Catching a Parabolic Reversal in Tech

Julian Brigden of MI2 Partners has done some interesting work on bubble stocks in recent weeks.In a report on May 30, he looked at the heightened risks of a sharp correction if a stock, in its parabolic phase of a classic bubble, started to lose momentum. This past week’s correction in many of the tech stocks that he referred to in that piece have clearly raised a red flag. In this follow up note Brigden – while conceding that he does not have enough evidence to call an emphatic top – suggests this is a time for ‘’unemotional risk management.’’ He draws some interesting parallels with the dot.com bubble, using MSFT and CSCO as examples of the parabolic bubble stocks of that era. Comparing them to today’s vogue tech stocks on the charts shows an uncannily similar pattern. This piece is available for purchase on RSRCHXchange.