Reported 12 months ago
A senior market trader describes the current US stock market as a 'technology-led huge bubble,' but states that only 'madmen' would short the US stock market at the moment. Two bubble warning signals have been identified, including the Relative Strength Index (RSI) being too high and the market breadth deteriorating to its worst level in years. The market is heavily supported by tech giants like Nvidia, Apple, Microsoft, Meta Platforms, Netflix, and only a few other large stocks outside of the tech sector, with investors overlooking potential risks and values in the AI craze. The expert believes that the bubble is being fueled not by retail investors but by algorithms, leading to a potential feedback loop and a nightmare scenario if a negative feedback loop emerges. However, shorting the market now is considered unwise and self-destructive, as it is believed to be the 'final stage' of the US bull market where fear of missing out (FOMO) is the only fear present.
Source: YAHOO