I created these charts back in July when I was first starting to delve deeper into time cycles and their prevalence in financial market's. What I found in July I considered profound. There were multiple, generational, time cycles that were all converging between last summer, and early 2022. Meaning they were all in one way shape or form signaling some sort of volatility or "soft patch".
I basically screamed this from the roof tops and the set ups were literally perfect. To the point where I'd get my hair standing on end with so many signals all converging at one. Point. In time.
I was obviously skunked on that one. Thinking our pullback in Sept/Oct was going to be "it" I took a massive drawdown going into the fall. The market has, or was, herculean in its resilience. Every time we had anything near a decent pullback you could literally bet every time that price was going to come back and win. You can argue that it's been like that the past 10-12 years even.
Now, post COVID aside; the markets have been good to the buyers. There's been warning signs since 2007, but people who sounded the alarm have been made fools of since, year after year. The longest bull market in history. Until we got into 2018-2020. Mr. Jerome "mid-cycle adjustment" Powell comes out and signals his willingness to raise rates. The markets immediately start to sell off. This mixed with the trade war was too much for the market to bear. But then, almost on a dime Mr. Powell came out and reversed course, right in time to stop the SPX from hitting a bear market.
Then what does he do? Well, come 2019-2020 he actually cuts rates. Why? I till this day don't really understand. We just had had the 10/2's invert, but that's what happens in cycles. There's peaks and troughs. And SPX as well as DJI seemed to be printing topping patterns, with NDX blazing its own trail, in which it will the next 3-4 years. SPX particularly was printing a massive broadening top as we entered into late 2019. But the bulls, emboldened by their new cheaper money, kept buying.
And then CLAP. Everyone got smoked. COVID literally wiped out billions in net worth almost hourly as the financial system was melting down.
You all know the rest.
Why am I giving this synopsis? Because there's one key player in this story that just changed teams.
The Fed put is, or was, real. The market literally had blind, unabashed faith that the Fed was going to keep the music playing for as long as it could, and indeed they did.
The put is expiring.
After the denial and incompetence of the US Fed and Powell on the inflation story that was so blatantly in everyone's faces Jerome Powell literally, press conference after press conference, hearing after hearing, promised everyone it was "transitory".
Ha.
Inflation has been either matching or breaking records over the past 6-8 months. And all of this is starting to get pretty hot in the face of an economy that may be showing signs of stress. The have nots have become even more destitute and the have's literally have more than they ever could have wished for. All for trusting in daddy Jpow.
But in a fit of soberness Powell and co came out two months ago and finally signaled that rate hikes were coming sooner than expected, and more than expected. And the market shrugged it off.
That brings us to this chart right here.
This time cycle is only from our last bear market (2020 lows, 2020 high before correction), it's young. But it's profound. And not only this one but many more like it not only point to the next two years as a "soft patch", but the implications of these time cycles are gigantic in scale.
2000 tech bubble time cycle:
snapshot
2002-2007 time cycle, nesting in October 2022:
snapshot
2008 Fiancial Crisis Cycle, first nesting in September, next is early 2023:
snapshot
And even things like the 2018-2020 leg higher is hitting a 1.618 in Trend Based Fib Time:
snapshot
That big ass RATE HIKES you see on the chart was typed and placed there back in July. This writing has been on the wall for what now feels like an eternity. And it's tough being wrong, almost all the time, about something you know is going to happen.
But when you think about it the world Central Bank cartel is in quite the quagmire. They now have to fight the highest inflation since the 60's while also making sure the massive shot of economic activity that was induced by the pandemic stays in the same trajectory unless things get really ugly.
They had their cake and they ate it too. And now we get to watch the aftermath of what's to come. These time cycles point ot a median point in time around end of 2023-early 2024. Meaning, if you trust the charts you can expect weakness from now until two years from now as the Fed hikes rates and tries to instill some form of normalcy to financial markets.
Since 2008, and to a much higher degree, post COVID. The SPX and the Fed balance sheet has had a .93 coefficient.
snapshot
They literally match each other perfectly.
Now, what happens when the orange line starts pointing downwards? Well, you're about to find out.
Cheers.
Oh, and to the lot of you who have been here with me playing this gut wrenching but somehow so fulfilling game we play, hats off to you, you made it. To the ones who thought it could never happened. This time is different.
I basically screamed this from the roof tops and the set ups were literally perfect. To the point where I'd get my hair standing on end with so many signals all converging at one. Point. In time.
I was obviously skunked on that one. Thinking our pullback in Sept/Oct was going to be "it" I took a massive drawdown going into the fall. The market has, or was, herculean in its resilience. Every time we had anything near a decent pullback you could literally bet every time that price was going to come back and win. You can argue that it's been like that the past 10-12 years even.
Now, post COVID aside; the markets have been good to the buyers. There's been warning signs since 2007, but people who sounded the alarm have been made fools of since, year after year. The longest bull market in history. Until we got into 2018-2020. Mr. Jerome "mid-cycle adjustment" Powell comes out and signals his willingness to raise rates. The markets immediately start to sell off. This mixed with the trade war was too much for the market to bear. But then, almost on a dime Mr. Powell came out and reversed course, right in time to stop the SPX from hitting a bear market.
Then what does he do? Well, come 2019-2020 he actually cuts rates. Why? I till this day don't really understand. We just had had the 10/2's invert, but that's what happens in cycles. There's peaks and troughs. And SPX as well as DJI seemed to be printing topping patterns, with NDX blazing its own trail, in which it will the next 3-4 years. SPX particularly was printing a massive broadening top as we entered into late 2019. But the bulls, emboldened by their new cheaper money, kept buying.
And then CLAP. Everyone got smoked. COVID literally wiped out billions in net worth almost hourly as the financial system was melting down.
You all know the rest.
Why am I giving this synopsis? Because there's one key player in this story that just changed teams.
The Fed put is, or was, real. The market literally had blind, unabashed faith that the Fed was going to keep the music playing for as long as it could, and indeed they did.
The put is expiring.
After the denial and incompetence of the US Fed and Powell on the inflation story that was so blatantly in everyone's faces Jerome Powell literally, press conference after press conference, hearing after hearing, promised everyone it was "transitory".
Ha.
Inflation has been either matching or breaking records over the past 6-8 months. And all of this is starting to get pretty hot in the face of an economy that may be showing signs of stress. The have nots have become even more destitute and the have's literally have more than they ever could have wished for. All for trusting in daddy Jpow.
But in a fit of soberness Powell and co came out two months ago and finally signaled that rate hikes were coming sooner than expected, and more than expected. And the market shrugged it off.
That brings us to this chart right here.
This time cycle is only from our last bear market (2020 lows, 2020 high before correction), it's young. But it's profound. And not only this one but many more like it not only point to the next two years as a "soft patch", but the implications of these time cycles are gigantic in scale.
2000 tech bubble time cycle:
snapshot
2002-2007 time cycle, nesting in October 2022:
snapshot
2008 Fiancial Crisis Cycle, first nesting in September, next is early 2023:
snapshot
And even things like the 2018-2020 leg higher is hitting a 1.618 in Trend Based Fib Time:
snapshot
That big ass RATE HIKES you see on the chart was typed and placed there back in July. This writing has been on the wall for what now feels like an eternity. And it's tough being wrong, almost all the time, about something you know is going to happen.
But when you think about it the world Central Bank cartel is in quite the quagmire. They now have to fight the highest inflation since the 60's while also making sure the massive shot of economic activity that was induced by the pandemic stays in the same trajectory unless things get really ugly.
They had their cake and they ate it too. And now we get to watch the aftermath of what's to come. These time cycles point ot a median point in time around end of 2023-early 2024. Meaning, if you trust the charts you can expect weakness from now until two years from now as the Fed hikes rates and tries to instill some form of normalcy to financial markets.
Since 2008, and to a much higher degree, post COVID. The SPX and the Fed balance sheet has had a .93 coefficient.
snapshot
They literally match each other perfectly.
Now, what happens when the orange line starts pointing downwards? Well, you're about to find out.
Cheers.
Oh, and to the lot of you who have been here with me playing this gut wrenching but somehow so fulfilling game we play, hats off to you, you made it. To the ones who thought it could never happened. This time is different.
