Is the US stock market a bubble after the 2020 stock market crash?

Music City Center 

After the stock market crash in 2020, the US stock market was almost out of control, with the S&P 500 index soaring 173.5% in less than five years. Based on the log-periodic power law singularity (LPPLS) method, we systematically investigate the bubble status of sectors with different total market capitalization levels of U.S. stocks through four major U.S. stock market indexes, including the Wilshire 5000 Total Market index, the S&P 500 index, the S&P MidCap 400 index, and the Russell 2000 index, which represent the overall stock market, large-cap stocks, mid-cap stocks and small-cap stocks, respectively. We find that the peak confidence indicator of these four indexes all exceed 19% after November 2024, which indicates that the price trajectories of these four stock market indexes have clearly featured the obvious LPPLS bubble pattern of the faster-than-exponential growth corrected by the accelerating logarithm-periodic oscillations and are indeed in a positive bubble regime. The accelerating growth trends of these four indexes are likely unsustainable, and the positive bubble regime may change in the form of a sharp crash or volatile sideway plateaus.

Stock market bubble

Log-periodic power law singularity (LPPLS)

LPPLS confidence indicator

Financial bubble and crash 

Business and Economic Statistics Section