I operate on the understanding that stock markets operate on cycles.
And cycles merely signify repetitive patterns of human action. Or put differently, this showcases history repeating itself. Or in a more somber description, cycles are what philosophers George Santayana warned as “Those who do not remember their past are condemned to repeat their mistakes” and Aldous Huxley’s “That men do not learn very much from the lessons of history is the most important of all the lessons that history has to teach.”
I have highlighted that endgame phases of stock market cycles that tend to be excessively violent.
The charts above illustrate such dynamics.
And in terms of the culmination of a classic boom phase of a bubble would be vertical liftoffs similar to what I would call the Philippine experience: the BW-SSO syndrome.
Eventually vertical prices suffer from Newton’s Third Law of Motion: For every action, there is an equal and opposite reaction. Underneath this would be the operating principle of the mean reversion.
And curiously, signs of such vertical price actions have emerged in the US stock markets.
Vertical prices has engulfed Mid and Small caps, bank and financials, transportation and semiconductor. And all these has originated right after the presidential elections
Yet aside from the above, four major US bellwethers hit a fresh record today…
Will history repeat?
Interestingly, wouldn’t present developments in US stocks be an absolute irony considering that President elect Donald Trump repeatedly denounced the US stock market as a one “BIG FAT UGLY BUBBLE”—in September 2016, December 2015 and October 15?
Yet Mr. Trump has been greeted or binged by the same BIG FAT UGLY bubble he censured! And they have even become even worse (as shown by vertical prices)!
Will Mr. Trump change or reverse his position to extol current events? Or will make good his threats to end the bubble?
More evidence that epic history is in the making!
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