Methodical Approach To Another Bubble.

Methodical Approach to Another Bubble.

Publishing our form of research to a new forum, requires some introduction. For our new readers.

Our initial post was “Checklist For A Top”. Which is a methodical approach to the ending action on yet another great bubble in the stock market. It worked for us in 2007 and in 2000. Understandably, the “Checklist” has not been published that often. It a methodical way to identify the climax of a financial mania.

The establishment still insists that a bubble can’t be identified until it is over.

This week, Mauldin again reviewed a “Minsky Moment” as well as another writer on the subject. The article did not include anything about the key events that mark the start of the contraction. The other writer noted that “There are no new eras”. Yes, there have been new financial eras. Indeed, in real time they have been called “New Eras”, because winning reckless behavior displaces fiduciary responsibility which becomes a losing strategy. And they have lasted long enough to be celebrated as permanent. The reason that they have been called “New” is because they end—always dramatically. Then, over time collective amnesia allows another one to brew up.

The key question was and is: “Is the market up when it should be?”. The answer is “Yes!”.

The next question is: “Are there signs of speculation?”

Our ChartWorks technical research is unusually thorough and the June 5^th “Special” on Microsoft noted the Upside Exhaustion. Also included was a list of some 80 “High Flyers” generating similar excesses.

This speculative surge is timely and measurable. As will be the consequent contraction.