I like this guy!
I've gotten alotta feedback from the Minyanship regarding yesterday's bubble blurbage and, in the interest of objective perspective, I wanted to share this particular note.
I know you have received a lot of mail about your friend's comment on the new bubble. I'm sure no one really believes it could happen but there is some graphic evidence to support a move much larger than most believe possible. If you pull up a weekly candle chart on Bloomberg of the Dow from 1/1/27-12/27/35 and compare it to the NASDAQ. Use 1/1/98-1/23/04 as dates for the NASDAQ. The charts are so close that it's scary. Then look at the Dow into early 1937. If the correlation holds we could have another 25-30 percent on the upside in the NASDAQ. Of course then we head to new lows!!! While this percentage gain is hardly a "bigger" bubble, it would take out what's left of the short base. Comparing the Dow and the NASDAQ may seem stupid but in the 20's a lot of the Dow were growth companies. Just food for thought."
I pulled up these charts (and, with luck, we'll get 'em up for the Minyanship in time) and the correlation is, indeed, spooky. While I firmly remain in the furry camp, I wanted to offer this view as another perspective. You always want to look at both sides of every trade in an effort to understand the thought process of your counter-party. Take it for what it's worth and with a grain of salt. Thanks!
Randoms: Keep an eye on a one month chart of the NDX. If we continue to edge sideways, it might set up some reverse dandruff. NDX 1480 would negate it (and pave the way to 1450-1460) while an upside breach will likely tag NDX 1515-1520. So ya know and if ya care!
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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