Wednesday, December 2, 2020

Sucker's Rally aka. Bull Trap

Don't assume this robo rally is a coincidence, this is the second largest pump and dump since Y2K...

Wall Street is taking full advantage of this fool's rally to dump epic amounts of stock. The same thing is taking place globally.

Hong Kong's IPO market is red hot, featuring the most issuance in ten years. Not to be outdone, the U.S. is heading for the second best year since Y2K, and the best year since Alibaba tanked the U.S. market in 2014:

Two massive IPOs - Airbnb and DoorDash are on tap for next week:

"Airbnb Inc. and DoorDash Inc. earlier this week raised the terms for their initial public offerings as a stock market rally indicated investors might be willing to spend more to boost returns."

Many of the companies that have gone public this year are pandemic plays in the technology and biotech sectors, propelling Renaissance’s IPO index to a 109% gain this year versus a 12% advance for the S&P 500"

The IPO market is more overbought than it was in September when it imploded. Take a look at volume:

Among the many bubbles in this era, semiconductors are also hyper overbought.

Being at the happy intersection of Tech and Cyclicals and hence going up every single day, regardless of rotation to deflation or reflation.

The overall Tech sector peaked back in September, giving us a good wave count:

The equity call/put ratio just reached a new record high this week:

It's no coincidence that all of the bubbles are peaking at the same time. Bitcoin's latest overthrow high is looking like a bull trap:

Just as the Dow's latest high is looking like a bull trap as well. Just orders of magnitude larger in impact:

Semiconductors, the inverse dollar, and reflation expectations are all reaching extreme overbought conditions in perfect lockstep deja vu of September:

When these rollover as one, global risk assets will explode:

Global markets ex-U.S., are deja vu of February 2018, only two months early:

What could go wrong?

"Global stocks face a potential $300 billion headwind heading into year-end: portfolio rebalancing."

"There would be some vulnerability in equity markets in the near term from balanced mutual funds having to sell equities to revert to their 60/40 equity/bond target allocation, either by the end of November or by the end of December at the latest"

This is the stock/bond ratio, which as we see is back at the key level that generated crash the last two times:

"It's called auto rebalancing"

Remember, it's just a hoax: