This Rally Ends In Panic

Your daily reminder that things are not as the stock market is making them seem.

Pardon my bi-polar thought process, but when not contemplating if it “really is different this time”, I can’t help but have visions that we are in the late stages of a market blowoff top that, as I have detailed this past week, is being driven less by fundamentals and more by mechanical options activity, concentrated speculation, and a level of complacency that tends to emerge near the end of major asset bubbles.

I wrote earlier this week that this obviously no longer resembles a traditional bull market fueled by earnings growth, broad economic expansion, or rational price discovery. Rather, this rally — with the NASDAQ tripling off Covid lows and rallying 37% in the last twelve months — feels like a frat guy bumping lines and ripping shots of Jagermeister on a 3rd story frat house roof while screaming gravity is “FUD” and a myth invented by bears and naked short sellers. What could go wrong?