The epicenter of this weekly time window in oil was already met on Thursday as it was the 161-day trading window in the stock market off the November low and in some places they call Nov. 16 “16.11.” So we were 161 off 16.11. Is the stock market going to respond to this window? Once again if it does not, that means something bigger is going on. You don’t need me to tell you what that is. What I will say is if we ignore this window the next really interesting window is now only six weeks away.
Folks, we are about to be 161 months off the top of the NASDAQ bubble. So look at these two charts. Each has an interesting golden spiral relationship to an important top. Why is the end of August so important? It’s because this rally off the 2009 bottom is going to be 233 weeks at the same time at the end of August. It doesn’t guarantee a turn but makes one a high probability. In the past year, I’ve come to you with other time window concerns. Last year I was hoping for a September low as opposed to a high because we hit the 5/10 year anniversary off 02/07. We got my high to within a week but the market threw us a curve ball. Such an important pivot only gave us an intermediate-level correction. That correction, which ended in November off those important anniversary dates, proved the bull market so what is happening now shouldn’t surprise anybody. However, I see those who are suggesting the stock market is in a bubble. This is not a bubble.
Look at this long term NASDAQ chart. Do you want to see what a real bubble looks like? Feast your eyes on the left side of this chart. It accelerated from less than 1500 to 5000 in 18 months. This market has done what it’s done in about 53 months and doesn’t cover the territory we did back in 98-2000. The definition of what is materializing now is a secular bull market and the problem many are having with this market is they are used to seeing serious sell-offs materialize when we hit new high territory. Bubbles also materialize when everyone denies it and nobody is pointing it out. Bubbles form when emotions go crazy and while the VIX continues to be a bottom feeder at the low end of the range there certainly are not feelings in mass crowd psychology that support a bubble mentality. Why not? I can name many but let’s bring up 2. In a bubble, they don’t climb a wall of worry. Right now everyone is worried about rising interest rates. They are worried the Fed will pull the plug on stimulus. Did they worry about interest rates in 1999? The other problem they worry about every month is the unemployment rate. There’s likely structural employment issues in this country which makes a stock market bubble a virtual impossibility. Then you have GPD where it is. Do you really think we can have a bubble with GDP under 2%?
I’ll tell you we have a chronically overbought market after a four-plus year rally, but we are far from a bubble. So as we move into the height of the summer doldrums season, let’s see what happens with the time windows we hit last week.