How do you tell if the Nasdaq is in a bubble?

We use a bubble index: the index level relative to the Fed's M0 monetary base. Readings above 100% mark historic bubble territory — it hit 160% during the dot-com bubble and 87% before the 2008 crisis. The current reading updates live on this page.

Should you buy when the Nasdaq crashes?

A crash alone is not automatically a buying opportunity. Historically, forward returns were strongest when oversold RSI (below 30) coincided with a low bubble index. Use the backtest to see the return distribution of similar past setups.

When is a good time to start DCA into QQQ?

Historically, starting QQQ purchases when the bubble index was low and RSI was oversold produced superior results. This calculator backtests past moments similar to today's QQQ conditions.

How do you check if the S&P 500 is in a bubble?

The S&P 500 bubble index is the ratio of the index to the Fed's M0 monetary base. This page shows the live bubble index and daily/weekly/monthly RSI, benchmarked against history since 1986.

How do I backtest a buy-the-dip strategy?

Set an RSI range and a bubble-index range, and the calculator finds every historical date that met those conditions — showing returns, max drawdown (MDD), and outcomes by holding period for the Nasdaq-100 (QQQ) and S&P 500, free.

Daily, weekly, or monthly RSI — which should I use?

Daily RSI for short-term entries, weekly RSI for medium-term trend reversals, monthly RSI for long-term undervalued zones. All three timeframes are backtestable for the Nasdaq, QQQ and S&P 500.

Can I rely on backtest results for investing?

Backtests are statistical references based on past data and do not guarantee future returns. All investment decisions are your own responsibility; this service is not investment advice.

BUSTUDY · U.S. Stock Buy-Timing Analysis

Nasdaq · QQQ · S&P 500 Bubble & Buy-Timing Backtest

Diagnose undervalued zones in U.S. stocks with a Fed-M0-based bubble index and RSI backtests.

Simulation Settings

Asset

RSI Timeframe

💡 Basic Mode — Auto Analysis

Automatically finds and analyzes past moments similar to today (±5 range) based on the latest market data.

Auto-set RSI Range

Auto-set Bubble Index Range (%)

Search Start Date

Holding Period (years)

Investment Amount

Latest Bubble Index & RSI (S&P 500, Nasdaq)

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Bubble index (%) = (S&P500 / M0)×100 − 100. Since M0 publishes with a lag, the latest value as of each date is used.

A reading of 0 is neutral; below 0 is undervalued, above 0 overvalued. The index ran 29% above the monetary base in the oil shock, 30% before Black Monday, 160% in the dot-com bubble, and 87% before the 2008 crisis.

Summary Statistics

✔ Summary (full holding period)

Results will appear here.

⚠ Summary (period not yet complete)

Results will appear here.

Detailed Results

✔ Conditions met & full period

Entry Date	Invested	Final Value	MDD(%)	Return(%)

⚠ Conditions met & period incomplete

Entry Date	Months Elapsed	Invested	Final Value	MDD(%)	Return(%)

[About the purchase method]
Applying recurring purchases (monthly/yearly) would multiply the computation per signal and slow or destabilize the server, so the backtest currently supports lump-sum entries only — one purchase at each signal date, evaluated across every signal.

What is a Nasdaq bubble? Diagnosing it with the bubble index

A Nasdaq bubble is a state where prices have risen excessively relative to the money supply. BUSTUDY's bubble index divides the S&P 500 by the Federal Reserve's M0 monetary base: 0 is neutral, below 0 undervalued, above 0 overvalued. Historically the index spiked just before crashes — 160% at the dot-com peak, 87% before 2008, 30% before Black Monday — while the low readings that follow major declines have marked the better buying zones.

QQQ timing — when the Nasdaq-100 ETF is worth buying

QQQ tracks the Nasdaq-100 and mirrors its bubbles, crashes and rallies. Rather than buying every dip, the data since 1986 favors starting purchases when oversold RSI (below 30) coincides with a low bubble index. Even in rallies, when the bubble index runs hot, waiting has historically beaten chasing. Use the backtest below to see returns from past moments similar to today.

S&P 500 bubble and buy timing — SPY · VOO

The S&P 500 bubble index is computed the same way, against M0. Moments when post-decline RSI entered oversold territory while the bubble index dropped have historically been effective entry points for SPY and VOO. During extended rallies, watch the bubble index to manage overvaluation risk.

Validating buy-the-dip strategies with backtests

Concentrating purchases at RSI- and bubble-index-based signals can beat plain calendar-based investing over the long run. Set your RSI range and bubble-index range, and the calculator backtests every qualifying date since 1986 — returns, MDD and holding-period outcomes at a glance. Use data to avoid buying at bubble peaks and build the habit of buying in undervalued zones.

How to use the Nasdaq / S&P 500 backtest

Basic mode auto-detects past zones within ±5 of today's bubble index and RSI and backtests them for you. Expert mode lets you set exact RSI and bubble-index ranges for finer analysis. Choose daily, weekly or monthly RSI: daily for short-term entries, weekly for medium-term trend calls, monthly for long-term value hunting. For post-crash rebound timing, try daily RSI below 30 combined with a low bubble index.

Important notes

These backtests are statistical references based on historical data and do not guarantee future returns. Bubble and timing judgments should be weighed alongside a broad set of economic indicators. All investment decisions are your own responsibility; BUSTUDY does not provide investment advice.