The Day The Bull Market Died

Chinastockmarket2007227

NASDAQ Update: 4:20 AM NYC time, February 28th: Just a quick note to mark an important day, the end of an era, the death of an old bull market. Indeed, yesterday marked, with a grand finale that nobody could miss, the end of the 1,599-day (4.37-year), 1,423-point (128%) rally in the NASDAQ. A fine rally it has been, enriching many a needy investor, speculator, investment banker and trader. Alas…


…the party is over.

Profit margins peaked, along with many/most other leading economic indicators, many months (see my prior posts), the yield curve inverted, heralding recession, many months ago (see prior posts), and the housing bubble popped many months ago (see prior posts). The smartest and most seasoned investors have bailed out (see Sam Zell video) and now the subprime loans are coming home to roost.

We’re already in a period of rising mortgage company failures, home loan foreclosures and generally tougher times for lenders and borrowers, especially hard-money borrowers. That environment will most likely get worse before it gets better. It may, however, create rich opportunities for those in a position to acquire assets at distressed prices, such as when margin calls and/or real estate foreclosures are peaking.

Anyway, enough ranting. It’s been a while, as I’ve been busy on my startup, BuzzPal – The World Is Your Party (www.buzzpal.com). Now on to a brief chart analysis. Cheers!

Nasdaq2007227

What we see on the chart is a classic failed breakout (the low volume was the warning) followed by a failure, undercutting prior lows, and the 50-day EMA, which has held since the start of the most recent intermediate-term advance, which started in July 2006. To top it all off, the three days prior to yesterday’s meltdown showed a variation of a classic candlestick topping pattern called the evening doji star, which was confirmed, with authority, yesterday. Cheers!

PS: Don’t forget that this blog was previously named Alan’s Bubble (www.alansbubble.com), now a paid parking page for me while it awaits a higher and better use), in honor of Sir Alan Greenspan, the man who did more than any other single individual to create the excess liquidity that drove the U.S. housing bubble, which drove consumer spending through cash-out refis, which drove imports, which drove Chinese manufacturing, which drove the Chinese economy, which drove the Chinese stock market, which crashed (or started to crash) the day before yesterday, which set off the global meltdown (or start of meltdown) yesterday. Thanks, Alan, you did a heckuva job!

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