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Bubbleburst

The Bubble End Game (in terms of the Dow - DJIA)OK, so this I had mapped out quite a while ago but despite my general agreement with the widely circulated May 24, 2021 Dooms Day predictions (in as much as a likely date around which the music will stop ), this (chart)setup was still missing it's trigger . - Until last Friday, that is. That last 15 minutes of trading on Friday, March, 26., 2021 was no ordinary window-dressing! That was a no-holds-barred locking onto the Final Target and simultaneously initiating the count-down, All-in . (By various players and in no small part by Sovereign Public "Investors" - i.e.; Central Banks.) If one examines the Who bought What, How and Why - and why at that exact moment -, the gig is up. - Not that those key players had any place left to hide hence, the notable drama preceding the whole event during the previous 24 hours. (I imagine that by the time of this posting it's all out there so I shall spare the repetition.) At the risk of stating the obvious, the size and enduring length of this current Speculative Bubble deserves (even demands), at the very minimum, at least an attempt to find some still unsuspecting buyers to trap and onto whom to unload as much as humanly possible before the music stops and the silence becomes deafening. - And that means; An Exponential Blow-off Top .... that was the trigger , this picture was missing, until last Friday, that is. (And Yes, last Friday's market close was the first and only trigger , in this particular frame work.) - And since nothing tickles a (historically uninformed) speculator's fancy like a no-rhyme, no-reason, all-in, exponential charge into oblivion... Well, you got it! - Or at least the beginnings of one. So, what is special about Dow 37130-37250, around the 1st week of May, 2021 that would make it a likely Final Price Target ? - Confluences! Providing a (rather obvious) Final Top between Dow 37130 - 37250; ... and potentially close to the much-touted May, 2021 time frame. ... after which, most likely; ... nothing but Gravity. Game on!!...
CBOT_MINI:YM1!
by Nemo_Confidat
5
Nasdaq100; Dump it!!Aside from a total U.S. Market Capitalization that is now in excess of 260% of U.S. GDP (the historic norm, not the low, being 78%!) ... ... and a Doubly Exponential; f(x)=a^(b^x), Central Bank(s) push in equities , up to this point, ... ... and the leverage in the system (U.S. equity markets) now easily the eclipsing all previous records, by any measure, not just in absolute terms!; www.hussmanfunds.com ... and since the current SPAC mania is identical to the South Sea Bubble, in as much as: "Let them see not what they do!" , ... and since the total Market Cap of the top 1500 companies, that were unprofitable for each of the past 3 years, now exceeds $2.5 Trillion, ... and because of charts like these; www.hussmanfunds.com ... and; www.hussmanfunds.com ... and; www.hussmanfunds.com ... youtu.be ... there are numerous (too many to list) other leading-, as well as coincident-indicators which would all suggest that being long here is very unlikely to turn out well. Such as; The valuation of Bitcoin now equates one-fifth (20%) of the entire U.S. Monetary Base ; ... and; ... and; from this post; ... and so on.
CME_MINI:NQ1!
by Nemo_Confidat
15
Tesla buy or sell? Bubble?Reasons to buy Tsla Although electric cars occupy a small portion of the global automobile market, Tesla has acquired a large market share within this niche segment. Tesla has a little less then 1% marketshare worldwide which is impressive for a young car company like Tesla. Especially in the electric segment where it has 16% marketshare in 2019. The company has a strong performance adn the unique design helps the sales. For example the preorder of the Tesla Truck. Also the solar and storage deployments will probably witness significant growth aided by the positive reception of the Megapack and Powerwall products. The delivery of Model 3 has risen significantly, which counts for a big part of the companies overall deliveries since it the best selling car of Tesla so far. Besides Model 3, Model Y is also improving Tesla’s prospects. The construction progress for Gigafactory 4 in Berlin and Gigafactory 5 in Austin are also underway, with production from both plants expected to start this year. With China being the biggest EV market, Tesla’s ambitious production plans in the country bode well. Robust production of Model 3 from the new Gigafactory in Shanghai bode well for its future growth. The Shanghai factory is ramping up well and commands a higher market share in the Chinese EV market. Over a multi-year horizon, Tesla anticipates achieving 50% average annual growth in vehicle deliveries. Meanwhile, low leverage of Tesla offers financial flexibility. Notably, its long-term debt-to-capital ratio stands at 0.31, lower than its industry's 0.54. Historically, from 2016 to 2020 sales of TSLA increased in average of 45% from one year to another, with an estimate of 49% sales growth for 2021 and 33% for 2022. The liquidity and Solvency of Tesla are both scoring good which means Tesla is able to pay of short term as long term obligations. Reasons to sell Tesla inc The company’s high R&D and SG&A costs do raise concerns. During the last reported quarter, R&D and SG&A costs were up both yearly and sequentially. Capex soared 138% year over year and is likely to increase this year as well, thereby affecting cash flow and margins. Tesla's excessive reliance on credit sales remain a concern. In 2020, Tesla posted a net GAAP income of $721 million. Without the regulatory credit sales, the firm would have incurred a loss to the tune of $859 million. Stretched valuation of Tesla is a concern. Going by the EV/EBITDA multiple, which is often used to value auto stocks, Tesla is currently trading at a trailing 12-month EV/EBITDA multiple of 187.9, considerably higher than the industry average of 52.41. The firm’s P/S ratio of 17.3 also compares unfavorably to the industry’s 3.05. Tesla bubble? Based on the future outlook of the industry and the company and considering all the discussion around TSLA bubble, it can be assessed which will be the fair value for the company at the moment. For this, the EPS reported for last quarter was taken and annualised which gives us 0,96$ per share. Based on recent developement and estimation, it is forecasted that Tesla will have an annual growth in earnings of 40% each year, first 5 years and 10% from year 6 to year 15. For safety reason 15 years is the number of years we will calculate with as there is a reasonable time to recover an investment. The forecasted EPS after 15 years based on this growth is around 12,17$ per share. Multiplying these with a decent P/E ratio of 35, the fair price would be currently below 500$, while the real price is just under 800$. Buy or not? Although it is clear that the company is the market leader and may outperform without problem any other company from the industry for the never ending future, however, following value investing principles, the current price is out of real position and may lead to the fact that the stock is overvalued. Thus, the stock may face a corrective action in the near future. However, it is a bit funny to observe that even in a period of instability and uncertainty and in this Covid-19 situation, where people use the cars a lot less, Tesla kept it's position, and even increased its position, without recording great losses. This could mean that value trading as we know, may not be applicable anymore and the investors should adjust and adapt trading principles and behaviours accordingly. If you are a value investor, like I am, then Tesla is not the right choice to invest in.
NASDAQ:TSLA
by Sharona_vf
When will the bubble burst?With a price of nearly 55$ per share and a market cap reaching 100 billion dollars, NIO has undoubtedly become a massively overvalued company that can be the cause for a destructive financial crisis when the optimistic enthusiasm for the EV Sector ends. The only way to profit from a Stock is -apart from the growth- its Earnings and the resulting dividends. Selling only 40000 cars per year NIO currently has a negative EPS of -0.94$, which makes it noxiously overvalued ( for comparison: General Motors sells around 6.38 million) ). This is often justified with future Growth, but NIO will still be overvalued even if it beats Analysts Estimates. This might cause the bubble to burst, especially when Tech Companies like Apple or Xiaomi start producing their own cars in the future. You could buy the stock for short term swings, but I do not recommend it for the long term. Warning: If the bubble bursts, it will happen fast. Do not buy the stock unless you are completely sure what you are doing.
NYSE:NIOShort
by schneidtmanuel
6
The 2020 Tech Bubble ExplainedIf you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight. In this post, I’ll be explaining ‘The 2020 Tech Stock Bubble’ crisis, through the lens of the Dot com bubble of the 90’s. In the process, I’ll also provide educational content on technically spotting a bubble through different phases. What is a Financial Bubble? A bubble is said to have formed when equity prices rise significantly, far beyond their proper valuation, in a short period of time. Bubbles are intangible and hard to spot, but their existence is undeniable, and hard to ignore. As such, it’s important for traders and investors to manage their risk before the bubble bursts. What is the Dot-com Bubble? - The Dot-com Bubble, also known as the Internet Technology Bubble, was a rapid rise in US tech stock equity valuations fueled by retail and institutional investments in internet based companies during the late 90s. - During this bubble, we saw an exponential move in the market, in which the Nasdaq index rose from under 1,000 to over 5,000 within 5 years. - The Dot-com Bubble grew out of a combination of speculation: investing in internet tech-stocks at the time was the typical get-rich-quick scheme, as there were huge venture capital funds ready to be spent on startups with minimal substance. - Capital flew into those companies, in hopes that they’d be profitable one day, and these investments were done in an extremely bold manner, with retail investors and institutional investors both looking to maximize profits on a speculative basis. What are we seeing today? - The market we are seeing today is not moved by investors who are looking at the long term prospect of the company. The Nasdaq Index overextending well above the 20 Simple Moving Average (SMA) on the monthly demonstrates that the market is driven primarily by momentum. - After the strong ‘V shape’ recovery we witnessed from the Corona Virus (COVID-19) stock market crash, people are trying to expose themselves to the financial market with the wrong mindset- chasing the next big thing, that will make them rich quick. The general public is trying to speculate where all the money is flowing into, and they arrive at one conclusion: tech stocks. - As such, it could be said that on a bigger picture, the market’s characteristics we see today are very similar to that of the Dot-com bubble. With a clearly bullish market trend, the number of new investors who are introduced into the market increase by the day, and with the profits they witness through growth stocks (and tech stocks in particular), 30% gains in a day has become a new norm for them. However, this does not indicate that one should liquidate all their assets, and cash out before the bubble bursts. Counterarguments 1. Introduction of liquidity by the Fed The Federal Reserve has been printing money at an unprecedented rate in order to rescue the economy from the Coronavirus pandemic. As such, it’s only logical that the stock market rises at least as the same pace at which money is being supplied. The Fed’s approach towards money supply is completely different from that of the 2000’s, which is why comparing the current tech-driven bull market to the Dot-com bubble is an incorrect analogy. 2. Momentum Relating to the reason above, it could be said that momentum was introduced to the market trend ever since the Fed started actively intervening in the economy. They decided to leave the interest rates near zero, at least until 2023, which indicates that momentum could continue throughout for years. 3. Fundamentals of Tech Stocks Unlike companies of the Dot-com bubble, tech companies today demonstrate some value and substance. Amazon (AMZN) is one of the few companies that survived the Dot-com bubble burst, and later grew to become a multibillion dollar conglomerate. Arguably a tech stock, Tesla Motors (TSLA) has also shown incredible performance in their financials over the past few quarters, demonstrating substance in their rise in stock prices. Whether the current valuation of the tech giants leading the Nasdaq index today is another question. One thing that’s very clear is that with the 4th Industrial Revolution, companies in the tech field show unprecedented rates of growth and innovation, which could justify the current bull market. How to Spot a Bubble Spotting a bubble is extremely difficult, if not, impossible. Most people weren’t aware of the Dot-com bubble until they later thought about it in retrospect. However, referencing Hyman Minsky and Charles Kindleberger’s work can help us understand the structure of a bubble, and the characteristics of the market in each phase 1. Displacement Bubbles star with a shock to the system. They could be events like war, political change, technological innovation, or the introduction of a new monetary policy. A displacement creates a new opportunity for a sector of the economy, and in this case, it’s technology. 2. Boom A boom begins as optimism grows. A positive feedback loop leads to greater investment, which then leads to economic growth. Borrowers increasingly become more willing to take on debt and risk. 3. Euphoria Participants expect prices to increase at unsustainable rates, and even with a small number of people realizing there is a bubble, they continue to participate in the market thinking that they can load their assets to someone else before the market bursts. The general public begins to enter the market as media attention grows, and as individuals see their friends and acquaintances get rich. This is the phase of irrational exuberance. 4. Distress At some point, an event that causes a decline in confidence takes place. Depending on each bubble, panic can set in immediately, or could take several years to fully develop. 5. Panic When a crisis takes place, most people don’t even realize that it’s happening. Insiders and institutional investors are usually the ones to sell first. Panic is introduced into the market at retail investors all attempt to sell at the same time. This sell-off caused by panic continues until investors are convinced that cash will be made available to meet demand, leading investors to buy back in. Conclusion Despite the current stock market index highly resembling that of the Dot-com bubble era, we also have to take into account the fact that many factors that fundamentally affect the stock market have changed. Also, considering that the Dot-com bubble lasted almost 5 years, even if we could confirm that the current market trend is a bubble, it does not necessarily indicate that the bubble will burst immediately. While it’s difficult to have patience, and suppress the urge to sell at the peak, buy back in when the market bottoms, investors should realize that there is still a lot of capital that could potentially flow into the market. As such, in lieu of trying to time the top, they should be focused on the market trend’s momentum, and execute their orders based on the confirmations provided by the market.
TVC:IXICLong
by Michael_Wang_Official
13