Marvel at my amateur technical analysis and overly wordy explanation for I am a genius!
Pretty simple stuff really, a 40%+ decline 2002 to 2008 followed by an A wave, a B wave and wave C rally starting April 2011. That rally topped in 2016 and we have seen a 5 sub-wave drop down from 104 to 88. Now I won't bore you with facts and figures - you wouldn't comprehend them like I do (because I am a genius). But, I am really quite interested by all this.
Why? Quantitative easing as you will know, is a massive increase in the money supply that is still underway. Low interest rates and huge increase in money supply resulted in the value of the USD going up? Flooding the market with something normally doesn't increase the value of that thing. A large part of the extra USD created has just sat on Corporate balance sheets to offset massive losses in the financial crisis, but clearly a lot has gone into hard and soft assets like the stock market as well. It seems that the Fed can't or won't "normalise." Any announcement of rate hikes send the stock-markets (used to free or almost free money) scrambling. On the face of it, it seems that QE is a one way street. Imagine the reaction if the fed announced a rate hike by 100, 150, or 200 basis points tomorrow (clearly that wouldn't happen).
At least the US was taking action in the face of a crisis, and global money flowed to the relative safety of US markets (from deflationary Europe and Japan and a weakening China) ever since. But there seems to be a build up of energy evident with the USD gaining value while trillions of dollars was created and released into the market.
What is next? Well, it seems that wave B has completed or is near to completion. At the moment, wave B appears to have ended with a diagonal and equal highs (97.71 on both the 10th Dec 2018 and again on the 3rd March 2019). What I expect next is a drop, and for $97.71 to possibly remain the swing high as wave C down starts. The target of 82 is just based on a 1:1 extension of wave A down. It could be longer, and it could be shorter. A drop to 82 would only be a 14% devaluation, which isn't that dramatic. So either wave C is deeper or the stored energy will be released later. It is a bit hard to tell just from the chart, as it only goes back so far.
Let's see. A devaluation like that would likely spike GOLD and may make USD corporations more profitable as well as cheaper to foreigners looking for somewhere safe to keep their money. Too bad the US stock-market is in a bear market. There will be some volatility ahead. Enjoy
"Nice Post" --- Thanks --- Excellent Chart Work
March, 2008 low 70.70 should be taken out in a few years. (My opinion)
"God Bless America"
Democratic Socialism in the U.S.A. will be a major disaster.
"One Eye Jim"
flyinkiwi10
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@jeffreyjim, Thanks man, my favourite part is the pretty colours. As an outsider to the US (obviously, as I put a "u" in colour), all Democracies have "socialist" policies, like medicare, social security, state run education in the US. There are aspects of society that just cannot be run for the benefit ofall by the profit motive (btw feel the Bern). Healthcare shouldn't bankrupt you. The life expectancy in the US shouldn't be reducing as politicians make speeches about the importance of "self reliance." The US has been a socialist Democracy since the 1940s.
The most significant part of the 2008 financial crisis: that the private sector losses were socialised.
Saying that, you don't even need to blame Democratic Socialists in advance - the US is presently prioritising corporate profits ahead of fiscal or monetary responsibility. The moment when my ears pricked up; when the US announced a major bond issuance to fund the budget deficit. It is possible that septuagenarians are not the people we should be relying on to be making decisions (borrowing from tomorrow to cover costs today) when they will not have to live with the consequences. Once any government borrows more than a certain percentage of its budget (I forget the percentage level), currency devaluation and hyperinflation is set in motion.
jeffreyjim
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@flyinkiwi10, "America -- U.S.A." is headed in a path of disaster in the next few years. The higher we go the harder we fall.
No later than the end of 2023 --- 66.7 % chance or better. Most people "Do Not" see it coming.
The March, 2009 -- "DJIA Great Recession Low" could be taken out by the end of 2023 ? -- .618 ret. min. (My opinion)
March, 2008 low 70.70 should be taken out in a few years. (My opinion)
"God Bless America"
Democratic Socialism in the U.S.A. will be a major disaster.
"One Eye Jim"