Phase transition

Without quenching, a superheated market becomes brittle

Phase transition is the physical process of transition between one state of a medium and another. Commonly the term is used to refer to changes among the basic states of matter: solid, liquid, and gas.

In materials science, quenching is the rapid cooling of a workpiece in water, gas, oil, polymer, air, or other fluids to obtain certain material properties. A type of heat treating, quenching prevents undesired low-temperature processes, such as phase transformations, from occurring. It does this by reducing the window of time during which these undesired reactions are both thermodynamically favorable and kinetically accessible.

Stock markets go through their own sort of phase transition when shifting from a hot bull market to a cold bear market. But they do so slowly, which allows “undesirable” processes to occur.

I think such a phase transition is underway, but it has only just begun, so there’s still plenty of heat that will take time to cool off.