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WHAT YOU DON’T SEE AT MARKET BOTTOMS: RATIONAL EXUBERANCE

It is said that while bottoms are events, tops are processes. Translated, markets bottom out when panic sets in; therefore,
they can be more easily identifiable. By contrast, market tops form when a series of conditions converge, but not
necessarily all at the same time.
We have stated that while we don’t believe the stock market has made its final cyclical top, we are in the late stages of a
bull market (see Four Steps, Where’s the Stumble?). Nevertheless, psychology is becoming a little frothy, which represents
the pre-condition for a major top.
As a result, we are publishing another report in a series of the “things you don’t see at market bottoms”, where we are
seeing widespread signs of investor euphoria.
Interested readers can review the reports in the other editions in this series:
1. What You Don’t See At Market Bottoms
2. What You Don’t See At Market Bottoms: Euphoria and Wild Claims
3. What You Don`t See At Market Bottoms: No Fear Edition
4. What You Don’t See At Market Bottoms: Paris Hilton Edition
5. What You Don’t See At Market Bottoms: CFD Trading Edition
6. What You Don’t See At Market Bottoms: Halloween Edition
We reiterate our belief that this is not the top of the equity market and investors should be aware of the risks of an
environment in which sentiment has become increasingly frothy