Party Like It’s 1999

As the late Prince so famously said, life is like a party and parties weren’t meant to last. Make no mistake, this party will come to an end. The only question is when? During the Tech Bubble it took more than two years for the Nasdaq to carve out a technical top. In 2007 the reversal was immediate and relentless. We have already concluded that the current price action has more in common with the price action during the period between mid 1998 and late 2000. But history does not repeat exactly. It does however, rhyme. The problem we are facing, with central bank intervention distorting the markets it is hard to determine just how much the easy credit bubble could inflate. While we do not have a crystal ball [unless a magic 8 ball counts] to tell us exactly when a top will form we do have a technical blueprint that we can follow, that of the Tech Bubble. For now, the party appears to still be going strong, but our word of advice, do not overstay your welcome.