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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Look at SPX versus M2 money supply. Breaking out of a MAJOR resistance level from prior to the financial crisis. Above here, the next resistance is at dotcom boom levels. Could ultimately top out around there, around 0.33. That gives the index at least 50% possible upside.
After that, things could get ugly, depending on monetary policy and the geopolitical situation.
-Victor Cobra
alb65
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Nice analysis technically speaking, but the weak point on it is your assumption that “low interest rates are here to stay”. With a total internal debt of 28 trillion dollars, the US will have to renegotiate it with the bankers, and only a small forced increase of interests on that astronomical debt figure will crash the SP500 in no time. (by the way, this is what caused the Great Depression in 1929). So be careful, people, it may happen sooner than later.
pechi123
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@alb65, Agreed, faulty assumption and 1.5 multiple extension, never heard of that in Elliott Wave.
onosejun
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@alb65, this is the new "it is different this time!"
remember people.
expansion could never last forever.
SXTrading
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If you think bullish confidence will allow price to reach there, I think your crazy. With most of the sentiment being that the market is overvalued and artificially inflated, price cannot keep rising without coming down to establish a new price floor. We need a prior bear market to allow this.
pechi123
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@SXTrading, Look what happened after the last pandemic in 1918, economy recovered and stocks fell.
epiclegendaryman
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Unfortunately, I must disagree. A for effort, great take, just include the following factors in your next update: a) multipolar politics, b) multipolar economy, c) sovereign debt, d) debt economics, e) psychology ( of market makers), f) corrections (are necessary for upward movement) and g) overvalued stock. With great respect I think we are entering a decade of depression since everything is linked to the greenback, see the: dot com, mortgage crisis cycle, we are entering a similar sideways correction from what it seems. Safe trading. This is not financial advice.
MccaslinAndy
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@epiclegendaryman, debt for america is a figment, its not real. It was created to have some sort of throttle even though we have never paid attention to it. America creates a budget every year but what is it based on? Nothing. If we need more we make more. Sure there is inflation but again its fake. Someone decided the inflation rate once and thats the benchmark. If we never say we are in inflation then there is no inflation. Economics are a joke and essentially are reoccuring additions to the law that made someone an extra few dollars so we all have to follow it as it would be taboo to change from it. Man sets the limits but who enforces those limits? No one as to enforce them ther ewoud lnede o tbe a powere higher than the human creating the rule. Sure there is God but he does not operate in the same mindset as us. Everything we teach and everything you said was made up by men and once it was not but now it is
Olafito
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@MccaslinAndy, Ha, love this reply, from one Course in Miracles follower to another. It's not real. It's all a dream. Live your own imagination......