Bubble Denial… Just as It May Finally Be Peaking

As I have commented recently, my mainstream media interviews have almost totally dried up – even with Fox Business. The last three I have done have been more about my on-the-ground experience in Puerto Rico!

It makes perfect sense though. Bubbles always suck everyone in before they implode. The financial media, like CNBC, become cheerleaders for the bubble. Bears turn to bulls. And almost everyone goes into bubble denial.

But mark my words here: This third and final bubble (fourth if you count 1987) is now the biggest and most obvious bubble in this boom since 1983. And it’s as overvalued as at the top of 1929!

And the fact that no one wants to hear about it is an ominous sign that it may well be peaking!

Everyone is getting a free lunch

stock prices are much higher than fair value; same with real estate prices

… mortgage and car loan rates are the lowest ever

… business borrowing costs are almost negligible.

Higher net worth, lower living costs what’s not to like?!

And if that’s not enough, now people, especially business owners and major corporate executives, are going to get some major tax cuts. Some as high as 87%!

No one wants it to end.

So, everyone goes deeper into bubble denial.

What people conveniently forget is that bubbles like this make our unprecedented income inequality worse because inflated financial assets greatly favor the top 0.1% to 10% that owns the great, great majority of them.

Another thing they forget is that the deeper into denial they go, and the higher the bubble inflates, the bigger the crash when it finally all unravels. More people get hurt because they were suckered into a fool’s game.

It was everyday people that got slaughtered in the China stock bubble crash in late 2015. They got in the latest and could least absorb the loss. It happens that way every time.

Now, when this bubble bursts, the markets will shed points in a jagged way, dropping sharply with violent bear market rallies as well. Remember, as I always say, nothing moves up or down in a perfectly straight line. But when all is said and done, my target for the Dow is 5,000 to 5,500 by early 2020. That’s a loss of 79% from here. We may even lose more, dropping as low as 3,000 to 4,000 into late 2022 or so. That would equate to an 87% loss.

I think there’s a good chance that this bubble is finally topping here in late October just as people are in the maximum bubble denial. Or it could be the beginning of a topping process that shows itself more in January forward.

Firstly, Andrew Pancholi’s model at www.markettimingreport.com has the strongest turn point in decades this month.

Secondly, the rising bearish wedge pattern I’ve been pointing to in recent months is right where it could top – and these tend to be terminal topping patterns. Here’s an update to this chart...

On October 23 we were right at the top of this channel in a 5th wave up. Often at such a top there will be a “throw over” just above the top trend line. That is already happening today. In this more likely Scenario 1, the market could turn back down.

The first blue dot would mark a break back down into the wedge and strongly suggest such a throw-over top. The second blue dot would mark a break back below the bottom trend line in the wedge and further confirm that top and suggest sharper move down.

Scenario 2 would see the break above the top channel line this week and then likely a retest of that top line in a mild pullback. But then it would hold there and continue to advance towards 24,000 – 25,000, where it could very well finally top by sometime in January.

No bubble can go on forever. They defeat themselves with their own extremes.

So, ask yourself: Do you want to be in the stock market if Trump finally bombs “Little Rocket Man?” Remember, the trigger for the 1987 bubble crash was the declaration of war against Iran.

But war is just one possible trigger. There are dozens of others just waiting to spring. The markets haven’t been this risky since March 2000 and September 1929.

The thing is, once this bubble bursts, it opens up once-in-a-lifetime opportunities for you in stocks, real estate, and commodities (including gold). It gives you access to all of these assets at the lowest prices youll see in your lifetime.

However, to be able to take advantage, you must first preserve your assets now. And it helps to find an investing strategy or service that can help you find profit opportunities in up or down markets.

I talk about this, and more (including the reasons why this bubble will burst, despite what everyone is saying), in the special video I’ve prepared for you. It airs tomorrow, October 25, at 4 p.m. To watch it, you must first register. You can do so here.

Harry
Follow Me on Twitter @HarryDentjr

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Categories: Forecasts

About Author

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.