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SPX/DJI: A Peculiar CorrelationPrice action discounts everything. The most important included. It discounts prejudgement. Price discounts everything every time... ...except when we don't want to allow it to change our hypotheses. High yield rates are synonymous with recession. We are convinced that high yield rates is the thing the majority hates. From this chart above, we conclude that this may not be happening after all... The majority (500 SPX companies) is growing against the minority (30 DJI companies) in periods when yield rates consistently rise. Everything is relative. Recession is relative. Bubbles are relative. A Big-Tech bubble was formed throughout the last two decades. Now, in a high-yield environment, this bubble is fed using derivatives. With incredible correlation, as yield rates increase, the relative density of QQQ derivatives increases. While this is an experimental calculation, only QQQ is showing this kind of derivative filling. SPX and DJI show more stable behavior. Given that in DJI most companies are Big-Tech, the following chart comes up to prove the long-term fundamentals of big vs small. Curiously, yield rates target a range of about 8%, similar to the inflationary highs. Inflation seems to be calming. Many wish rate cuts... A rate cut schedule however may signal the beginning of a recession for the US. Cutting rates will push bond prices higher. Thus, a money outflow from equities and into bonds is created. This outflow will be a cause for SPX weakness. As the SPX*yields chart suggested, a near-term recession may be coming. For the following few years, SPX seems strong as the yield-SPX/DJI correlation showed. It can take decades though for balance to shift decisively. We need both oscillators to get bearish for a convincing move. While Buffett advised investing into oil, but not all oil is the same... (High yield rates for the US will drive prices lower. Yield-SPX correlation points us to SPX bullishness in a high-yield environment) In a progressively higher-yield environment, the outflow from bonds and into equities can get immense. A US debt default will outright crash bond prices, aiding the potential for SPX to move higher. Not all is well for the US though. Money is already seeking other ventures... Don't fall for the news-driven trap. Tread lightly, for this is hallowed ground. -Father Grigori P.S. A US Default might not be as light as I describe. Who knows how big the scale of such an event might be... P.S.2. I am posting a link to the indicator I am using: It is highly experimental, but I am beginning to get a good grip of it. Many adjustments may follow. This indicator can be used in any timeframe, and in charts of any scale.
SP:SPX
by akikostas
SPX | Another LieOrdinarily, I wouldn't contemplate them... but these *are* extraordinary times. - G-Man A bank just went broke, oops! It was certainly something we expected. With money literally burning, these kinds of events are expected. So what might be ahead of us? The rate-hike schedule went relatively smooth sailing until now. But just last week something changed... When the first bank failed, the consensus shifted from calm to fearful. Now the market is pricing-in the coming yield-peak. This goes hand-in-hand with the yield-curve correcting. At that time, the market expects only short-term yields to increase, while long-term ones will slowly and steadily drop. Back in 2018, we were begging for the FED to lower the interest rates so as the economy to "grow". Little did we know, that by lowering rates we were pulling the rug from underneath our own feet. Equities growing when cutting rates is cheaty... Now we have the same. We beg for the FED to stop burning money and calm the liquidity crisis that is building-up around us. This bankruptcy may prove an event that causes even a premature FED pivot. At any rate, both charts and simple logic call for a pause in the rate-hike schedule. So what can we expect? What I talked about in the original cake. Unsurprisingly, I expect equities to grow next year. Their price will increase while their true "value" will drop. While a sell-off may occur in the weeks to come, this will give the signal that the bottom is in. I believe however that this capitulation will not be the main "event". The 2018 "Recession" had some violent drops. A sudden 20% drop in 3 months in Q4-2018 was definitely something that conquered the headlines. Passing through that gave the signal that a bottom was already in. The same consensus may be brewing now. Surely the FED cannot tighten further. Surely they will step-in an cautiously calm the financial markets. The calm will come, and it will stay for some months. Until the calm erodes. And if rates drop, the economy itself will silently erode. Until the building collapses, at a time nobody expects it to. Tread lightly, for this is hallowed ground. -Father Grigori PS. There are two ways to become rich. Theft and Inheritance. -Aristotle Onassis, Billionaire For the rich to get richer, they must rob. They are robbing the unknowing gamblers/investors. In the era of information, in order to rob you must fool the public by changing-up the picture. Present the eroding building (economy aka. SPX*yields) with a luxurious cover (SPX). And hide the treasure in the dirtiest place of all. Find the treasure. Don't fall for the trap.
SP:SPX
by akikostas
6
SPX | The US is FailingEurope and especially Germany (the biggest power in Europe) have suffered this year due to the energy crisis. There is more background though... The US has performed well until now. This period of US dominance is failing. The chart above is respecting a long-term trend. Now, price is at the bottom with stochastics primed for continuation of the uptrend for Germany. To effectively compare Europe and USA we need to "fix" the indices of each country. Currency strength should get out of the picture for us to better analyze equity performance between countries. So, the DEU40 Index of Germany is multiplied by EURUSD, to get it denominated in Euro. This should always be done when comparing items of different origin (different currency). As an example, for reference I will also analyze Turkey. It is as if Turkey is performing incredibly... The General Index XU100 has gone exponential. If we plug in the currency, the picture changes. There are more evidence against the US... Turkey is set to overperform the US in the years to come... Many countries follow Turkey's example: Honestly, the most dramatic of them all is China. A substantial diversion from it's trend, with a massive double bottom shaping. Will price seek the trend? Is it a new beginning for China, or the beginning of the end? Tread lightly, for this is hallowed ground. -Father Grigori
TVC:DEU40
by akikostas
14
SPX | Spaaace!!!Spaaaaaaaaaaace! Let's make a quick party, also bring a cake to celebrate! Make it quick, because it's late and I am tired and I should be sleeping by now. We have reached the top of the world. Well, equities have. It is time for them to lose value big time. Their successor is here, bonds. I have talked about it extensively in my last idea. This is an urgent idea I wanted to post. It seems that day-by-day we might be witnessing the peak in equity price. And this idea is dedicated to the person who gave me the crazy idea to analyze something like that. The idea is simple. We all know the immense yield inversion, it is definitely ugly... What if we found a way to analyze SPX based on the yield inversion itself? That is the idea of @CryptoTaoist and I am very thankful for it. All credit and all the likes this idea gets, are dedicated to this person! Yield curve is a way to calculate money creation (normal times) and money destruction (inverted times). Green is good for money, red is bad. No wonder dollars are green but flammable! We also know that yield inversion is strictly bound to recessions. I will naively try to add these two together, equities and inversions to get an idea of when the recession is actually beginning. Me and others have posted about how the US isn't in a recession yet. This can be seen if we multiply SPX by yields. In a sense, this year we had no recession for the US economy. Please bring a real cake, not this lie... The next part is analyzing whether SPX is performing good or bad considering the current rate of money creation / destruction. In a sense, dividing SPX by the yield curve. If you calculate the yield curve as US10Y-US02Y you will have trouble analyzing it compared with SPX. Captivity of Negativity. Zero values for the denominator make a mess of the chart. You could instead opt for a bodge, to fix the denominator by adding 1. While this works, it is not harmonic enough for my liking. I will create a new yield curve, but instead of standard yields I will calculate it using modified-yields. More about the modified-yields in this idea below. The new yield curve (in blue) is following the standard yield curve (in orange). So it can be considered a satisfactory replacement. Do note that on the numerator we have modified(US10Y). On the denominator we have modified(US02Y+1). I add this +1 so as to further normalize the chart. In normal times US10Y and US02Y have a difference of ~1%. To conclude, we divide SPX with the modified yield curve and we see the following: A surprisingly smooth chart shows us what we expected, that the US isn't in a recession yet. It is also incredibly straight, from 2010-2022 and today. This means that yield curve and SPX correlate very well, if we modify them appropriately. In a sense, dividing SPX by the yield curve calculates the following: How much SPX increases as money gets destroyed? If SPX can swim against the tide (money destruction) this means that it is very strong. A strong economy can hang on even when money is destroyed. US hanging on even with that immense of money destruction, means that it was (and perhaps still is) a very strong economy, which can withstand a heavy beating. Note: DGS2 is a good replacement for US02Y if you want to analyze old historical data. Feel free to notify me of indicators that calculate even older yields of the 2 year bond. But where is the ceiling in this chart? While the 2.0 Retracement proves a significant resistance point, it is inconclusive of whether it is the terminal ceiling. One answer may lie in the following chart: (I knew the cake is a lie!!!) We have divided by M2SL and multiplied by 10^12 to bring numbers to measurable scale. A normalized chart appears, and we also observe a curious ceiling appearing. Price obsessively tries to penetrate this ceiling, just like DJI/M2SL did in 2018-2020 Are we witnessing the very last weeks of the equity bubble? Tread lightly, for this is hallowed ground. -Father Grigori Captivity of Negativity is a reference to Bagwell of the Prison Break TV Series.
SP:SPX
by akikostas
11
4-17-23 nqgood morning, here's another idea for you guys - this one is quite neutral, and takes into account all of the current events which are currently taking place in the markets. --- nasdaq looks to have completed 5 waves up from the lows of october. (it could potentially go slightly higher to 13,666). >5 waves is either the beginning or the end of something - >in this case i will have to say it is the beginning of something based on the overall vibe of the market. --- >what i am philosophizing about over here, is a very deep raid into may \ june to flip the current sentiment which is very bullish. >only once this sentiment flip has taken place, do i believe we go to put in that C leg to the upside, to 15.6k ✌
CME_MINI:NQ1!
by notoriousbids
10
Apple by EOYApple based on current 119D movement. I still believe Apple is heading below $100 this year. It took a tad longer to see a drop because of corporate buybacks but that wont change the overall outlook for Apple. Apple's price move from 2018 downward coincides with the Feds tapering. The August 2019 rally also coincides directly with the Fed increasing QE in August 2019. You can see somewhat normal movement until the price breaks out of the channel, although QE was introduced in 2008. No QE = no more rallying. More QE = hyperinflation. Simple as that. I think the Fed will let equities take a bath to save the dollar... but than again, who knows? Data Points: MACD Crossed RSI has room to come down Q1 Guidance was grim
NASDAQ:AAPLShort
by WorldEconomics
9
Tipple Top or Dead Cat BounceWe're taking a look at Apple here. This ticker has been known as a quality stock that investors flock when other tech stocks take a hit. MACD is playing right there in the middle and this could go either way. Money Flow Index is showing that there could be more up to go. Markets have been rocked by the recent banking crisis that is still not over. We're now learning of First Republic continually collapsing, even with backstops and liquidity pledges from big banks. Perhaps this crisis isn't over yet, and with bets of a 25 basis point hike Wednesday, this could snowball into a bigger crisis, but it's one to watch. Central banks are doing all they can to keep this bubble alive, but with declining economies, it's now a matter of time. Manufacturing, retail, housing, autos, are all down, and continuing downward. Joblessness claims continue upward. Layoffs are increasing. You know how it goes... thoughts?
NASDAQ:AAPL
by WorldEconomics
SPX | Let The Roaring '20s Begin!As the famous billionaire said in December 2021 (elon), the "prophet" who is apparently loved and trusted by everyone. I don't know why... Disclaimer, SPX by itself will probably not follow this path, things are quite complex as you will soon find out. First of all, Recession is not something simple. Everyone talks about it, but it is not always meaningful. This year, equities weren't in a recession. While on the one hand the prices dropped, the denominator (dollar value) increased. The 2022 "Recession" is not apparent, we have just hit the mean. Note that the channel is automatically drawn from 1950 using the Log-scaled Linear Regression indicator. Taking note of the above, we can interpret that instead of SPX following the 1920's bubble, the pair SPX*yields will. These charts above give us a valuable lesson. Until now, a .50 increase in yields had little effect on the direct equity value. A monthly rate hike of 100 points had little meaning in the 80s. A change from 15% to 16% on yields for example, is just a 6% increase in the immediate price of money. A change from 0.25% to 4.50% in 2022, is an 18x increase. This means that the immediate effects of such an increase are dramatical. The 2022 "recession" occured just because price was so rapidly revalued. The change in dollar value is "effective immediately", when a rate-hike comes. Everything measured in dollars is immediately repriced accordingly. Even if price may take time to show it, cost does change. The USOIL true price changed immediately. US investors enjoy a massive discount in oil price, while the rest of the world "enjoys" a bull-flag. But this phenomenon will not last forever. Rates will eventually hit a ceiling and the FED will pivot. I will now try to "estimate" when the tightening schedule might end. Had the 2020 crash not happened, this would be an average rate-hike schedule. It lasts 7 years. This puts the end of the tightening schedule to the end of 2023. So to add these together, we expect a QT environment until the end of 2023, and stable decrease of yield rates starting in 2024. Now I will try to make sense of them all, and try to find a probable behavior of SPX based on the yield hike-drop schedule. For simplicity, I pretend that the terminal rate is already here (or priced in). After all, the US10Y chart shows signs of peaking. We can conclude that even if this is not the terminal rate today, and based on the FED announcements, the market has already priced in the full extent of the tightening schedule. I will return to the modified USOIL chart. We have seen that in reality, the price for oil (the main contributor to inflation) dropped a lot thanks to the tightening schedule. The USOIL/yields chart is like a time machine. It shows the final price equities/commodities will take when the dollar-repricing (rate hike) circles around the economy. We can conclude that the rate hike schedule was successful and will cool down inflation (inside the US) With all of the above, it is safe to assume that: Inflation has peaked (for now?). The rate-hike schedule / QT environment will persist until the end of 2023. From 2024 we can expect rates to drop. By multiplying or dividing with yields, we can make conclusions for the reason why we were not in a recession this year. Since equities and yields are multiplied to calculate the true equity value, we don't have a clear indication on why the true value is increasing. Charting SPX/yields can help us understand "thanks to who is the true SPX chart increasing". By analyzing them, we can get more indications on the future movement of SPX. We assumed that yields have nearly peaked. They will remain constant or increase a little for the months to come. Equities have no reason to continue a sell-off now that yields have almost peaked and the worst of inflation has passed. So we expect equities to increase compared to steady yields in the following months. Taking all of that in account, we can end up with the following charts: A probable scenario: An improbable scenario: More about the trends in the following idea: Moral of the story, always have a plan B. Make sure not to waste it creating a bubble. When inflation drops and equities bubble, there will be no reason for rates to increase. Just like in the 2018-2020 Recession, we will beg for the FED to drop rates to feed the bubble. When there is no more room for yields to drop, equities will. The equity market is infested with weapons of mass destruction (derivatives). It is bound that we see a burst of this long-term bubble. Final question of the night: Why would anyone print an astronomical amount of money to make so little in the end? Tread lightly, for this is hallowed ground. -Father Grigori PS. I've talked about how the 2018-2020 Recession no-one remembers is a micrography of the 2008-2009 Recession. For reference, look at the rate-hike schedule, and notice the little "step" that appears in the end of the 2008 rate-drop schedule. The same appeared in the 2020 crash. On the left, the modified-GFC is visually similar to the standard GFC chart (with and without yields transformation). On the right, the bubble SPX experienced in 2018-2020 now looks like an actual recession. PS2. This crazy idea I posted may not be so crazy after all... PS3. In 2025, Nostradamus (another pseudo-prophet) told that WW3 would come. The same I heard from many others. endtimeheadlines.org PS4. The two sources of wealth are theft and inheritance. -Aristotle Onassis PS5. I am not a trader, I am a father. Take what I say with a grain of salt.
SP:SPX
by akikostas
41
The DOW Road has Ended. Now Welcome Hyperinflation.The market has chosen a way to profit throughout all these years. This is the end of this way, QE lead us here... in this dead end. Equities was the "gold" of the time that passed. Now this is changing... If you read until the end of this idea, you will realize that a lot is changing. I will briefly analyze this chart and what it tells us. This is the ratio of equities compared to yields. I have modified yields using an equation I made up. This channel is drawn from 01/01/1950. This is a date I use since this is the day America 2.0 was born. I have talked about it on the MV = PQ idea linked in the end of this idea. Well, we have just missed this trend... Right now we could be witnessing the very beginning of US 3.0. Long-term technicals on this chart are deadly for DJI. So this chart above suggests that the new big thing is bonds. As you will now realize, this is not the entire story... The following are IMPORTANT: There are some things that trouble me... SPX compared to energy is showing signs of stagnation. There is substantial drop for equities ahead of us. So okay, energy cost is going to increase compared to equities, that is something we have taken for granted the past few months. We have talked about this a myriad times... This is not the entire story. This chart below shows that energy increases will overperform yield increases. So in a sense, inflation (calculated from commodity cost) will overperform yields. Inflation is poised to increase much more than yields. Until now yields were consistently decreasing, now there is no more room down for yields. Even if yields remain stable on today's levels, this chart suggests that energy prices will still increase. If yields increase, energy prices will increase more compared to yields. This is a recipe for hyperinflation... This chart below, shows more evidence towards the same conclusion... Basically, "long-term inflation" (PPIACO*GOLD) is creating bull-flags compared to "total money created from yields" (mod-yields*CURRCIR). This means that the cumulative price of production cost and gold cost, will substantially increase compared to what bonds yield in total. Conclusion: Chaos. No matter what politicians want, things are out of control right now. These charts suggest that. This is a long-term phenomenon which cannot change from free will. Nature is more powerful than we could ever hope to be ourselves. These charts are simply scary. I don't have the words to explain much. The charts speak for themselves. I am sorry for the rushed post, and any mistakes that I might have done. I began writing about DOW, and I found out that there is much more happening right now... We all knew that we could have increased cost of energy, and stagnating equities. I couldn't put the scale of them in perspective. I hope that these charts gave you some perspective, they certainly gave me a clear perspective. PS. While we cannot avoid what is coming, we have the power to choose what boat to take. The stranger told us that we cannot be in two different boats. We are basically obliged to choose our path. Tread lightly, for this is hallowed ground. -Father Grigori
TVC:DJI
by akikostas
10
The Case for UnemploymentUnemployment is tricky. You just cannot announce high unemployment. The political damage is too much to take. But unfortunately, the time comes when unemployment just increases... Every sane person would want the economy to remain calm for as long as possible. This is not sinister or bad. After all, it is in the duty of Governments and Central Banks to keep our daily lives as calm and peaceful as possible. Bad unemployment data is inherently bad. It is worse than bad inflation data. So it is always a tricky situation... After the inflation chaos, calm has return to the financial world. Volatility and inflation is lower, equities are higher! So all is well! Not only inflation is lower, but also unemployment! With an ultra-low rate of 3.4%. News just couldn't be better! Initial claims is also breaking down, signaling better days ahead... After all, low unemployment is good! Right? Not so fast fella! Low unemployment is good for, well, employees! But it is bad for corporations! Finding skilled personnel is incredibly hard. So much so, that most companies underperform. They just can't grow! I believe that unemployment does not necessarily break the economy. And the economy does not necessarily break the unemployment. It is a mixed bag... Sometimes, businesses benefit from high unemployment. If the antagonists fail, others get their workers, and most importantly, the piece of the pie! Some companies grow while others fail... Believe it or not, low unemployment is risky. Especially when it is in a 54 year low... It just cannot go lower! Recent unemployment data is perfect. However, Continuous Jobless Claims (USCJC) may give us a new perspective... It is at times like these when we see conflicting data. Continuous Claims increase while unemployment rate is decreasing. At that period, the official unemployment rate was making lower lows! This is deeply concerning. Especially when it is eerily similar to 2020. Perhaps it is a shift of balance right before a crisis. Perhaps a period when long-term employees lose their jobs since companies attempt to cut down costs. Instead, they hire less skilled workers with lower wages, perhaps for part-time jobs. This may be the last attempt of companies to stay afloat. It is also the last attempt for families to stay afloat. High food prices necessitate work at all costs, no matter how low... A crisis may be brewing... A Black Swan one, just like 2020. The Big Tech bubble is literally hollow, full of derivatives aka weapons of mass destruction. And the scale and the ramifications of such a crisis are still unknown. (By inflation pressure I mean the amount of work the FED does to fight inflation. While this chart increases, inflation gets out of hand) Perhaps all of this is meaningless. Only time will tell what will happen... WW3 commence I guess? Tread lightly, for this is hallowed ground. -Father Grigori
ECONOMICS:USCJC
by akikostas
3
Who would you trust with your money?Spoiler alert: More evidence against NDQ in this idea! US Companies are organized in clusters, some of them are DJI, SPX, RUT, NDQ etc. Some of them are more trustworthy than others. And by that I mean which of these sets one can depend on. DJI is indeed a dependable group of companies, the so called Blue Chips. Composed of the 30 largest US Companies. These companies aren't playing around, they have deep foundations that can withstand the worst of crises. The opposite of foundation is hollow ground. In finance, one hollow ground could be derivatives. More info about the possible repercussions of derivatives in my last idea: Derivatives are financial weapons of mass destruction. -Warren Buffett I have talked about how you should not blindly trust the price of the main indices. And as we know, the effect of derivatives is embedded in the price we see every day in our Watchlists. Equity price is a victim of derivatives. You know, these derivatives which by default have no foundation and are susceptible to a possible crash like the .com bubble. Let's hope a ".options" crash doesn't come for derivatives. And if it does, let's hope that the "weapons of mass destruction" was a figure of speech! So how big is their effect? BIS warned about the hidden debt, the "everything bubble" we have created and we are comfortably sitting inside it. Buffett has warned about derivatives. The only thing I can analyze is these hyperbolic charts, namely SQQQ (short QQQ) and it's cousins DOG (short DJI) and SPXU (short SPX). To remotely begin to make sense of their nature, we have to reduce their exponent. Dividing a chart by an arbitrary amount doesn't "flatten" it to a lower growth scale. We will have to raise SQQQ to 0.2 for example to bring it down to meaningful and comparable levels. I tried normalizing these 3 beasts, using the following methodology: For the entire history of SQQQ we calculate the SQQQ^-1 chart, and measure how much it grew in this period. As seen above, SQQQ^-1 increased by 17000x. To make it comparable to QQQ, we progressively increase the exponent so as to make QQQ and SQQQ growths identical. If this explanation didn't make sense, the following chart may clear things out. So we come up with the following "balanced" derivative charts. SPX // SPXU^-0.216 DJI // DOG^-0.62 QQQ // SQQQ^-0.244 WIth the // symbol I mean that these charts move in parallel. So what can we infer from them? More speculation maybe, more questions than answers... But still, there seems to be some important difference between them. I will divide these two charts to make some sense. When the chart increases, the "real" part of the index is increasing. When the chart decreases, the "derivative" part of the index is increasing. So in a sense, the chart increases when indices grow fairly , without cheating using derivatives. First SPX Next DJI Finally QQQ (NDQ) Painful... Is this derivative bubble the only reason NDQ is still afloat in this immense QT environment? In an attempt to keep business going and as money gets scarce, Big Tech is pushing prices higher using an immense amount of derivatives. Are these derivatives going to be the doom of NDQ? All of this may be speculative and some charts may not be financially true. But sometimes, price simply discounts everything. Tread lightly, for this is hallowed ground. -Father Grigori
AMEX:DOG
by akikostas
10
SPX | Early AccessI have posted about this chart before, but I wanted to show it more clearly this time. Above we see SPX, the standard chart. Below we see a custom index I invented, which is VVIX/VIX. It is a neat way to make sense of the chaotic nature of VIX. To clear things out, I have hidden both charts and instead I show an indicator called WLSMA. It is tremendously helpful to smoothen the "fog" the standard chart creates. In the end I will add the link to the inventor. I took great care on drawing these trendlines. I tried to get into the mind of the investor back then, and drew the lines that best made sense, and could provide some actual meaning. On the chart, red arrows are drawn. These are the times when the VVIX/VIX chart violates decisively it's trendline. On the same dates, I created arrows on the SPX chart to get an idea of just how early this method warns us. While this method may not be useful for traders (I am not a trader, I am just passionate analyzing charts), I find it incredibly interesting on how these two correlate, and make actual sense. I find VIX by itself completely useless. Don't get triggered by what I said. How on earth is VIX = 20 a good buy-in strategy? It is as about as useful as RSI getting below 80. Again don't get triggered by it and flame comments down below. Numbers and money don't mean nothing. It is perspective and values that make sense. Now onto some charts: In 2008 we were notified from VVIX/VIX all the way back in February of 2007, and got a confirmation on April of 2007. This is not a typo, 1 year before the GFC. Curiously, this happened when FED's tightening schedule was near it's end. Also interesting is the April-September period of 2008, when the VVIX/VIX chart showed signs of hope when it broke above it's trendline. And compared to now: We can conclude similarly for the 2010-2015 period. And the 2016-2020 period. And the 2020-2023 period of course. Are we approaching this hopeful period before the crisis? A comparison between 2008 and 2023, in the period of deadly hope. Link to the inventor of the WLSMA indicator: Tread lightly, for this is hallowed ground. -Father Grigori
SP:SPX
by akikostas
4
SPX | A Trader's MindThe anxious moment when your investment goes through a period of slowdown or drop. When everything is good, everyone is happy. Nobody thinks twice when a market is growing. It's at that point of the first lower-low, when an investor loses their sleep. And it can be suffering when insomnia is prolonged. The 2022 Recession will be remembered as the most confusing and pressured of all. One whole year later, and still we don't sleep all that well. We hoped that things would clear out by now. Instead, the situation is more confusing and chaotic than ever! Being in a period of all-time-high records, I feel proud. Yet, the responsibility in my work is most important than ever. And there are many records occurring right now... For the first time, Money Supply has taken such a dramatic downturn, with an incredibly steep yield-curve inversion. With 470B burned until now (M2SL chart) and with such a prolonged inversion, it seems that a new era begins right before our eyes. A period when money is scarcer and scarcer. We were crying all these years that money loses it's value. Now that money is getting much more powerful, we are still crying. This kind of mentality doesn't help us. It can certainly get us pretty far, but in the wrong direction. We should dedicate our thoughts and efforts into deciphering this incredible new era. I am not optimistic for this new era for many reasons, an explanation of these reasons is not fitting in a trading platform. We are facing serious humanitarian problems that we choose to avoid, or problems that we create (un)willingly. To figure out what happens, we should begin thinking spherically. Isolating equities doesn't get us far. It is the balance of powers that is changing in an instant. -- Tricky Bear Market Trendlines Bear market analysis is not as simple as many expect. The bottom is not that easy to pinpoint. There are many bottoms that precede the terminal bottom. In each one, everyone trades as if the bottom is in. Most of these times, the bottom is not in... I've seen innumerable charts this past year, claiming that the bottom is in and that we should trade it. Yet, none of them ended up true Breakout, divergence, MA crossover, over and over and over again... The same mentality occurred in previous recessions... After these instances, more downside followed. Are we sure we are out of the woods? -- Hollow Equities The Stock Market is not what it used to be. The major indices are not priced just by stocks, but from derivatives also. The following chart attempts at calculating the percentage quantity of derivatives. The higher it gets, the more "hollow" prices get. More info in the following idea: How much should we trust index prices given that they are filled with weapons of mass destruction? -- Cash instead of Stocks From 1920 to 2020, Equities were the go-to investment. Currency was just the mechanism to buy into equities. Now a paradigm change is beginning. Progressively higher yields and steady equities shape an entirely new understanding of what investment is. From investment in equities, to investing in money itself. A horizontal movement is expected for DJI against yields. Equities can increase as much as yields allow them to. Not the other way around. Until now, equities dictated yields. If equities stagnated, yields had to drop to stimulate the economy. Now, equities may increase only when yields allow them to. The FED is showing that rates will not lower even if this ends up in severe financial crises. Money has to remain strong for those who have it. In periods of war, financial advantage is more important than growth. Surviving against the enemy is a priority. Talking about a paradigm shift! -- Commodity Inflation Commodity inflation is brewing. Now it is beyond brewing, it is getting explosive... Inflation is getting so severe, that it is bull-flagging against money supply itself! At least according to my charts... And if Bitcoin can be considered a commodity, it is showing the same dynamics as material commodities do. And in an even higher degree! To NDQ Bulls, the big-tech bubble appears to have already ended! Perhaps we have not seen just yet the dynamics Bitcoin can get. It is proving an investment that is progressively accumulating incredible amounts of idle wealth. High amounts of money are "parked" in Bitcoin, sitting idle. This chart is very simplistic. One more experienced with Bitcoin analysis can make a more thorough analysis. If one of you does, please inform me because it is very interesting for me! There is much more occuring. Housing is one important market, on which I am not experienced to analyze. As a conclusion, I advise every TradingView user to concentrate their efforts into deciphering the future. In this new era of progressively stronger currency, equities and investments will not perform like they did the past 40 years of QE. There is much work to do for us to financially survive in this environment. PS. To get something out of the way, I don't give trading advice. My charts are drawn with arrows so as to explain more easily my thought process. I post these ideas to provoke conversation and logical analysis. I can always be wrong in my thought process. If you disagree with a chart, please disprove it with a chart. Not with texts of semi-logical reasoning and by calling me crazy or conspiracy theorist. Of course any comments and corrections are welcome! It is when you want to disprove something that requires you to send counter-evidence. Tread lightly, for this is hallowed ground. -Father Grigori
SP:SPX
by akikostas
5
SPX | The Everything BubbleSPX vs Inflation is a chart I explained in the following idea. While this chart showed incredible golden-ratio behavior, there are some periods which stand out. The smooth dance of the ratio throughout the last 100 years, has some quirks (the red ellipses). These periods are not random, they all feature a bubble behavior. It is clear as day that in 1996 the .com bubble formed, which caused SPX to return to trend in 2003. The 2004-2008 stock market growth and the Great Financial Crisis are not apparent, since they are part of The Great 2000 Recession. They are in the middle of a long-term downwards trend. So where does this leave us? If this chart has any meaning, we are in the middle of the air, with incalculable drop for the chart in the future... One target can be pinpointed using probable fib-extensions, using retracements drawn from important highs and lows. It is 12 times lower than now, or 92% drop. It depends on how you look at it... PS. I know that charts don't go back in time. The red arrow is drawn towards the left for aesthetic reasons. Who knows how far downwards is the trend now... PS2. I invented a new name for the Head and Shoulders pattern. I call it Cerberus, the three-headed beast guarding the Underworld. Look at it in action: The tail of Cerberus is a dragon's head spewing flames, which in trading would be a bull-flag. Chart taken from SPY_Master Tread lightly, for this is hallowed ground. -Father Grigori
SP:SPX
by akikostas
6