Companies apply financial shenanigans by applying orders from Q3 and Q4 into Q2 and lay people off / cost cutting
3. Eh volia .. they beat the estimates after 6 months from the “crash” when people have enough time to forget about hte miserable Sept/ Oct / Nov 2008 they had etc..
Result: Rally!!!!!!
Cramer says stocks will spiral up!
Analysts say Dow 12000 or 14000 in 2010!
Unemployment headed to 12%, Alt A Mortages to blow up, Commercial Real Estate coming down the road … ah, this is going to fun to see Cramer on the Comedy Channel again!