The DJIA reached an all-time high last week although the SPX and NAZ plateaued. VIX dropped. The Fear & Greed Index was in Fear. The trade was neutral since the SPX and junk bonds have been stable relative to the 10 year Treasury bond price. The bubble continues to inflate.

My theory, which I have not bothered to verify, is that when bubbles pop they do not fall straight to the basement. There are enough people around waiting for “a good price” that when there is that first big fall, they jump in trying to find a bargain. They are, of course, catching a falling knife, not a bargain. I expect this time (I hope!) will be the same.

If you look at a chart of 1929, for example, as horrible as Black Thursday was - and it was brutal, the tape running hours behind, traders standing dazed at the stations, headlines blaring. Yet the real damage didn’t come for days, weeks, even months after. As I recall (and I am only recalling, not verifying) the slump after the dot-com crash was the same. I would not be surprised to find the same after the Nifty Fifty crash in the 70’s.

That said, there’s a lot more “hair trigger” now, particularly with flash trading, hyper traders, and even AI jumping into the mix.

It seems like those of us with an ounce of caution are all sitting, waiting. I hope like Godot, it never arrives, but this is real life and the ending has yet to be written.