Image Source: Unsplash
 

I don’t know, and you don’t either. Instead, let’s discuss “What If?”
 

S&P 500 daily chart courtesy of StockCharts.Com, anecdotes by Mish

Daily Technically Speaking
 

Other than to say valuations are the most stretched in history, I don’t care to discuss fundamentals.

Technically speaking, there are four open gaps below, multiple tests of a horizontal trendline at 6600, and a normal or slanted head and shoulder topping pattern (both valid).

In bull markets, head and shoulder patterns routinely fail. So, has the bull market finally ended? Only history will show.

But if it has, we can set some reasonable downside targets. All four of those gaps will fill. And then there will be a test of support somewhere in the 4800 to 5200 range.

S&P 500 Weekly Chart
 

S&P 500 weekly chart courtesy of StockCharts.Com, anecdotes by Mish
 

On the weekly chart, there is a huge gap at 5600-5800 begging to be filled.

Support is at 5100, 4800, 4000, and a broad range of support between 3500 and 3650 or so.

A routine bear market would be a 50 percent decline. That would be a decline to 3450. Timewise, that would only take things back to October 2022.

That’s another indication of how overbought and overloved this market has been.

Nasdaq 100 Daily Chart
 

Nasdaq 100 daily chart courtesy of StockCharts.Com, anecdotes by Mish
 

The chart looks like the S&P 500 daily chart, except there is a better-formed normal head and shoulder pattern.

Many charts look the same. It’s been a case of “just buy, everything is going up” for many charts.

Nasdaq 100 Weekly Chart
 

Nasdaq 100 weekly chart courtesy of StockCharts.Com, anecdotes by Mish
 

No surprise. The Nasdaq 100 weekly chart looks like the S&P 500 weekly chart. Support levels are much different, though.

Support levels are at 17000, 14000, and a range of consolidation support at 11000-12000.

A 50 percent retracement would be to 13100. I expect more downside in technology. Taking everything back to October of 2022 would be a 60 percent decline.

60 percent on the Nasdaq would be a routine bear market decline.

Have the Markets Topped?
 

You tell me.

But I gave you very routine targets if they have.

Warning Signals
 

• What’s interesting now, though, is the lack of talk about recession in the discussion forums. And I have not seen any recession articles either.
• There’s little talk about major job losses except in this corner.
• The MAGA crowd still believes everything Trump says, at least publicly.
• The VIX volatility index is just now starting to rise.
• The 30-year-long bond action hints at stagflation.

In general, I get no sense of fear. Nor do I see any “this is it” calls. This is in stark contrast to the widespread belief of a recession in 2023 or 2024.

AI Bubble Talk
 

The difference between now and 2000 is that many of these companies have solid earnings.

But trillions of dollars of circular investment on no current earnings tells the story.

On October 13 I asked Is Nvidia Worth More than the Entire GDP of Germany, India, or Japan?

Yes, regarding India and Japan. Germany is close.

On October 30, I noted Circular Investment Deals in AI Look Similar to the Dot-Com Bubble

Please buy my product, and I’ll use the money to buy yours.

AI investment and high-end consumption are the only things holding GDP estimates high. I re-crunched the numbers on the AI contribution to GDP and will do a post shortly.

Finally, if the stock market does tank, that will kill a heck of a lot of demand on the high end.

That’s a lot of ifs in this post. Feelin’ lucky?

More By This Author:

Do Tariffs Cause Price Hikes? Studies Say Yes and No
Fed Vice Chair Blames Tariffs For Lack Of Progress On Inflation
What Should We Make Of The Biggest Trump Tariff TACO Yet?