Week of May 11

This is not a bubble. Yet. Will it be?

Recap of last week

A couple of weeks ago, in my weekly post I warned everyone that the crowd is extremely offsides - underweight, short, too bearish writ large regarding AI.

This is from my April 27 post, not an observation made in hindsight but before the move happened.

We had the right view before most did. On the execution side, we sniped the low of the week. ES closed at 7419.

We had the right view now, for weeks. That people were too bearish on AI. Yes, you read that right. Too bearish.

Myself included, have been taking profit too early. Although its easy to say in hindsight. You cant exactly enter in to a long trade and say “My exit will be when QQQ reaches the most extreme OB stage in 25 years”. You cant develop a systematic trading strategy with take profit targets at extreme outlier points. You develop a strategy for making money on normal outcomes and normal distributions. If you enter a trade on ES, you might say Ill take profit at +15, +30, +50 for example. You cant say, for example, my take profit is set at +500 points. Thats not realistic.

So if you missed this extreme vertical rally, dont be too hard on yourself. It was a true outlier in every sense. But now, the question is. After the fact, are we now in a bubble? Was that the blow off top, or a significant repricing? If this is another bubble, a la Dotcom, what inning are we? Is it too late to buy in a make alot of money if so?

Next move for markets