Charts are not the end all be all. February 22, 2020 should have taught everyone this simple edict. Accidents happen and although they may "Appear" in our Charts, there is something FAR MORE IMPORTANT and that is the underlying Fundamentals.
It is more than fair to suggest the Federal Reserve can and will provide unlimited support to the Equity Complex, Bonds, Real Estate, Money Markets as well as support Fiscal Malfeasance by our Government.
To a point...
Global Equities look terrible, there is an accident ahead, a large and insidious event that will arrive unannounced and undo what has been done at surreal expense.
It has been a long time - An extreme divergence between US Equities and Global Markets.
A large and important drop in Asia's Equities Markets implies a contagion is developing and with it a hyper selloff in global equities.
Divergences within our Equities Complex have NEVER been this extreme.
It is referred to as Capitulation, not by you or I - but by Global Central Banks under the direction of the BIS.
Yeah, I've been saying something similar for a while.
When this Humpty comes tumbling down I hope everyone enjoyed the past 7-9 years ... We're going to get to repeat them.
From 1993 to 2000 (7y), the market when from $44 to $153 tripling value (251% gains).. That crash ended at the 328-level and, in 2y, wiped out over 70%.
Then, we repeated it all again 5y later, but so much worse. Yep, the 2008 crash (it actually started late-2007) wiped out MORE than was gained. We BARELY topped 2000 ($154-ish) and proceeded to DELETED everything back to mid-1996, almost 13y of advances and effort gone in 1.5y.
Notice any patter developing? ... 7-2 (.285) ... 5-1.5 (0.3)? Yeah, for every year of gain there's roughly 1.3 of crash.
2020 was a flash crash and not in any way similar to 2000, 2008. But, we were on the same trajectory that, when it did happen, would have stunned even the most prepared among us. Think S&P @ 160s, maybe less. Sound like a vaguely familiar number? What was our highest before the last crash? $154. When this hit, I estimate it would have taken about 4y of pain until we settled right back into mid-2013 era.
But wait, it gets worse ... so, so much worse. That expected crash from that similar trajectory would have been a cake walk compare to what I see headed our way. That ain't no light at the end of the tunnel. THAT is a fookin' freight train barreling towards us.
That trajectory we were on ... hoooooooo-boy we've blown that out of the water. We didn't just pick up a little speed toward cataclysm. No sir, we've took both feed and firmly planted them on the accelerator, tripling the rate of increase. Yep, we've gone from a leisurely stroll to an all-out sprint into oblivion. The past 1.5y has added 4.5y to an already 13y cliff's edge.
It ain't gonna be pretty and I've visions of 1929-styled emotional response.
(Imma publish this with a chart showing what I'm talking about. It might be a little while for as I flesh out the indicators drawn and an interesting tidbit not presented here. )
HK_L61
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@TranceaddicT66 We have 5 left to complete, this should be 4... test 200SMAs, break them and reverse to new highs.
We shall see.
Thank you
HK_L61
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Appears Timely.
HK_L61
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Appears to have leanings... to SELL today.
leftygolf69
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Great stuff. Got lots of cash on the sidelines but how to best take advantage of this drop if and when it happens is the question.
HK_L61
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@leftygolf69, It will happen in the Blink of an eye at any level...
This is the issue, managing drawdowns in anticipation of a rapid decline.
Cash, although the probably the best position for most, will trade below PAR...
Another concern as Supply Side disruptions move prices even higher, thereby further
destroying Purchasing Power Parity.
tblocke
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@leftygolf69, I do too. The problem is is all this money gets out again it has the potential to increase the volume of money. If that happens you could see super high inflation. Having short positions seems logical but it’s super hard to time when things go to shit. Many have tried and most fail. My goal is not necessarily to make money but preserve it. Good luck.
HK_L61
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@oplocke, 2U as well.
There is a much greater problem :)
UnknownUnicorn11430563
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Thank you for this. You are amazing insiteful. I seen part of this but not close to the depth you did, wonderful and bless you!
When this Humpty comes tumbling down I hope everyone enjoyed the past 7-9 years ... We're going to get to repeat them.
From 1993 to 2000 (7y), the market when from $44 to $153 tripling value (251% gains).. That crash ended at the 328-level and, in 2y, wiped out over 70%.
Then, we repeated it all again 5y later, but so much worse. Yep, the 2008 crash (it actually started late-2007) wiped out MORE than was gained. We BARELY topped 2000 ($154-ish) and proceeded to DELETED everything back to mid-1996, almost 13y of advances and effort gone in 1.5y.
Notice any patter developing? ... 7-2 (.285) ... 5-1.5 (0.3)? Yeah, for every year of gain there's roughly 1.3 of crash.
2020 was a flash crash and not in any way similar to 2000, 2008. But, we were on the same trajectory that, when it did happen, would have stunned even the most prepared among us. Think S&P @ 160s, maybe less. Sound like a vaguely familiar number? What was our highest before the last crash? $154. When this hit, I estimate it would have taken about 4y of pain until we settled right back into mid-2013 era.
But wait, it gets worse ... so, so much worse. That expected crash from that similar trajectory would have been a cake walk compare to what I see headed our way. That ain't no light at the end of the tunnel. THAT is a fookin' freight train barreling towards us.
That trajectory we were on ... hoooooooo-boy we've blown that out of the water. We didn't just pick up a little speed toward cataclysm. No sir, we've took both feed and firmly planted them on the accelerator, tripling the rate of increase. Yep, we've gone from a leisurely stroll to an all-out sprint into oblivion. The past 1.5y has added 4.5y to an already 13y cliff's edge.
It ain't gonna be pretty and I've visions of 1929-styled emotional response.
(Imma publish this with a chart showing what I'm talking about. It might be a little while for as I flesh out the indicators drawn and an interesting tidbit not presented here. )