There comes a time in every technical analyst’s career after all the time spent counting waves, ogling oscillators and tracking divergences, he wonders whether it is all just hokum. I am approaching that point now. These moments usually arrive during fifth-wave extensions—like the one we’re in today. Fifth waves ultimately fail, but an extension can carry 5%–10% beyond a traditional target before doing so. Given the A.I. hype and massive capital-spending buildout, it makes sense. And while the market has noticed that the Mega caps are overspending their formerly massively high free cashflow, newly issued SpaceX stock and bonds are trading lower and Chinese A.I. engines are substantially lower cost, the rest of the market trades higher.
Millennials are the dominant generation today, surpassing Boomers, and are the marginal buyers supporting this market—too young to remember the Internet Bubble. While many are still unable to afford their own home, a growing contingent are hitting their prime earning years while also benefitting from the generational wealth transfer from G.I. Boomer to A.I. Boomer (i.e. Millennial). Despite all the obligations the Boomers have rung up (most notably social security and Medicare), the stock market (ever the most inflation sensitive asset) continues to hit new highs, nominal highs—not necessarily real ones.