If you follow most bubbles you will see a graph that is similar to this one.If course every bubble is different and the desperate measures to reinflate the bubble once it starts to deflate means that the shape and duration get distorted.
The Nasdaq graph from 1996 to 2004 follows this graph almost perfectly. You could put the two on top of each other and each blip and spike will be on both.
US real estate also followed this pattern.
Of course not ALL bubbles follow the graph, some will have prolonged plateaus, others will just collapse suddenly. However this pattern repeats itself sufficiently frequently to suggest it is a good proxy for human mass psychology.
In any case, I post this to show that we could very well be right where we should be. We had the first sudden drop, are in the midst (or near the end) of the rebound up...perhaps to be followed by the big drop.
Ironically we are so easy to predict that we have the exact emotions on the graph. Bulls are now jubilant and bears dejected, both are becoming convinced that we are heading for the highs again.
If we DO reach the highs again, then this graph is not valid and we are developing a different pattern. Let us see what happens over the next few months.
