It’s a huge warning when good news is smashed.
Question of the Day Yesterday
Will Nvidia be sell the news?
I never properly asked and did not vote. I meant judging by today, not yesterday’s after hours results.
Today, the answer is yes.
Amusing Morning Headline Hoot
Investing.Com changed that headline multiple times today, but kept the same link.
And it was not just the headline that changed. So did the contents.
Here’s an amusing paragraph that Investing removed.
“The market is very eager for a year-end rally and therefore is filtering news through that prism, and therefore the bulls/doves are likely to win the argument (at least for now),” said analysts at Vital Knowledge, in a note.
Huge Sell the Good News – S&P 500
In about 90 minutes, the opening enthusiasm collapsed.
This is the kind of action one sees at market tops. But is this the top?
Have the S&P 500 and Nasdaq Stock Markets Peaked?
Two days ago, I asked Have the S&P 500 and Nasdaq Stock Markets Peaked?
I don’t know and you don’t either. Instead, let’s discuss “What If?”
My answer today is the same as two days ago other than to say it’s more likely now.
The market is insanely priced and has been for a long time. But one should not argue with bull markets.
It’s a very bad sign when good news is sold. What more even better news is coming?
If the top is in, click on the above link to see my sobering targets.
And regarding Nvidia and AI, please see 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.
Recall Lucent’s lending of billions of dollars to upstart telecom companies fueling Lucent’s growth.
When the financing went bust the scheme crashed.
Now, AMD is paying OpenAI to be a customer, albeit in a different way. The same is going on with Nvidia and OpenAI. But at least it’s not debt financed.
This indicator always works:
CNN’s Fear & Greed Index was at 7 today (that’s in a range from 0 to 100). In this case it was sitting at Extreme Fear. This almost guarantees a good sized rally within a couple of weeks at most. This index closed today at 11, representing a moderate move up in the mkt. The Index is still in Extreme Fear region. This index has never failed me in the last 15 years.
There is no economic sense behind Nvidia’s results. On the contrary, its results are a sign of a bubble in AI rather than alleviating the concern for one. This uneconomic spending is now showing in other parts of the computing components industry as well. OpenAI recently committed to purchasing 40% of the world’s entire supply of RAM, not because it actually needs that much but it appears mainly to make it more expensive and difficult for competing AI players to build out their own infrastructure. These competitors have been catching up to OpenAI in terms of the product and Open AI has been pulling all the stops to try and hinder their progress.
In the meantime, this move has caused memory prices to jump by a factor of almost 2.5x (based on my own observations) in a matter of a few weeks. This will in turn cause a significant rise in the price of computers, servers and mobile devices over the coming months.
The crazy part is that none of this the result of organic demand for AI services. It’s nearly all due to the AI bubble situation.
The market is now finally starting to understand what is happening and is getting nervous… and the result is being reflected in recent market action.
5X leveraged ETFs are coming, including for Nvidia. What could possibly go wrong….
https://www.ainvest.com/news/volatility-shares-files-5x-leveraged-etfs-tesla-nvidia-bitcoin-ether-2510/
Nothing changed in over 100 years. The volume and velocity of money flows, both short and long term have crested. Monetarism has never been tried.
There is a “sweet spot” where the RoC in money flows is robust (increases real incomes as opposed to inflation).
Monetary policy objectives should be formulated in terms of desired rates-of-change in monetary flows, relative to RoC’s in R-gDp. In juxtaposition, R-gDp is the nominal anchor (“not the nominal price level or its path”).
Only price increases generated by monetary demand, irrespective of adverse changes in supply, provide evidence of Central Bank inflation. There must be an increase in aggregate monetary purchasing power, AD, which can come about only as a consequence of an increase in the volume and/or transactions’ velocity of money (total checkable deposits and/or debits to depositor’s accounts).
It’s stock vs. flow. There are 14 trillion dollars in savings/investment type accounts impounded in the commercial banking system.
During the U.S. Golden Era in economics, the thrifts promoted a higher money velocity, and a higher mix of R-gDp. Whereas lending/investing by the DFIs is largely for existing assets.
The Fed is driving the economic engine, the savings-investment process, in reverse.
It’s not the kind of argument that would garner support from any peer group.
Link: Philip George: “The riddle of money, finally solved”
“For nearly a century the progress of macroeconomics has been stalled by a single error, an error so silly that generations to come will scarcely believe that it could have persisted for as long as it has done. It is an error that has been committed by John Maynard Keynes and Milton Friedman, John Hicks and James Tobin, Franco Modigliani and Ludwig von Mises, Murray Rothbard and Paul Krugman, and continues to be taught to every economics undergraduate today.”
“The error has blinded economists so that, like the seven men of Hindostan, they have mistaken the partial reality that has come within their groping grasp for the whole of reality. And this in turn has divided them into warring sects, looking very little like practitioners of a science and a lot like religious fundamentalists. Keynesian has poked fun at monetarist. Monetarist has ridiculed Keynesian. And both have mocked Austrian and been mocked in return…”
But the error was first discovered by Leland J. Pritchard, Ph.D., Economics, Chicago 1933. And Pritchard said the same thing George did over 30 years earlier.
Lending by the nonbanks is noninflationary (using pre-existing deposits), as opposed to lending by the commercial banks is inflationary (creating new deposits).
Moving forward, if people have to choose between investing in the stock market via 401k / brokerage accounts or paying the higher premiums on health insurance, I think most will likely choose the health insurance. The stock market may die by death of a thousand cuts.
This is one of the subtle consequences of those subsidies going away.
I’ll take the other side of that bet. I think most would instead invest in the stock market (esp crypto/gold/AI stocks) instead of purchasing insurance they may not need (chronically sick will of course get insurance but 95% of the population is not chronically sick and young people especially feel like they are never going to be sick).
This is exactly why the conservative Heritage Foundation (which had promoted an ACA-type of insurance before Obama came around) wanted to require all people (including these young gamblers you reference) to buy private health insurance – to be able to rid of system of government programs but to also avoid the moral hazard of people being bootstrappy before they got sick and then pleaded for federal assistance afterwards
The former Lucent corporate campus in Naperville is being turned into a data center.
History repeats itself, first as tragedy, then as farce.
Ditto the Avaya (Lucent spin-off) building in Westminster CO…not data center related, but “price-apocalypse” related
“Huge Westminster HQ sells at 65% discount”
https://www.denverpost.com/2025/11/18/vantor-maxar-headquarters-westminster-sold/
“Recall Lucent’s lending of billions of dollars to upstart telecom companies fueling Lucent’s growth.”
Lucent’s vendor financing scheme is a good analogy, but the overbuilding of fiber networks and bandwidth after the 1996 Telcom Act is an even better one: Level3, Global Crossing, WorldCom, et al. The analogy would be Telcom Fiber was to the 2000 market crash as “IA /Quantum Compuing & Chips” is to the YYYY market crash (TBD).
Furthermore:In the 1990s, bandwidth trading emerged as telecommunications companies sought to capitalize on the growing demand for internet services following the deregulation of the industry. This led to a surge in new companies and significant investments in fiber optic networks, but ultimately resulted in a market bubble that burst in the early 2000s, causing substantial financial losses.
Go back even further, and it was the overbuilding in railroads. The overbuilding of railroads in the United States contributed significantly to financial crises, particularly during the Panic of 1873, when excessive investment in railroads led to bankruptcies and a broader economic panic. This pattern was repeated in the Panic of 1893, where similar issues in the railroad sector triggered widespread financial instability.
+100
Excellent points and review of a history that does not repeat, but sure does rhyme!
One of my all-time favorites: Montana Power Company (MPC), a company that owned coal-fired power plants, sold off their plants and purchased railroad right-of-ways in order to lay fiber. This was around 2000 or 2001.
Immediately thereafter, the price of fiber internet collapsed.
Enron also happened, and the price of electrical power skyrocketed.
MPC went bankrupt.
They went into the exact wrong business just prior to their own business becoming extraordinarily profitable.
How bad of business people do you have to be?
5 year CAGR (Nov 2020 to Nov 2025)
S&P 500 : 11.5%
S&P 500 minus Magnificent 7: 3.3%
Magnificent 7: 28%
It is literally a handful of companies driving things along with stock market gains. Valuations are ridiculous again and not sustainable. Feels like early 2000 again.
Agreed 100%.
Todays reversal was brutal and caught traders unaware as it struck without any particular news or headline. How whoever knew to hit the sell button all at the same time is anyones guess and smacks of market manipulation. Without a credible SEC or DOJ it will never be investigated, much less known.
Perhaps it was as simple as leveraged Bitcoin holders getting liquidated all at once?
Of great interest to me was the way that gold held up and the mining stocks were sold off. It was quite a contrast.
Of particular interest for gold traders is the December futures/options expiry on the 24th of November. This is a large physical delivery contract and it has been trading since 2020. Many contracts are “in the money”.
For over a decade options expiry is met with a wall of paper gold being sold to suppress the price.
Traders should be aware and prepared for the hazards ahead.
Got VIX?
The last nominal 40 day cycle looks to have run from October 10th to November 18th. It closed barely higher than it started and broke support lines from the previous 40 and 80 day cycle lows that ended October 10th. Today’s gap was the move out of the old 40 day cycle low. The crap is very concerning because it closed below every trading day in the previous 40 day cycle.
In terms of E-waves, I believe the start of the last major motive wave was October 2022. The tariff tantrum this past April was smaller wave 4 with the end of wave 5 in October 2025. The first move into early November 2025 has the stair step and 5 segments of a motive wave. Intraday charts show several wave 2 flats correcting downward moves. There is still a valid count of a corrective triangle to the downside, which would imply one more new high and then the bear market begins.
Combining hurst and e-waves favors a top rather than a corrective triangle.
And don’t get me started on Bitcoin. The price is falling a lot faster than I expected.
Go ahead – interested in Bitcoin
Are we now in 3 of 1 Ewave (with 4 and 5 of 1 to come)
If so, just getting started. 3 of 3 is the biggie.
On-chain data shows that Bitcoin’s recent 30% drop—from its October 2025 peak of $126,250 down to ~$89,000—was driven by ETF outflows, extreme fear among short-term holders, and thin liquidity conditions. These signals suggest a classic “capitulation” phase.
The Short-Term Holder SOPR (STH-SOPR) for Bitcoin has recently fallen to around 0.97 in mid-November 2025. This means that, on average, coins held by short-term investors (those holding BTC for less than 155 days) are being sold at a loss.
I just heard “billions of dollars being dumped into AI now account for 40 percent of US GDP growth in 2025, with no signs of slowing down. Meanwhile, AI companies have accounted for 80 percent of growth in American stock”
The Big Beautiful Bubble must continue higher or else it the economy collapses. Cut rates to keep it all going. If it starts falling apart, war with Venezuela would serve as a good distraction.
I have hard data on AI and GDP – will do a post
>Venezuela
Now that a Ukraine-Russia deal seems to be imminent despite “coalition of the killing” warmongers tearing out their hair in despair (thankfully, no-one cares) a new action scene is indeed required
“Deal imminent!” Hahahahaha
it will be as successful as the “ceasefire” in palestine / israel war.