Economic Collapse Gains Momentum as Stocks Lose Momentum
The NASDAQ has clearly put in a major top and is starting to topple.
If you look at the stock market over the past two months, you see a clear triple top in the NASDAQ, which had been driving all the momentum relentlessly uphill until recently:
That’s the look of a major top. What I see graphed out in that image is a market that climbed confidently and rapidly to a peak in May (the first circle), ignoring the war completely. Then it finally fell a little (caught its breath after months of not falling). From that stumble, it tried to rebuild, mustering all of its former momentum, in order to push above that May peak in order to try to keep the bull market alive. It succeeded by just by a tiny bit by early June, but it couldn’t hold that slightly higher ground for more than a couple of days. So, it fell … much harder than it did after the first peak. From there, it tried again with everything it had to push back up above its ultimate early-June summit, but this time it could barely hit the level of the first peak. So, it fell again; and it is now trundling sideways, close to the bottom of its big drop from the summit.
The market quite simply is out of gas. It does not have the old energy it once had for high-tech that was driving bets relentlessly higher. It is, in fact, quite literally out of gas as it also struggles with the huge energy shortage that has developed that is raising corporate expenses. Of course, the NASDAQ is breaking up worse than the other indices because it is the vault full of AI and chip stocks. The once-enthusiastic market is worn out.
The area we are flatlining in at the end of the graph was well explained, I thought today, by another article in boldface in The Daily Doom’s news headlines section. I read this morning that stocks are bouncing “wildly to nowhere” because major market-making institutional investors are now just betting the volatility—casting a bet against the market one way, sure it will swing the opposite, pocketing the profit when it does and then casting a bet the opposite way. They are surfing the chop, which is a way some people make a lot of money when the market finally breaks; but it is a dangerous surfing game for the novitiates, who are likely the ones taking the wrong side of those bets.
Exorbitant enthusiasm dies hard, but this looks like the bull’s initial death throes—like stocks are in anaphylactic shock and just quivering now.
The Dow is not breaking up as badly, though it is flat-lining over the past couple of weeks, too, near the top level of its last summit, which has become major resistance even for the Dow. that is because the big-momentum, high-tech stock investments are rotating into more mundane investments now. The Dow is less heavy in high-tech and bigger on other blue chip companies like major banks, major retail, major energy companies and major manufacturers. So, it is trending slowly sideways but not taking the rough action seen in the NASDAQ.
That, too, is how the dot-com bust happened, which is how I’ve always said this last bull market was going to die. So, it all looks right on track for me, and the long fall to a bottom that may take a couple of years to play out with temporary bear-market rallies along the way will begin when the horseplay at the end of the above graph gives up. That will happen when the next big trigger hits, and there are several likely big triggers to keep it happening every time it thinks it can recover:
When the Iran war breaks open again or when the gulf is clearly reclosed .
When the national Strategic Petroleum Reserve hits bottom in about 3-4 more weeks.
When the first gas stations in the US run out of gas because the SPR, Cushing and other facilities cannot adequately buffer the peaks in summer energy demand, which will drive gas and diesel prices up locally wherever that happens.
When AI inflation adds to energy-crisis inflation, which is already adding to the tariff inflation and becomes a fire tornado that is suddenly clearly out of control.
All of those things have a reasonable likelihood of happening this summer. One headline below points out how AI is now the third wave piling into inflation, not just because of how it is also driving up energy prices, but particularly because of how it is driving up the prices of all electronics, such as cell phones, computers, iPads, video games, etc. because AI is an enormous demand vacuum sucking chips away from all other products as chip producers push all their production capacity to flow toward higher-paying AI ventures, which forces everything else to pay higher prices to compete for production capacity on chips that are in short supply.
Another big threat in the headlines below is Putin expanding his war to other former Soviet bloc nations near Europe’s former iron-curtain border as he becomes desperately angry over Ukraine’s increasingly broad and successful drone attacks inside Russia, which he has not been able to defend against. The serious damages Ukraine has brought to Russia’s oil infrastructure have turned into Russia’s own internal gas and diesel crisis, making Putin’s war more unpopular at home. Putin is now threatening NATO because he believes NATO has to be involved in targeting those attacks because Ukraine doesn’t have the satellites to do the targeting on its own.
Meanwhile, the questionable deal between Trump and Iran took a big hit today when Iran attacked a cargo ship in the strait and threatened a broader war against any ships that it hasn’t approved for transit, while also clarifying that, yes, Iran will charge tolls if it wants to and that it will certainly be the entity that controls the strait, perhaps in a shared-power arrangement with neighboring Arab states, but certainly, it pointed out, exclusive of the US entirely.
“Oh, and by the way, if you put boots on the ground, USA, we’ll rush a million of our own troops to attack them.” This it threatened as it warned against the movement it has seen of US war ships toward the strait. Plus, Trump yesterday boasted that Iran made big concessions, to which Iran responded by thanking him for the amazing victory they had just experienced.
It turns out—satellite photos in one story below reveal—that Iran rained major damage down on US military bases in the Middle East, contrary to the endless lies of the Trump Administration. The destruction to command headquarters was so great that the US is considering not even rebuilding the bases. Winning!
All of those things are going to keep ganging up on the stock market and bond market and piling onto inflation to harm all other markets by diminishing consumer capacity, even as AI starts to seriously strip down human employment for months and months to come, also reducing consumer capacity. So, yes, as two videos call out below—one by an economist, another by a billionaire—we are already sliding down into an economic collapse that will sweep markets down with it.
Delirious stock investors are going to get their heads kicked in. The question is will it be many of the biggest investors, or will it be, as usual, the little retail investors that jumped into the momentum late in the game, who are buying up all the stocks the billionaires want to sell—because that kind of rotation (toward other types of investors, not just other types of investments) is the flip side of the explanation for the pitches up and down in recent days. For every major institution casting bets on the volatility, there has to be a counterparty taking up the other side of the bet, and that’s usually the little guys, often baited by the big guys, such as Goldman’s Sacks of Gold, to believe there is still room for stocks to rise.
Meanwhile, some Israeli leaders in videos posted below are now demanding the US use nuclear weapons on Iran and taunting the US for it cowardice in not doing so. One has to wonder why these emboldened and boisterous starlets are not taunting their own country to use their own nuclear weapons. “No,” the truly demented and depraves Israeli leaders say, “We have to keep our nuclear weapons in order to maintain the nuclear threat by making other nations wonder whether or not we even have nuclear weapons.”
Like that makes sense. Brainless as their arguments are, you should hear how strident they are in demanding the US do so and taunting it as a coward for not going there! You can hear it via videos posted in one of the boldfaced articles below. It’s like listening to the inmates in the psych ward banging on their cell bars with their tin cups or like a pyromaniac demanding the fire marshal supply gasoline.
