Has the US stock market become overbought? Is the "Black Swan" coming?

Tesla's poor performance seems to have created a "pinball effect" across multiple asset classes, and Elon Musk is to blame, according to Jeff Bierman, chief market technician at TheoTrade. Bierman believes that due to "excessive asset linkage," the market is cloudy and assets are fluctuating synchronously, which is the theme of today's market.

Bierman explained that Bitcoin, gold, the S&P 500, bonds, and oil have been "running together in an automatically serially linked way under trading algorithms."

"In this type of market, there is nowhere to hide, no diversification. This is a black swan event. This is a bubble that could burst at any time due to external catastrophic risk events or any other factors," Bierman added, which "is highly likely" to mark the end of the 2023 US stock market rebound.

"Technically, the market is overbought, fundamentally, the market is overpriced, there is almost no pricing risk, and the market is complacent," he said.

Bierman pointed out that except for financial stocks, almost all stocks have risen to perfect or higher-than-expected levels, and expectations are also too high.

Earlier this week, Morgan Stanley's Mike Wilson warned that "excessive profit expectations may suddenly change dramatically."

Bierman said that the market has already digested too much good news, and the upside is limited while the downside is significant.

He suggested that investors should pay attention to one of the few realists, JPMorgan CEO Jamie Dimon, who "honestly and courageously admits that we are in a profit recession, and investors' expectations are out of control."

In short, don't let those algorithms fool you, he said.