(OPINION) Michael Snyder – Over the past several months we have been witnessing one of the most gloriously irrational stock market rallies in U.S. history.  Even CNN is admitting that this is “the worst economic crisis of our lifetimes”, but stock prices have just kept going higher and higher until this week.

Several months ago the Federal Reserve decided to do whatever it took to rescue the financial markets, and their exceedingly reckless behavior fueled a speculative boom that is unlike anything that we have ever seen before.  But now it appears that the boom may be ending.

The Dow Jones Industrial Average was down 807 points on Thursday, and it appears that Friday could be another very challenging day for Wall Street.  It is well documented that many of the greatest stock market crashes in history have happened in the fall, and many investors may be trying to bail out before this latest bubble bursts in spectacular fashion.


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Tech stocks have led the way up during this latest rally, and now they could potentially start leading the market back in the other direction.  On Thursday, the biggest names in the tech world got hit particularly hard… Apple shares fell 8% for their biggest one-day decline since March 16. Amazon and Netflix were both down more than 4% and Facebook slid 3.8%.

Microsoft slipped 6.2%. Alphabet pulled back by 5.1%. And Tesla has been absolutely monkey-hammered over the past several days.  If you can believe it, the stock is now 18 percent lower than it was on Monday… Tesla shares slid 9% on Thursday, building on the stock’s recent losses after the company’s largest outside shareholder reduced its position, and after the automaker said it would raise up to $5 billion in a new share offering.

With Thursday’s decline, the stock is more than 18% below Monday’s close, a day when the name surged following its stock split. But I wouldn’t be crying too much for those holding Tesla stock just yet.  The stock is still way, way up far in 2020, and it is still massively overvalued. In fact, if Tesla’s stock price fell 90 percent I would still think that it was overvalued.

Needless to say, the entire market is tremendously overvalued at this point.  It is absolutely absurd that the Dow is sitting above 28,000 at the moment.  Investors decided to divorce economic reality long ago, and even with the losses that we have seen this week, they are still sitting really pretty.

But could that soon change? According to one expert that was just interviewed by CNBC, the market could be heading into a “Minsky moment”… Asset prices could be on the cusp of a sharp collapse known as a “Minsky moment,” and may retest lows last seen in March, according to Ron William, market strategist and founder of RW Advisory. READ MORE

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