TIME IN THE MARKET (a different perspective)
Hello TradingView friends,
Today I would like to discuss a topic many have heard of but few actually have indulge deep into. The phenomena is known as "Time in the Market".
The chart we are currently looking at is on a Monthly time frame and I will be using 5 smooth moving averages. (red:20, purple:50, green:100, blue:200, white:300)
There is a point on the chart, which I like to call the "hard reset" (it is defined with the white vertical line) and that is when the monthly candle touches the 300SMA. The reason I call it the "hard reset" is because once the market visits this moving average it doesn't visit it again for a long time. As a non-believer in the 16 year cycle theory I like to vision cycles from the 300SMA back to the 300SMA. Looking at the first "hard reset" we can see that we visited it again approximately 36 years later (73-09).
For you to get a better perspective, I like to class any candle above the 100SMA (green) as "in a bull market" because every down trend/bear market that has occurred in between the 300SMA's have only been for a short period of time as it has held above the 50 month SMA (purple) before continuation.
-A "hard reset" recovery.
After the monthly candle visits the the 300SMA the markets first goal is to rally then recover the 200SMA (blue), rally again and recover the 100SMA before ultimately going on a lengthy multi-year bull run with soft landings in between.
Diving deeper into the years between 1973 and 2000 we can observe one major crash which happened in 1987. This infamous crash known as "Black Monday" (purple vertical). It was the biggest one-day percentage drop in U.S. stock market history and even that crash bounced off the 50SMA, which in perspective is actually a "nothing burger". It didn't even hit the 100SMA and quickly continued on its trajectory.
-What happened between 2000-2009?
When looking at this void in time, it was a correction that took place over a period of 9 years and lasted from the top of the 27 year run to the 300SMA, which in my terminology is called the hard reset. It involved 2 major market crashes known as the DOT COM and GLOBAL FINANCIAL CRISIS. An extremely tough period of correction but needed to happen for the "hard reset" to occur.
-So where are we today?
I'd like to think we are just over half way through another 27 year-ish cycle (that is from the hard reset to the top), approximately 14 years ahead of the last "hard reset". During this period we have rallied and recovered the 200SMA and rallied again and recovered 100SMA (the covid19 crash). The covid19 crash was a swift but hard crash that helped us recover the 100SMA as support and shortly after, the market continued its rally. Funnily enough, the covid19 crash is (on a time factor) a worse crash than the 1987 crash considering it wasn't a lower percentage drop.
-Using all of this data what can we obtain?
I believe that using the factor of time we are not yet ready for a hard reset and that the market should naturally continue as time has not yet shown that we need this type of correction. Judging from the point that we are currently at I think we either bounce from the 50SMA, which we hit late last year, and continue (the red line) or we correct one more time and target the 100SMA then continue (green line). I personally would be extremely surprised that the 100SMA is targeted twice in such a short period and therefore continuation from here and a multi-year bull run seems like the utmost clear probability. Using all this data, I would conclude that this bear market due to time was/is our generations version of the 1987 Black Monday crash because it hit the 50SMA. This is technically again a "nothing burger" and would expect us to continue from here and further down the line target the 50SMA.
I hope you enjoyed this read and would love to discuss your opinions on this. At the end of the day I don't have a crystal ball and can't predict the future but I like to dissect markets and obtain information. Have a great week and can't wait to see what happens. Much love.
Today I would like to discuss a topic many have heard of but few actually have indulge deep into. The phenomena is known as "Time in the Market".
The chart we are currently looking at is on a Monthly time frame and I will be using 5 smooth moving averages. (red:20, purple:50, green:100, blue:200, white:300)
There is a point on the chart, which I like to call the "hard reset" (it is defined with the white vertical line) and that is when the monthly candle touches the 300SMA. The reason I call it the "hard reset" is because once the market visits this moving average it doesn't visit it again for a long time. As a non-believer in the 16 year cycle theory I like to vision cycles from the 300SMA back to the 300SMA. Looking at the first "hard reset" we can see that we visited it again approximately 36 years later (73-09).
For you to get a better perspective, I like to class any candle above the 100SMA (green) as "in a bull market" because every down trend/bear market that has occurred in between the 300SMA's have only been for a short period of time as it has held above the 50 month SMA (purple) before continuation.
-A "hard reset" recovery.
After the monthly candle visits the the 300SMA the markets first goal is to rally then recover the 200SMA (blue), rally again and recover the 100SMA before ultimately going on a lengthy multi-year bull run with soft landings in between.
Diving deeper into the years between 1973 and 2000 we can observe one major crash which happened in 1987. This infamous crash known as "Black Monday" (purple vertical). It was the biggest one-day percentage drop in U.S. stock market history and even that crash bounced off the 50SMA, which in perspective is actually a "nothing burger". It didn't even hit the 100SMA and quickly continued on its trajectory.
-What happened between 2000-2009?
When looking at this void in time, it was a correction that took place over a period of 9 years and lasted from the top of the 27 year run to the 300SMA, which in my terminology is called the hard reset. It involved 2 major market crashes known as the DOT COM and GLOBAL FINANCIAL CRISIS. An extremely tough period of correction but needed to happen for the "hard reset" to occur.
-So where are we today?
I'd like to think we are just over half way through another 27 year-ish cycle (that is from the hard reset to the top), approximately 14 years ahead of the last "hard reset". During this period we have rallied and recovered the 200SMA and rallied again and recovered 100SMA (the covid19 crash). The covid19 crash was a swift but hard crash that helped us recover the 100SMA as support and shortly after, the market continued its rally. Funnily enough, the covid19 crash is (on a time factor) a worse crash than the 1987 crash considering it wasn't a lower percentage drop.
-Using all of this data what can we obtain?
I believe that using the factor of time we are not yet ready for a hard reset and that the market should naturally continue as time has not yet shown that we need this type of correction. Judging from the point that we are currently at I think we either bounce from the 50SMA, which we hit late last year, and continue (the red line) or we correct one more time and target the 100SMA then continue (green line). I personally would be extremely surprised that the 100SMA is targeted twice in such a short period and therefore continuation from here and a multi-year bull run seems like the utmost clear probability. Using all this data, I would conclude that this bear market due to time was/is our generations version of the 1987 Black Monday crash because it hit the 50SMA. This is technically again a "nothing burger" and would expect us to continue from here and further down the line target the 50SMA.
I hope you enjoyed this read and would love to discuss your opinions on this. At the end of the day I don't have a crystal ball and can't predict the future but I like to dissect markets and obtain information. Have a great week and can't wait to see what happens. Much love.
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