Today's short squeeze [6], EM-is-fixed, Fed-hope-fueled relief rally (in the face of compounding errors in earnings expectations and outlooks) we thought reminiscing on what happened the last time stocks were this high and over-levered and debt-bloated entities were rapidly revealed for what they were would be useful. While the 'just three charts' [7] we showed two weeks ago provide plenty of concern, when the NYSE Composite, which accounts for 1,900 companies representing 61% of the world's publicly traded stock market capitalization, shows eery similarities to the tipping point in 2007 as NewEdge's Brad Wishack pointed out earlier, we thought it worth sharing.
With strangely similar magnitudes and durations, the current Fed-driven rally and the previous Fed-driven rally in the NYSE Composite Index are raising concerns aross trading desks...
[8]
Furthermore, as in 2007, stocks paused and trod water for 5 weeks as they umm'ed and aaghh'ed over whether any of it was real.
Of course DeMark/Mclellan's 1929 Analog remains ominously timed...
[9]
and Hussman's Bubble Trajectory...
Based on the fidelity of the recent advance to this price structure, we estimate the “finite-time singularity” of the present log-periodic bubble to occur (or to have occurred) somewhere between December 31, 2013 and January 13, 2014.
as does @Not_Jim_Cramer showing us the extremes in bond and stock sentiment...
[10]
Will it still be Hendry's year or not? [11]
Charts: Brad Wishack (NewEdge), @Not_Jim_Cramer , John Hussman