TradingShot

S&P500 entering a Golden Decade and no one is paying attention

Long
TVC:SPX   S&P 500 Index
This is S&P on the log scale of the 1M (monthly) time-frame. Since the Great Depression, the index has entered a Channel Up that never stopped/ broke to the downside to this date. In particular, I have distinguished this pattern into 3 key landmarks:

1) When the price broke below the 1M MA200 (orange trend-line) but made a bottom on the Higher Lows trend-line of the Channel Up (the end of a Bull Cycle).
2) Then it crashed violently in a day or a few days (Black Monday-October 1987 and COVID crash-March 2020) and hit the 1M MA50 (blue trend-line).
3) The Hyper Cycle Peak just below the 1.5 Fibonacci extension level (end of the DotCom Bubble).

As you see the two eras are identical. And what is more interesting is that the 1M MA50 crashes seem to serve as the middle of each Hyper Cycle making the start - middle with the middle - end fairly symmetrical. At least that appears to be the case for 1974 - 1987 (roughly 4750 days) and 1987 - 2000 (roughly 4700 days). So if we are currently in an identical Hyper Cycle with the March 2020 COVID crash serving as its middle, then then next peak near the 1.5 Fibonacci extension should be roughly as long as the time from the bottom of the Subprime Mortgage Crisis in February 2009 until the COVID crash in March 2020, i.e. 4000 days. That puts the target for S&P500 around 12000 by mid 2031! See also how identical the RSI action is between the two eras as well as the bottom levels on both the 1M MA200 crashes and the 1M MA50 crashes.

So if the above data are true and the pattern replicates the former Hyper Cycle, it means that we've just started the 2nd part of it, which is also the most aggressive. This time around the index is closer to the top of the Channel Up than it was after the 1987 crash, which means that if it breaks, there is a chance to approach the 1.5 Fibonacci extension even quicker. Will that mean that we will be looking for the next peak above the 1.5 Fib and closer to the 2.0 Fib? Who knows? But I firmly believe that (especially after the trillion dollar rescue packages and the near zero interest rates globally that seem to be here to stay) we have a new Golden Decade ahead of us for the stock markets and no-one seems to be paying attention as most are focused on overvaluations expecting a new crash.

What do you think? Contrary to popular belief, is this the time to go heavy on stocks for one decade and happily retire in the process? Feel free to share your work and let me know in the comments section!


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