scheplick

Charting some of the big global events of the last 20 years

AMEX:SPY   SPDR S&P 500 ETF TRUST
I just wanted to add a few events to a chart of the S&P 500 and share some quick thoughts about them. The first and most obvious is just how strong this bull market has become.

It's more than doubled its highs from the DotCom Bubble and the Great Financial crisis.

The 2016 election and the COVID-19 crisis both barely put a dent into the price action. It is really hard to call tops and bet against the market. Only a few people in history have ever done it well.

For me, when I see this chart, I just don't know how the market suffers another 20% drawdown again in the next 12 months. The COVID-19 crash seemed to be the big one . It wiped out a lot of "weak hands" and it also brought in a wave of new investors, mostly young and just getting started. The market would have to correct 30% just to get back to its prior COVID-19 lows.

And so I am left wondering: has new bull market just begun? Are we at the stages of something like the DotCom Bubble? Do we need to climb even higher, say another 50%-100% before we can talk about an impending correction? The strength of this market is a site to behold. And the difference between the DotCom Bubble and the Financial Crisis was that those were structural, broad market moments that lead to devaluation and cycle reset. I'm not sure now is the time for a cycle reset because it seems the sudden transition to WFH, remote work, and immediate Fed supportive policy may actually be the start of the next cycle.

This is on my mind and I'm thinking about it daily.

I work at TradingView helping to build charts, tools, and software for everyone interested in financial markets.

Twitter: https://twitter.com/scheplick
Blog: https://scheplick.com/

Comments

good job!
+1 Reply
You need not worry about the doom-and-gloom market crash predictions here or elsewhere. They're the reason we know the market isn't due for a(nother) major correction. That's because when everyone agrees, it's probably wrong. So, only when the bears relent and become bullish will we know that there is no one left to buy and thus the top is in. Until then, dip-buying will prevail, and short-selling will simply provide more fodder to rip to the upside. Of course, this is presuming a black swan event does not occur. But the nature of black swan events is that they are unforseeable -- unlike bankruptcies or higher interest rates, which we are already aware of the possibility for. Markets can stay overbought for very long periods of time, and buy climaxes can extend well beyond what seems reasonable. Also, more money is lost waiting for a correction than is lost during one. If we have a 5-10% pullback in Q1, buy stocks with strong fundamentals and ignore the doomsdayers. Bears are rarely right, and when they are, it's usually not for very long.
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I think much higher soon, but i only share details to clients. Astro insight shows more up for sometime until...
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CAPE still isnt as high as in 1999
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Add Quantitative Easing periods, to get the real picture.
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Biden reaffirming intent to institute a debt jubilee of $10k for student loan debt across the board is pretty significant. Further, another $2k stimulus isn't fully priced in yet. There's talk of war breaking out in South China seas. While I don't see us getting involved in the battle, we'll certainly experience the shock from trade embargos that will invariably arise. Buying 'volatility' seems more reasonable than buying traditional investments, given these wild justifications for higher highs and lower lows. Probably the only comfort in going long at this point is that price action will swing back in your favor just as quickly as it swings away. Shorting, on the other hand, means managing premiums/margin calls.
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Very interesting! Good job!!!
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Thank you for the analysis and discussion. As a business owner and new covid trader, i too think about these issues daily.

I think we can all agree on two things- the ongoing wave of covid bankruptcies, and to the +$7.2B in unpaid rent. With the eviction & foreclosure moratoriums in effect, there is huge elephant in the room that not many traders talk about.
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