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(Click on image to enlarge) 

(Click on image to enlarge)

For the first time in what seems like forever, the market corrected over the last 7 trading sessions. The leading Nasdaq-100 (QQQ) – dominated by The Magnificent 7 – lost 5.5% over that time period. At first it looked like a bullsh rotation and broadening of the rally into the smaller stocks in the S&P 500 as represented by the S&P Equal Weight (RSP) and the Russell 2000 index of small cap stocks (IWM). But both of those indexes gave back a significant amount of their recent gains over the last three trading sessions.

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To bulls, it looks like a garden variety correction. For example, Uber-bull Tom Lee is calling for small caps to rally 40% over the next 10 weeks. But to perhaps the second greatest bear in investment history – after Jesse Livermore who made $100 million shorting stocks in October 1929 – Universa’s Mark Spitznagel it looks like the beginning of the end of the “greatest bubble in human history”. (Spencer Jakab profiled Spitznagel’s views for WSJ’s Heard on the Street on Saturday: “Is The ‘Greatest Bubble’ Ending?” [SUBSCRIPTION REQUIRED]).

While Spitznagel thinks the bubble will continue to inflate for a few more months due to a likely Fed rate cut in September, one sign that we are close to the end is the capitulation of the last bears. Morgan Stanley’s Mike Wilson turned bullish in May after being removed from the firm’s global investment committee. And JP Morgan’s Marko Kolanovic recently lost his job. This is similar to when Merrill Lynch’s bearish strategist Charles Clough left the firm in late 1999.

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What should you watch for for confirmation that this is indeed the end? The first thing that is likely to happen is Nvidia (NVDA) – the market’s leading stock – breaks down below its 50 DMA. After that, it shouldn’t be long before the entire Nasdaq-100 (QQQ) follows suit. If the Equal Weight S&P (RSP) and the Russell 2000 (IWM) recent moves prove to be “false breaktouts”, that would likely confirm the beginning of the end.

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