Charting is amazing. The excitement it gives me is far greater than the satisfaction a good trade could ever give me. It is easy for me to state this fact since I don't trade. I consider the stock market as a super-long-term strategy. A strategy that lasts for generations, not a career. After all, the most wealthy have ancestors heavily invested in the stock market decades ago.
Charting can be prone to showing ghosts when there are none.
We tend to believe a crisis is coming, when in fact it is ending.
No wonder the yield curve is super important. With specific adjustments to rates, the FED manages to accelerate and decelerate the economy.
I recently found out about the following chart:
SPX-equal-weight vs SPX-market-cap
This chart represents "democracy" in wealth distribution between the 500 members of SPX.
The higher the chart, the more spread out the wealth distribution.
Now we are apparently reaching what appears to be a significant floor.
There is a lot of ground to cover regarding this chart above.
First things first, there appears to be a significant correlation between yield rates and wealth spread. There also appears to be a lag on this chart. First there is a wealth distribution change, and then the yield rates change appropriately.
The charts above state that high yield rates go hand-in-hand with higher wealth distribution.
At first this may seem counter-intuitive. How on earth do high yield rates help the markets? We all know that equities suffered last year because of the rapid rate hike.
It is simple, really. High yield rates encourage banks to lend money.
High yield rates help spread money from the few to the many.
As a historical analogue we could compare the SPX/DJI chart.
This chart is false.
The many vs the few is not what you think it is.
There is one caveat with this chart. SPX is a market-cap index while DJI is a stock-price index.
With that in mind we should consider the following:
-- The SPX/DJI chart is not 100% comparable. It may even represent the "average cost" of a stock. Since Market-Cap (money) is divided by Stock-Price (stock).
-- In hindsight, we realize that the Great Depression happened in a period of ample and cheaper stocks, with market cap diminishing. It might have been the absolute definition of a bubble. Buyers bought progressively more and more stocks that came into existence out of thin air.
Does this story ring any bells? Has anyone heard about derivatives?
The RSP/IVV chart we talked before had an excellent behavior and correlation to yield rates.
All was well, until now. Now we have an issue...
The RSP/IVV ratio, which appears to lead yield rates is rapidly dropping. With that in mind, the FED should have lower yield rates into what the market prices them.
Right now, the FED attempts killing the market.
A conclusion is hard to make. Both the SPX/DJI charts, and the RSP/IVV-yield-rate chart suggest that yield rates are significantly overextended upwards.
Have we leaped too fast too quick? Has the FED overreacted?
Does wealth distribution suggest lower rates in the months to come?
Has the market settled with a low-rate hyper-inflationary future?
Will the RSP/IVV floor give-in?
Is a roaring '20s-like bubble brewing? Just like our "friend" Musk called...
Tread lightly, for this is hallowed ground.
-Father Grigori
Charting can be prone to showing ghosts when there are none.
I recently found out about the following chart:
SPX-equal-weight vs SPX-market-cap
The higher the chart, the more spread out the wealth distribution.
Now we are apparently reaching what appears to be a significant floor.
There is a lot of ground to cover regarding this chart above.
First things first, there appears to be a significant correlation between yield rates and wealth spread. There also appears to be a lag on this chart. First there is a wealth distribution change, and then the yield rates change appropriately.
The charts above state that high yield rates go hand-in-hand with higher wealth distribution.
At first this may seem counter-intuitive. How on earth do high yield rates help the markets? We all know that equities suffered last year because of the rapid rate hike.
It is simple, really. High yield rates encourage banks to lend money.
High yield rates help spread money from the few to the many.
As a historical analogue we could compare the SPX/DJI chart.
The many vs the few is not what you think it is.
There is one caveat with this chart. SPX is a market-cap index while DJI is a stock-price index.
With that in mind we should consider the following:
-- The SPX/DJI chart is not 100% comparable. It may even represent the "average cost" of a stock. Since Market-Cap (money) is divided by Stock-Price (stock).
-- In hindsight, we realize that the Great Depression happened in a period of ample and cheaper stocks, with market cap diminishing. It might have been the absolute definition of a bubble. Buyers bought progressively more and more stocks that came into existence out of thin air.
Does this story ring any bells? Has anyone heard about derivatives?
The RSP/IVV chart we talked before had an excellent behavior and correlation to yield rates.
All was well, until now. Now we have an issue...
Right now, the FED attempts killing the market.
A conclusion is hard to make. Both the SPX/DJI charts, and the RSP/IVV-yield-rate chart suggest that yield rates are significantly overextended upwards.
Have we leaped too fast too quick? Has the FED overreacted?
Does wealth distribution suggest lower rates in the months to come?
Has the market settled with a low-rate hyper-inflationary future?
Will the RSP/IVV floor give-in?
Tread lightly, for this is hallowed ground.
-Father Grigori
Comment:
Just to clear something out about the charts above:
This shows that the FED ignores the (purple) pain in the equity market and rates hikes unstoppably. At the same time, indices like NDX soar. While the purple line is dropping, wealth accumulation is occurring to few big stocks.
Comment:
Volatility analysis simple as 12345
Or even simpler... Simple as ABC
Note that the lower the chart (1/VIX), the lower the SPX.
Comment:
Simple as an elephant...
Comment:
I have just found out the following chart:
If we are to compare the few vs the many, we must first fix the indices.
DJI is a stock-based index, SPX is a market-cap-based index.
The only stock-based analogue to SPX that I could find is the RSP ETF.
So we can compare a DJI ETF like DIA to RSP. And voila!
Well... now THAT clears the picture.
We are at the tip of the iceberg.
If we are to compare the few vs the many, we must first fix the indices.
DJI is a stock-based index, SPX is a market-cap-based index.
The only stock-based analogue to SPX that I could find is the RSP ETF.
So we can compare a DJI ETF like DIA to RSP. And voila!
We are at the tip of the iceberg.
Comment:
Is that a massive anomaly on the right?
The crisis may never have came.
The 2020 crash had no effect to the underlying trend.
Now the balance appears to be shifting rapidly downwards.
Wealth is rapidly accumulating to the few, until we reach the horizontal rectangle...
...that is when the end times begin.
The crisis may never have came.
Now the balance appears to be shifting rapidly downwards.
Wealth is rapidly accumulating to the few, until we reach the horizontal rectangle...
...that is when the end times begin.
Comment:
Comment:
What are you doing Elon... ???
Comment:
The parasites have eaten all there is to eat.
Now they will let the haunted tower collapse.
Comment:
Comment:
Long-term inflation trend has broken out.
Unsurprisingly, the same goes for US GDP.
Remember, MV=PQ. GDP as a value is dependent on inflation.
Money Velocity is nearing a record-low value.
Money Velocity is nearing a record-low value.