Quantitative Easing, a fancy way of describing a bubble, the easy way out.
QE Alpha
During QE Alpha, speculation lead to a massive bubble, and a painful burst.
Technicals: A Fibonacci Retracement shows that price followed closely it's levels.
QE Beta
During QE Beta, after stabilizing from the Great Depression, and after the end of WW2, economy rose steadily. US being one of the winners of WW2 and with the Marshall Plan deal, had a big advantage compared to the rest of the world.
Technicals: The 1.618 retracement proves a significant resistance from above, which behaved as the ceiling for the Great Stagflation period of 1960s. Price reached an indecision where price couldn't penetrate the 1.618 retracement, but didn't want to fall below the 1929 high. A golden bull-flag was created, which escaped to the upside in 1982.
QE 1.0
After severe stagflation, a new era of progressively lower yields led to the creation of the mechanism for QE1. It's fuel ended in 2000, and for a decade, the economy had big trouble going forward. It wasn't until the GFC when the foundation was set for the birth of QE2.
Technicals: We have reached the 3rd harmonic and this proves big resistance for price. During this time, a harmonic bull-flag shaped.
QE 2.0
The QExperience, which until now was unknown and unnamed, had now a name. And we have lived with it until 2021. Derivatives came about and inflated what is left to inflate. Since day 1 of 2022 we are outside it's trend.
Technicals: Retracements drawn using the Great Depression peaks/bottoms constitute significant support/resistance levels.
Conclusion: This SPX modificator makes historical analysis of SPX more mathematically accurate and clearer to see/analyze. A new era of increasing yields leads to multiplicative problems in the QE machine. Welcome to the QT era. We are already in it, for the past year, we hope you enjoy your stay!
Look at the GFC intervention.
The modified SPX chart depends on yields. More about it on this chaotic, full-of-mistakes idea.
Tread lightly, for this is hallowed ground.
-Father Grigori
QE Alpha
During QE Alpha, speculation lead to a massive bubble, and a painful burst.
Technicals: A Fibonacci Retracement shows that price followed closely it's levels.
QE Beta
During QE Beta, after stabilizing from the Great Depression, and after the end of WW2, economy rose steadily. US being one of the winners of WW2 and with the Marshall Plan deal, had a big advantage compared to the rest of the world.
Technicals: The 1.618 retracement proves a significant resistance from above, which behaved as the ceiling for the Great Stagflation period of 1960s. Price reached an indecision where price couldn't penetrate the 1.618 retracement, but didn't want to fall below the 1929 high. A golden bull-flag was created, which escaped to the upside in 1982.
QE 1.0
After severe stagflation, a new era of progressively lower yields led to the creation of the mechanism for QE1. It's fuel ended in 2000, and for a decade, the economy had big trouble going forward. It wasn't until the GFC when the foundation was set for the birth of QE2.
Technicals: We have reached the 3rd harmonic and this proves big resistance for price. During this time, a harmonic bull-flag shaped.
QE 2.0
The QExperience, which until now was unknown and unnamed, had now a name. And we have lived with it until 2021. Derivatives came about and inflated what is left to inflate. Since day 1 of 2022 we are outside it's trend.
Technicals: Retracements drawn using the Great Depression peaks/bottoms constitute significant support/resistance levels.
Conclusion: This SPX modificator makes historical analysis of SPX more mathematically accurate and clearer to see/analyze. A new era of increasing yields leads to multiplicative problems in the QE machine. Welcome to the QT era. We are already in it, for the past year, we hope you enjoy your stay!
Look at the GFC intervention.
Tread lightly, for this is hallowed ground.
-Father Grigori
Comment:
SPX shaping into a bear flag?
Comment:
There are several prices for something... Not everything is/should be measured in "spot" dollar value.
If you want to consume oil for example, you are interested in it's current cost. Then the absolute price is a good measure.
If you consider investing in oil and you are troubled between it and bonds, consider the following chart. This year there was substantial drop in oil performance.
If you consider investing in equities, you should shape your portfolio analyzing this chart:
In periods when equities overperform bonds, the chart increases. It will be very interesting to see how this chart plays out in the years to come...
If you want to consume oil for example, you are interested in it's current cost. Then the absolute price is a good measure.
If you consider investing in oil and you are troubled between it and bonds, consider the following chart. This year there was substantial drop in oil performance.
If you consider investing in equities, you should shape your portfolio analyzing this chart:
In periods when equities overperform bonds, the chart increases. It will be very interesting to see how this chart plays out in the years to come...
Comment:
PLEASE make sure to follow this idea, since all of this got quite confusing...
Comment:
One comment on the USOIL chart:
When USOIL/modified-yields drops, it means that modified-yields perform more than oil, and that modified-yields are a riskier investment with more reward. Oil this year has been a very low-risk investment, compared to bonds.
USOIL is now a very low risk asset, compared to equities (SPX). With commodities looking very promising for making new highs in the years to come, it could be considered a good investment from a risk standpoint and good long-term evolution.
We can conclude the same when we compare SPX/modified-yields. Equities have been a much lower-performing investment this year, with very little risk, compared to bonds.
When USOIL/modified-yields drops, it means that modified-yields perform more than oil, and that modified-yields are a riskier investment with more reward. Oil this year has been a very low-risk investment, compared to bonds.
We can conclude the same when we compare SPX/modified-yields. Equities have been a much lower-performing investment this year, with very little risk, compared to bonds.
Comment:
The pattern must be fulfilled...
By then the ribbon will be substantially inverted, which will prove significant resistance for price.
In short, equities down, yields up, energy up.
In short, equities down, yields up, energy up.
Comment:
The violation of this trend marks the end of QE. This shows the true effect. I hope you all understand it.
With Green and Red arrows, I have marked the points I used to draw the rays.
These long-term rays, prove as significant resistance.
Hitting one of them, was a fundamental reason the Black Monday was so severe.
These long-term rays, prove as significant resistance.
Hitting one of them, was a fundamental reason the Black Monday was so severe.
Equities = SPX
Borrowing Rate = (US10Y + 1 + 1/US10Y)
Their product is basically the "true" change of the economy. It answers how much the economy is growing/dropping.
Equities * Borrowing Rate
While their ratio is the relative increase of the two. It answers how much equities are increasing compared to the increase of "fake money" made by "duplicate-lending".
Equities / Borrowing Rate