Friday, March 3, 2023


What all bulls need to learn the hard way is that in Ponzi markets there is no strength in numbers...

A head and shoulders top is now clearly visible in Semiconductor stocks, Internet stocks, and the World ex-U.S.

As we see via semiconductors below, the left shoulder which took place in Q1 2021 marked the Gamestop pump and dump and the top for Emerging Markets, IPOs, SPACs and Ark ETFs. During that selloff the hedge fund Archegos exploded.

The head took place in late Q4 2021 and marked the top for all of the major U.S. averages. That was the beginning of the global bear market. As we see below, the first leg back down to the neckline saw the largest breadth collapse in Nasdaq history (bottom pane). And the bear market low saw the FTX explosion.  

Which brings us to the right shoulder. What I call "System Test 3.0".

The high yield spread which is a proxy for risk appetite is highly compressed as it was pre-pandemic crash.

The left shoulder for internets goes back to March 2020.  

The left shoulder for the World ex-U.S. is the same as it is for the Internets above. March 2020.

My Geometric index equal weights the largest cap Tech stocks in the market. On the left shoulder these stocks were consistently above the 200 dma. On the right shoulder, they are consistently below the 200 dma. They have become consistently more overbought on Momentum (MACD) all the way down.  

These are basic facts that bulls are ignoring. 

The Adani crisis started on the right shoulder and is only the very beginning of meltdown for Indian markets. 

Bitcoin became extreme overbought on the left shoulder, now it's imploding again on the right shoulder.

Bulls never gave an explanation as to why markets rallied into the pandemic lockdown. 

This time, they will have even less explanation as to why markets rallied into a global depression.

In summary, only someone with zero commonsense could trust these markets. Hence, they are largely unquestioned.