I don’t know and you don’t either. Instead, let’s discuss “What If?”
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 routine 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
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
The chart looks like the S&P 500 daily chart except there is better-formed normal head and shoulder pattern.
Many charts look the same. It’s been a case of “just buy, everything going up” for many charts.
Nasdaq 100 Weekly Chart
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 lack of talk about recession in the discussion forums. And I have not seen any recession articles either.
- There’s little talk about major jobs 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 widespread belief of a recession in 2023 or 2024.
AI Bubble Talk
The difference between now and 2000 is 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 consumptions 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?
Not yet, patience grasshopper… The AI bubble is still growing…
But when it bursts the shit will hit the fan and the whole world will look like Pam Bondi’s nose.
Do not forget that the market can remain irrational longer than you can remain solvent ~ if you are shorting it!
If unemployment accelerates then 401k flows reverse and then the algorithm if money buy reverses sharp and quick. VOO smack down. Many boomers will exit as well. Smack down Charlie Brown!
Should be exciting. WMT earnings tomorrow with TGT both below 50dma already.
Was that the top of the SPX? By fractaI analysis in the 13/33 year 1982 to 2026 macroeconomic cycle, I think so, although the actual 28/29 Oct 2025 date of the
SPX/ACWI peak valuation was not prospectively predicted.
If the president, with congressional approval, were to issue the promised quasi jubilee payment of two grand(with his signature on the treasury check) to ?each citizen? taxpayer in the population of lower 80% of American incomes to offset his tariff/trade/ally/decimated small business policies with the primary intent to help his prospects in the midterms(how socialist is that?), the electronic money/credit generated might (but doubtfully) propel the US composite equities to reach a higher high in this 1982 to 2026 13/33 year :: x/2.5x large scale macroeconomic cycle. Besides causing a surge in inflation, the 2000 dollars (I would legislate 400 upfront and promise 1600 after the election – if the republicans retained the house) would help Google’s and Meta’s advertizing, Toyota, GM and Ford car down payments and Apple I-phone, Amazon, Walmart, Home Depot, et. al sells. … with not so much help for the AI Industry with its 1.2 trillion of debt and 95% of profitless AI enterprises.
The asset-debt macroeconomic system and its boom-bust cycles can be defined by on varying time scales: hours, days, weeks, and years by its intermittent and long term asset easily identifiable valuation peaks and nadirs of its easily tradeable asset classes (with cycles of saturated buying and saturated selling with respective lesser peaks and nadirs on the smaller time scales). Before the time of equities and stocks, historical commodities valuation peak to nadir cycles were/are retrievable. Governmental currency electronic debt/credit creation, private bank fractional reserve lending to individuals(state banks with state currency/credit running up to the panic of 1837), and corporations and issuance of corporate debt expands the money supply – together all yield the day to day composite valuations of all asset classes. With the 6-15% US governmental deficit-GDP spending, MBS QE, ongoing bank issuance of individual and corporate debt, and accelerated corporate AI and crypto bond issuance for investment over the last 5 years(with .. much worse … Chinese corporation and local government debt at 172 % of GDP), higher high equity composite, (eg. the SPX) peak valuations are identifiable. But if the actual GDP contracts because of individual/corporate debt distress/default (E.G. Enron, Lethman Brothers, subprime mortgages, student and credit card loans defaults) accompanied with growing unemployment, equity asset valuations qualitatively and historically decline.
Does the growth and decay of equity composite valuations under the above parameters occur in a highly defined self-ordered quantum (fractal)manner? Today, 19 Nov is day 106 of a x/2x-2.5x :: 53/106 to 132-133 day of a 7 April 2025 SPX first and second fractal cycle. Starting. tomorrow, days 107 to 132-133 are in the 2X-2.5x window of 2nd fractal nonlinearity. Will there be a nadir on day 132-133 of the 2nd fractal? Is this gobbledygook? Take a look at the daily fractal groupings from 7 April. You decide. Everyday of trading valuations offers new objective data. The ongoing quantum fractal models must be consistent with the objective data.
Stocks broke coinciding with the huge inflection point in money flows in November. Its downhill from here as we are entering a recession in the 1st qtr. of 2026.
You wonder what the FED is going to do to stop it.
“In statistics and econometrics, a distributed lag model is a model for time series data in which a regression equation is used to predict current values of a dependent variable based on both the current values of an explanatory variable and the lagged (past period) values of this explanatory variable.”
Contrary to Nobel Prize–winning economists Milton Friedman and Anna J. Schwartz’s “ A Monetary History of the United States, 1867–1960, “there is no “Fool in the Shower”. Monetary lags are not “long and variable”. The distributed lag effects for both real output and inflation have been mathematical constants for over 100 years.
“Fisher’s Purchasing Power of Money as well as the work of Pigou and Marshall were the basic building blocks for later students of monetary economics.”
“The theory of distributed lags is that any cause produces a supposed effect only after some lag in time, and that this effect is not felt all at once, but is distributed over a number of points in time. Irving Fisher initiated this theory and provided an empirical methodology in the 1920’s”
“Friedman and Schwartz (1963) “Money and Business Cycles” showed that NBER specific cycles in money growth preceded NBER reference cycle turning points, that the degree of severity of business cycles was closely correlated with the amplitude of cycles of money growth , and that evidence contradicted the view that cycles in money growth were mainly a lagged response to changes in the business cycle.”
I.e., Marcus Nunes, Shadow Stats, TMS, and Divisia Aggregates all use the wrong lags.
We live in a predatory society. And the American Bankers Association is public enemy number 1.
Gee, I thought the billions, maybe trillions poured into AI will save us. But who knows that may be the primary cause of our next world wide depression.
When you stand back a ways it looks like a WIle E Coyote market. If are old enough to remember Wile, then you should ready for what happens when you look down.
How about tulip bulbs for sale.
Market by ACME Productions
Been 50-95% cash for over a week now. It’s very hard to trust the market right here, with things having been stretched, BTC/cypro complex under assault, salacious headlines driving daily moves, and unpredictability in the Oval Office.
The easy gains are long gone, I don’t mind sitting in fiat for weeks at a time waiting for signals.
The explosive upwards move of the boring utility sector would seem to be just one more warning sign that a flight to safety is quietly occurring. Do ai energy demands alone explain such a large jump in this sector?
https://finance.yahoo.com/quote/XLU/
Hey I was rando well before it was cool, 30+ years ago bub. This is my corner LOL
*trademark dispute intensifies* 🙂
Investors have never had more ways to place complex wagers on crypto. In some cases people can put down $1 of their own money to gain exposure to $100 of bitcoin.
Regulated institutions and fast-money traders alike are now pushing complex strategies such as options and futures, so-called treasury stocks and even crypto lending.
This type of leverage is crazy.
WSJ has an article on easy crypto leveraging that is occurring
This made me think of the massive leverage and the collapse of Bear-Stearns and Lehman Brothers.
I’ve been getting that ominous feeling I’m picking up nickels in front of a steamroller
Wheres papa dave
I still drop by now and then, but I have been too busy recently.
I have time to make a few remarks regarding markets and the economy:
After watching Trump’s tariffs and flip flops in the first 6 months of the year, I called for a recession by the end of this year. My first recession call on this blog. I could be a bit early in my call. The massive AI spend has probably helped prevent the recession from hitting so far.
Starting in August, I began raising my cash position. I have raised it from 20% in April to 40% today.
Still heavily invested in many Canadian oil stocks. Making a bundle on them. Selectively sold some of them to raise that cash.
One of my favorites; Meg; got bought by Cenovus.
Still liking Whitecap, Tamarack, Cardinal, Headwater, Athabasca, Peyto, and other small and midcaps. Even like the larger caps, like Canadian Natural, Suncor and Tourmaline.
Where do you hold your cash positions?
Mostly mmf. Don’t like sweeps, treasures or cds.
Just wondering, since it seems holding cash in treasury bond ETF pays a little more with lower cost.
I would assume you’re getting a similar MMF rate as my Fidelity account which is currently 3.67%with a .42% expense ratio. And your MMF is heavily invested in treasuries.
However, my SHY (1-3Y) holding are currently paying 3.85% (TTM) with a .15% exp. And my SGOV (0-3 mo) is @ 4.21% (TTM) with the same Exp Ratio.
Yes, a recession could start in Dec.
“Starting in August, I began raising my cash position. I have raised it from 20% in April to 40% today.”
I like that, increasing cash. Calling the recession is quite challenging nowadays. More to follow.
Cash turns to trash when inflation, devaluation and a bankrupt FDIC get figured in. Got gold?
Gold like the stock market is currently overvalued.
You do understand why PapaD is raising his cash position? He thinks a recession is getting closer? Any good investor will pare down their laggard positions, if they expect a recession to arrive in a reasonable amount of time.
It seems like likely that the market has more downside to it than racing ahead. Of course all of this could spin on a dime, if somehow the jobs number start to brighten or if inflation at least plateaus.
Mish part of that high end might be the boomers living of those 401 ks.
Everything seems to be sinking are people just sitting on cash or am i missing something
This Boomer is living off of the IRA and the dividends and bond interest actually. The IRA is still going up even with the withdrawals.
I had to rebalance twice this year as the stock portfolio kept outrunning the target.
How does the flow of 401K funds impact the markets? Athough a small fraction of the population contributes, high income folks do and again next year can increase the contributions. And when do the withdrawals offset the contributions or does that never happen. Bottom line how much is that contributing to stock market increases and possible over valuations.
There are minimum required withdrawals, but no minimum required contributions. The 401K system has an asymmetry that can lead to prolonged selling or forced contributions to stabilize it. Many people won’t be happy.
I don’t know if the markets have peaked, but when I’m browsing the comments over at Breitbart, there are a lot of unhappy MAGA folks with Trump right now. So while I know you won’t reconsider this blatantly false, cart blanche statement, you really ought to, Mish:
“The MAGA crowd still believes everything Trump says, at least publicly.”
The last I checked, the Breitbart comments sections are public, and there’s a lot of H1-B visa rage going around trashing TACO. Making this kind of statement reminds me of that never say never reminder.
And finally, I’m pretty sure that I’m MAGA, and I routinely bash Trump here on your site. You might want to spend some time over at Breitbart’s comment section.
Let us know what you think, okay?
WRONG! If you’re bashing Trump then you are NOT MAGA just ask MGT or Tucker or Nick. True MAGA never ever questions anything Trump says or does because Trump is MAGA. All the Breitbart complainers aren’t MAGA either. Now you know how fascist regimes work and you’re finding yourself on the outside. Trump would call you a RINO or maybe a liberal or maybe something else insultingly.
Congratulations though, you’re starting to finally think for yourself and it only took 10+ months but you got there.
Trump is not MAGA!
Amen, Ben. Many of us see Trump has lied about being America First, about being the peace candidate, and about being the one who would expose the CIA/FBI’s secrets and evil deeds. Alas, he was the only choice the ruling class permitted us.
Liar, You had choices, you could even write in any natural born citizen over 35. You are either a cult member or you just wanted to be on a winning side or it could be you are just as insane as the rest of the cult. That’s as kind and civil as I can be. Thank you for your attention.
okay, bring back the Birdbrain Biden regime
Careful what you say and write publicly, you may get canceled in the cult.
The 80 day cycle in the SP500 has been fairly regular. The last low was early October 10, 2025. The next low is expected December 17th – 19th. Given this 80 day cycle has broken the support line of the previous 80 day cycle and is about half way done indicates a correction or reversal, Today’s price activity retraced more than 80% of the rally out of the October 10th low, giving strong evidence of a topping larger cycle.
But I think the strongest evidence is anecdotal. I was shopping for clothes and two men in their late teens or early 20’s were talking about the stock market. One was feeling a little skittish and either sold or wanted to sell. The other was holding for the long term. He taunted the first man, “They are playing with you. They are dropping the price so you will sell and they get your shares for cheap.”
The dialog fits the shoeshine boy meme Joseph Kennedy Sr recalled in 1929: When people with no connection to high finance start giving tips, the market is near a top.
Ask the AI Weisenheimer thingy.
Given lots of recent press reports it wouldn’t be a surprise. Don’t crashes usually come out of know-where? Maybe there’s been so many false calls no one believes it’s possible anymore. Who knows?
One problem with the analysis is the measuring tool, the dollar, is not constant; it is shrinking in value which gives the charts an upward bias. The link is to an S&P500 chart priced in gold. It shows the peak occurred during the tech bubble with the next bottom following the great recession. there is a clear head and shoulders pattern centered around the end of 2021, and it has been downhill since around summer 2024
I would not build a house with an elastic measuring tape, nor do I believe measuring anything economic with a fiat currency is valid.
You will need to create the chart, I cannot get the ratio chart to link correctly
You can find this and similar on the NorthstarCharts Twitter channel. All S&P components are in bear markets when priced in gold. There are clear long-term cycles in gold vs stocks, masked for the multitudes by enormous dollar devaluation.
The Fed is ending QT as of December First and that coincides with lowering interest rates. They see the softening labor market even with over a million deportations and that implied loss of productivity and economic activity. Considering that these workers have no savings and spend everything they earn, it is like taking the fertilizer out of the financial crop. Gutting the base of the feeding chain is unwise in any financial system or eco system.
As Falls Wichita so falls Wichita Falls.
We are looking at a flood of new liquidity from the Fed if there is even the slightest faltering. Not an environment for a strong dollar, but since the dollar is now is a weapon, it is also a target.
This would be a spectacular environment for gold and mining companies but often all ships sink in a falling tide.
We have the perfect storm forming. Commercial real estate was kicking the can down the road with extend and pretend on $1.5 trillion in loans. It was slowly recovering after COVID and work from home but now AI is eliminating white collar jobs across the board…ooops there goes CRE again down the tubes.
Residential real estate bubble has popped and it’s ugly out there with no sales. The AI tech bubble seems to be popping and Burry’s depreciation observation may turn it all into a giant financial scandal.
Add to it private equity defaults in subprime and other areas and now counter-party risk with collateralized debt obligations are growing. Read something about insurance defaults today that looked scary.
Inflation, unemployment rising, boomer retirements increasing, and a shrinking population round out the catastrophe decades in the making.
Welcome to Trump’s golden age.
Like I’ve been saying, it’s going to get real ugly but some of us have plans for it all.
> but some of us have plans for it all.
Key point. Never let a good crisis go to waste. And many or even most most still unaware of the century old background plans or simply don’t care. Human species.
Yes, the Federal Reserve will be in “neutral status” by keeping the balance sheet at $6 trillion. So they will just replace maturing debt like 10 Year Treasury with newly issued debt. That helps the US Treasury some by providing demand for US Treasuries.
Weekly QT has been fairly weak the past two or three months!
Fed scarcely reduced $2T of the $4 T or so covid splurge.
Fed is going to halt and REVERSE QT.
See The Fed’s Balance Sheet Is $6.5 Trillion, the New York Fed Wants More
https://mishtalk.com/economics/the-feds-balance-sheet-is-6-5-trillion-the-new-york-fed-wants-more/
Am I crazy to think “bubbles”, especially in tech? Are any assets in place to support such valuations in the S&P or is it a result of flows from abroad, given the European political instability etc.?
Why is nobody talking about the European instability as a factor of unstable opportunistic inflows?
No call yet on top or continue.
Just to throw more monkey wrenches into the works:
*I like to draw a head and shoulders from a slightly longer time frame than you did which puts the right shoulder as a break below. Standard play is to short when the rebound fails to break the h&s base line.
*Gaps in a trend don’t matter so much. Note there are also, more recent gaps above, to be filled.
*My old mentor said to be careful trading opex and the week or more before. Extrapolating; don’t base trading predictions on opex activities. (luv that guy GRIP)
*If this was real liquidation, there are some rico and insider violations based on premarket and opening market actions. If it was real, there wouldn’t be such an effort to move the market.
David Hunter says one more euphoric spike to 9500. Sounds completely absurd but this guy’s absurd calls always seem to be correct.
Why would a “routine” bear market be 50 percent? Seems a bit extreme.
Except it’s not, especially given the amount of debt and leverage that has accumulated thanks to an EXTREME 16-year-old bull market.
point taken
Mainstream western economists assert infinite growth and inflation. The stock market will never peak, in the long run it’s a vertical asymptote and has no max. ( if you believe them )
How about they stick a 1% tax on every share traded? That would help a lot of stuff eh?
peaked? if it has or has not the writing is on the wall American Decline in Three Parts
https://substack.com/home/post/p-178818576
What few are talking about are the defaults happening in the background in private equity and credit default swaps (video below). This is how the GFC started and 1 year later it was total chaos. I think we’re on the same/similar timeline and have always stated 2026 was going to be rough for all assets across the board including real estate, CRE, bonds, stocks and maybe metals.
https://www.youtube.com/watch?v=Syagp5YsqLQ
I think we’re close to a peak but the Fed could surprise by doing a 50 or higher basis point cut and send markets shooting up but it will be short lived. Too much debt and defaults will derail the train.
I think private equity is seeing some circular trades at fakey valuations, to keep the investor money in the corral, and lure in new money.
In publicly-traded equities, for the moment we are seeing some dip-buyers. There is still a lot of loose cash sloshing around looking for yield or a bigger fool.
Is it really a Ponzi if your investors are demanding returns?
The addict has developed quite a tolerance over the decades. Not many good veins left.