- Prices have moved up precipitously over some period of time.
- Price points are extreme (far too high) when compared with the real value of the underlying asset (you can choose the various measure to use when determining real value depending on the asset class being evaluated).
There may be other criteria, but those two seem to always be tied to the bubble talk. Given this loose definition, are the rails the latest bubble? Here's a weekly chart of IYT.
Now, to decide if that would be a good area to buy, we flip to the long-term time frame to assess the longer-term trends and see if they are suspect or confirmed. Here's a monthly chart.
- 1. A technical setup
- 2. A reasonably good probability of success on the setup
- 3. Risk-to-reward parameters that work