Long

SPX | Of Course I'm Lying (?)

Updated

I am not lying.
I am completely disproving my latest idea, on how to short SPX. That idea went on Editors' Picks. And I am now killing it.

I am not kidding, April Fools is for fools. I don't consider me or you a fool. So I am being serious.

Chart analysis is not always straightforward. Pinpointing tops and bottoms is the ultimate bet for a trader. As most of you know, this is very hard sometimes.

In 99% of a chart's movement, the trend is continuing. A significant trend change is very rare. Significant evidence for a trend reversal are VERY RARE, and not apparent in all timeframes.

This is a chart that shows clear evidence of reversals. On the weekly timeframe, SPX analysis has showed significant evidence of peaks and bottoms.

Believe it or not, SPX and NDX are showing evidence of going long.

But what about long-term?

Now THAT is a hard conversation.

KST (and many other indicators) can show us incredibly early signs of price stagnation.

Signs of stagnation in long-term charts however, can take DECADES to play out.

SPX/M2SL Technicals were peaking in 1957, but the peak in SPX prices came 6 years later.
For the standard SPX chart, things took even longer to play out.

It is as if we are in 1957. And there is more evidence towards such a realization.

What I did here was basically compare the .com bubble with the Roaring '20s.
The .com bubble was just a very-fast version of the Roaring '20s. If we slow down NDX a little, we end up with the following:

The effect of bubbles is apparent in different periods, and in different scales. The same laws that shaped the 1950-1980 price movement, may be dictating the movement of today's stock market.

The Roaring '20s still has an effect on our moves. We may be living inside the reality-distortion field of the .com bubble.

KST Peaking is an EXTREMELY early sign of stagnation. Price continues upwards, albeit at a slower rate.

Now as we speak, KST reaches this exact point of peaking. This has proved an extremely early sign of stagnation.
Will this time be different, and instead KST is showing an immediate sign, an abrupt crash?

Perhaps things are too simple after all.

Long Live the US!

P.S. Remember, the stock market is for the patient ones, those who plan for decades ahead.

Tread lightly, for this is hallowed ground.
-Father Grigori

Note

Final note:
As we have talked about, yield rates are fated to increase.

Bonds are inversely-related to yield rates. So for the foreseeable future, Bonds are going to underperform significantly.

Parking money in bonds is a bad idea. So an investor is trapped, they lose money. The only place where there is money to be made is in equities. Parking money in equities is like parking money in money.

Money goes into equities, money gets out of equities. In my small mind, it makes sense in a period of progressively increasing rates to invest in equities.

That way you get:
Even if stock prices stagnate (charting shows that they may slow down, not stop), you will be paid in dividends.
A decreasing money supply helps! Now there is a ton of money around which is cheap. In 10 years there may not be that much money around, therefore your initial investment may be worth even more.
Investing in equities is something like investing in money itself. Equity prices are measured in dollars after all.
When the cycle completes and yields peak, a wise investment would be to only then park money in bonds.

Right now, it seems that an equity "bubble" can indeed form. Bonds will continue to fall as yield rates increase. Who knows how much money is in bonds. And what will the effect be if all that money gets funneled into equities?

Note

I wonder... Were we being fooled the past 2 years from all the "crisis" panic? Or are we only today being fooled by me?

Note

Moral of the story: The market is too bearish.
This idea I posted is too extreme for the market to even click on.

Perhaps the ultra-bearish periods are those that result in considerable growths.

Thought experiment: Do high yields affect corporations? With so much money printed in 2020-2021, does anybody really need any more money?

Note

Rupert Sheldrake in his book
'Seven Experiments That Could Change the World'
has stated that scientist's attitude toward their experiments
affect the results of their experiments.
[Lyrics from Yello - Beyond Mirrors]

There is no such thing as a definite fact in science. (and trading)

It is easy to fall into the trap of the free-fall mentality. Myself included.
Equity analysis is not black and white. It is relative.

Price discounts everything. But price analysis is misleading. I have posted extensively about it.

In the beginning, I tried analyzing price itself. This led me nowhere.
Then I used RSI as a more representative method of analysis. RSI is a measure of strength.
After a whole year of basing my analyses on RSI, I reached a wall. And KST came about. KST measures energy, it is like measuring accumulated RSI.
And with KST paired with a ribbon, we have an easy way to pinpoint support/resistance levels.
To complete upon KST analysis, one could use the MACD indicator paired on KST.

The difference between the two MACDs is night and day.

In my analyses, the main protagonist isn't price, it's KST.

Not trading advice.

Note

Many think I am lying.
Many think the dollar is useless.
Many think the Gold Standard will come and Gold prices will explode.

What if this immense rate of Dollar Burning makes it as rare as Gold itself?

After all, prices depend on scarcity and demand.
Gold is scarce but the demand for it is not high.
But demand for money, you know, the stuff you need to buy virtually EVERYTHING. Oh boy it is high demand...
And in an environment of higher prices (oil, food), the demand for the greenery will get chaotic.

Note

Something more regarding Gold.

When food becomes scarce, and you will be hungry, you will sell your gold to buy food. In modern economy, to buy food you need money. Virtually nowhere Gold is accepted.

Don't be like Midas.

Note

I am not bullish on equities. This idea is not for trading advice or predictions.
It is just that, analysis needs appropriate tools. One of them is the KST paired with a KST-based MACD.

This kind of divergence is not apparent in the price-based MACD

Note

NDX is indeed showing significant signs of weakness.
Are we SURE however that SPX will go down?

We need to manage our expectations. What is statistically expected to happen? And how big can that move be?

Note

After all, a flag is a flag...

The markets show us. We can see only if we let our minds see.

Note

They printed TOO MUCH money. They won't let the opportunity go to waste...

Note

If you believe in the dollar milkshake, then the only way to profit from it is to invest in dollar-denominated investments.

Gold is the enemy of dollar. You cannot profit from it if the dollar milkshake comes up true.

Note

Trend analysis and long-term peaks can be tricky to pinpoint.
Peaks and Troughs must confirm by many timeframes.

In the 4M chart, the KST-based MACD has called the peak. Historically, the 4M chart is an early-teller of peaks.

The 6M chart shows that we are in the late stages of an uptrend.

These charts suggest that the Equity/Commodity ratio may increase slightly in the months to come.

The ribbons must confirm one another...

Finally, when a trend is violated, we must zoom out and manage our expectations.

Note

Non-bear-equity ideas are quite unpopular these days...

The same behavior, only faster...
Who knows, maybe we will enter a period of inflationary, exponential-movement for equities.

Note

More apples?

Note

Long live SPX!

akikostas

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