Michael Burry doesn’t expect the record rally in stocks to turn into a devastating crash, as that kind of “needle top” would be unprecedented in market history.
“Right, a needle top is like a unicorn, mythical until proven,” the investor of “The Big Short” fame wrote in a Sunday discussion thread with his Substack subscribers, describing a chart pattern where stocks spike upward then immediately plummet.
Instead, Burry predicted choppy trading going forward, adding that this run-up in stocks could form part of the bull market’s peak when investors look back in the future.
“I think it will be volatile and there will be further new highs and big drops and at some point maybe what has happened will one day look like a top again,” Burry wrote in the thread.
Michael Burry/Substack
Burry’s Substack comments followed a late Friday post on X, in which he wrote: “Markets have never seen a needle top.” He quoted one of his posts from late March for context: “Shorts are not forever.”
He posted that after the S&P 500 surged by 12% in 13 trading days to a record 7,126 points at Friday’s close. The benchmark index opened slightly lower on Monday.
In the Substack thread, Burry shared three screenshots of a recent BTIG report titled “Rarefied Air.” The firm’s chief market technician, Jonathan Krinsky, and his team wrote that “things look good, but a bit overheated” and a “pause is in order.”
They noted the S&P had gained at least 3% for three straight weeks for only the third time since 1980. They also pointed out that the Philadelphia Stock Exchange Semiconductor Index (SOX) was more than 16% above its daily moving average, which has happened only 13 times since 1994, and that this tends to be bearish for the next 10 trading days but bullish over the next 30.
Burry didn’t immediately respond to a request for comment.
The former hedge fund manager pivoted late last year from running clients’ money to only investing his own and writing about his strategy on Substack.
He’s best known for successfully shorting the mid-2000s housing bubble. Actor Christian Bale portrayed him in the movie “The Big Short.”
Burry has been loudly skeptical of the boom in AI stocks that has propelled markets to fresh highs. He’s warned of heady valuations, dubious accounting, overinvestment, and circular dealmaking in the red-hot sector.
