looks like a local top and possible global deflationary environment ahead for the next year or so. hedge with cash and bonds might be best bet but I would not personally short the market.
Tip: Indicator needs to be improved by normalizing the data from various indices before averaging(not done in graph above)
Thanks for that. It never occurred to me to try M2*M2V but that makes a lot of sense intuitively. But I could only think of two reasons for it:
- It makes sense to represent inflation effects on pricing as a ratio of M2. More buybacks etc. within the market itself means the price is "lying" to some degree so we need some truth filter other than purely inflation numbers.
- I noticed if you don't multiply by M2V, it paints an angled resistance structure rather than a horizontal one.
Any other reason for that or is this why you did it?
- It makes sense to represent inflation effects on pricing as a ratio of M2. More buybacks etc. within the market itself means the price is "lying" to some degree so we need some truth filter other than purely inflation numbers.
- I noticed if you don't multiply by M2V, it paints an angled resistance structure rather than a horizontal one.
Any other reason for that or is this why you did it?
Cheers