AynCzubas
Short

Thought-provoking S&P Pattern?

FX:SPX500   S&P 500 index of US listed shares
196 2 1
When I look at the peaks and lows of the market since 2000, I can't help but visualize a pattern forming here. In this chart, the peaks of 2000 and 2007 are marked with yellow vertical lines and the lows of 2002             and 2009 are marked with purple ones.

These are cyclical lines which, based on the time frames from peak to peak and low to low, project equal time frames forward. Notice how the time frame for the total decline from 2007-2009 was about half of what it was from 2000-2002. Based on the future projections of the next implied "due" peaks and lows ( just assuming for the sake of argument that they will occur on such a "schedule" at all), the hypothetical time frame for the next decline will approach relatively no time.

Should a decline occur so rapidly at the implied point, I would not be surprised, considering the amount of speculative zeal over the years that has been encouraged by loose lending policies intended to maintain inflation in the midst of a more powerful deflationary trend. The market has been prevented from naturally correcting for so many years that when it does fall under its own weight, it will presumably do so more forcefully and quickly than most can imagine.

Of course, at least three data points in agreement are necessary to propose the beginning of a pattern in anything, but in my humble opinion it certainly looks and feels like the equities market is fast approaching the third one.
AynCzubas
2 years ago
If we look at the inflation-adjusted S&P 500 (S&P denominated by the Consumer Price Index), the picture is perhaps more worrying. It indicates that if we disregard the decline in the purchasing power of the U.S. Dollar from then until now, then the S&P has still not yet exceeded its peak value in the year 2000:
snapshot
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AynCzubas
a year ago
The S&P seems to be following the path outlined in the chart above posted 6 months ago (note the forecasted periodic cycle high and low in May and August, respectively). The most recent high was in May, and this emerging decline is following quite rapidly down the vertical August line.
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