Join        Login             Stock Quote

Naz Vs Financial Bubble

 February 22, 2013 12:16 PM

Many analysts like analogs and I admit I like them too. In writing a recent Barron's Online column on financials, I looked at how that bubble compared to the one before it and saw something interesting. Unfortunately, it was left on the cutting room floor. Here is what I wrote fleshed out a bit more.

Before looking at the chart, I have to tell you that the time frames do not line up. In other words, the tech./Nasdaq collapse in 2000 took about 2 1/2 years and the financial collapse in 2007 took only 1 1/2, both rounded a lot. Therefore, in order to get the ebb and flow to match, the data for one of them is stretched to fit the other.

[Related -Death Cross More Of A Buy Signal?]

The point is not to say they are following the exact timing but rather they are following the same structure. Is this how bubbles work? I don't know and honestly I am too busy trying to earn a living (journalism deadlines) than pursue this all the way.

But it is interesting.

So what is in the chart? Basically, the financial bubble recovery, based on what the Nasdaq did, "should" have already peaked. I'll blame the government for prolonging this thing with QE/TARP and all the other money they threw at the problem instead of letting the free market clean its own house.

Think about the broad market back at new highs. What 2007-2009 bear market? But not so for the financials with only a Fibonacci 38.2% (closer to 30%) retracement.

[Related -Key Price Planning Levels Updated for Chipotle]

After the 2000-2002 bear, the Nasdaq in 2007 only retraced a 38.2% (actually closer to 45% but it ruins the flow). Where was the broad market? At or near new highs and saying "what bear market?"

The bubble markets retraced less than half while the rest got it all back.

Under this scenario - without any true statistical backing - it is time for the financials and the market as a whole to top out again.

Wouldn't it be cool to see the current bubble - bonds - follow the same script? If they do, then there is a lot of pain ahead for the next two years.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageDeath Cross More Of A Buy Signal?

With the recent weakness in the equity markets, many stocks' and stock indices' chart patterns have traced read on...

article imageKey Price Planning Levels Updated for Chipotle

After a huge price surge from $600 to $760, Chipotle (CMG) shares retraced to a critical “Make or Break” read on...

article imageChina Growth and Market Structural Integrity Top List of Fear Poll Concerns

After a hiatus of almost a year (the October 2014 pullback, to be exact), I have reprised the VIX and More read on...

article imageIs The Treasury Market Still Expecting Moderate US Growth?

The roller-coaster ride in global markets in recent weeks has raised new doubts about economic growth in read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.