There are five stages of a bubble in an asset price:
Displacement: This is the stage where the price of an asset begins to rise above its fundamental value. This can happen for a variety of reasons, such as a new technological development, a change in economic policy, or simply investor psychology. Boom: In this stage, the price of the asset continues to rise rapidly, and more and more investors start to buy in. This is often fueled by speculation and herd mentality, as investors become convinced that the price will continue to go up. Euphoria: This is the stage where the price of the asset becomes detached from reality. Investors are willing to pay any price for the asset, and there is a widespread belief that the price will never go down. Profit-taking: This is the stage where some investors start to sell their positions, taking profits from the rising prices. This can lead to a slowdown in the rate of price appreciation, or even a small decline. Panic: This is the final stage of the bubble, where the price of the asset collapses. This can happen suddenly, triggered by a small event such as a news report or a change in interest rates.
Now let’s look at the price patterns for the most important tickers of AI bubble in 2023: NVDA, SMCI,PLTR,AI 1 year chart: https://www.tradingview.com/x/GubQ05e1/
As you can see AI, PLTR and SMCI, has already lost 50% of their gains after their most recent earnings! This week NVDA will have its earnings! Will NVDA join the rest of the herd?
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