Is AI A Big Ponzi Scheme? Friday Premarket 11/21/25
Good Morning Team,
AI Ponzi Scheme Or Bubble
Futures are mixed to lower today after Thursday's big negative reversal and failure at the 50 DMA line.
NVDA and the market opened higher on Thursday but sellers showed up right after the open and sent stocks (and other risk assets) sharply lower. Fear spread when someone said NVDA's accounts receivable (money owed to the company) soared by 50% in 2 quarters. That is a sign of channel stuffing. Nortel, CISCO, and other overvalued Dot Com stocks did that in the late 1990 into 2000 with their circular financing scam which caused the Dot Com crash. Doing this temporarily inflates sales figures by forcing more product into the distribution channel than it's capable of selling. Account receivable = the money hasn't been paid yet. Either the money will be paid eventually or it won't. If it won't, then it is a big ponzi scheme/scam. If it is paid, then everything works out. Other AI stocks are doing the same thing and the accounted from CSCO in the Dot Com bubble is the same accountant for OpenAI. That's odd.
From my perspective, AI is in a bubble, there's no doubt about that and most of these over-hyped AI stocks will not be around in 10 or 20 years. That's normal and happens with just about every new "disruptive" industry. It happened with Railroads, Automobiles, Airlines, Dot Com, and countless other stocks over the years. If the money is not paid, then the house of cards comes crashing down and this turns into a ponzi scheme that blows up.
50 DMA Line Is Now Resistance
Technically, the market hit a wall this week near its 50 DMA line and that is formidable resistance going forward. It tried to get above the 50 DMA line on Thursday but sellers showed up and sent stocks sharply lower. In fact, November is negative and most of October's gains (on a monthly chart) are erased. Right now, we are in a pullback (down less than 10%) but if this selling continues, it will turn into a correction and then possibly a bear market. As I have been saying since early November, defense is king.
Here's a look under the market's hood courtesy BreakoutsAndSetups.com
Today's Premarket Action (7:14 am ET)
4 Extended Hours Breakouts
3 Extended Hours Breakdowns
15 Extended Hours UP
81 Extended Hours DOWN
Yesterday we had:
5 Breakouts
85 Breakdowns
67 Movers UP
685 Movers DOWN
All this updates in real-time on BreakoutsAndSetups.com
I'll be back after the open with today's breakouts report.
Enjoy your day,
Adam