The interesting feature of the ‘last chance to go out’ is no one sees it up until after the crash has done its damage.
Every possession bubble has a last chance to get out prior to the crash point that becomes obvious in the consequences. However at the time, this last chance to exit before the wipeout is tough to recognize for a variety of reasons.
One is the general mood at the top of bubbles is severe self-confidence that there are more gains simply ahead. Everyone who tried to recognize the top of the rally has been shown wrong, and everyone who shorted the rally (i.e. bank on a decline) has actually been erased.
The most anybody wants to state openly is that danger rises, some day there will be a numeration, and so on, all of which is boilerplate everybody has heard for months or perhaps years.
The last opportunity to sell doesn’t provide itself away; technically it’s at finest unclear as all the standard topping signals tend to be muddied, allowing Bulls to state the top is far from in and bearish signals have been nullified.
The classic last opportunity follows an evident breakout to brand-new highs that surpasses previous resistance. In retrospection, the breakout shows to be false, but at the time it’s clear to Bulls that this is yet another breakout and for that reason a reliable signal for more gains ahead.
Everyone who offered on downlegs is anxious to get back in and so every dip is reversed by buy the dip purchasers who have been handsomely rewarded for purchasing previous dips.
Technically, traditional signs of a top such as double tops and head and shoulders are mooted by the advance. The rally goes beyond whatever levels were thought about bearish triggers therefore the consensus that even more advances are essentially guaranteed discovers enough technical assistance for even skittish traders to continue to be all-in the marketplace.
The first decrease off the last opportunity to exit is purchased, but the rally falters. The buy-the-dippers dismiss this as an anomaly and buy this second dip. That too falters and as soon as the 3rd buy-the-dip has stopped working to rally back to previous highs, lots of buy-the-dippers have been wiped out and the momentum of purchasing slackens.
When it’s clear buy-the-dip has failed, the selling ends up being a self-reinforcing avalanche and the marketplace crashes.
None of this shows up until it’s too late to leave with profits in hand. By the time the banquet of effects has been cleared, most of the followers in the inevitability of more gains just ahead have been eliminated by the crash that they reckoned was difficult.
Is this the last chance to get out before the crash? Bulls are positive for factors that have actually worked astoundingly well (“It’s all about circulations, absolutely nothing else matters,” “since the Fed,” etc) and Bears have been lowered to mumbling about raised risk.
The intriguing feature of last opportunity to get out is nobody sees it until after the crash has done its damage. Just when it’s far too late does it become painfully apparent.
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