I was doing a research about market crashes in history (what was the reason, what happened next and how it was solved) ...So I read many titles about financial instruments in US (Loans,credit cards,mortgages etc) ...yeah and those freaking BONDS...we have two types of bonds - short-term and long-term..and here comes the trouble. They should go in the same direction. That means if short-term bonds(STB) rise,then long-term bond yields (LTB) should rise as well...so what is wrong ? Every time in history before a market crash these STB and LTB yiels were going in different directions - STB were rising whereas LTB were falling. We can talk about divergence.
Crash Confidence Indicator is in it s highest value since latest market crash in 2007 - that means that many investors believe that market crash is not going to happen... the same scenario was right before 2007 crash
Citi group‘s indicator about euphoria or panic in the stock market is in euphoria sector and is steadily rising
Another indicator..VIX ..is down 28%...that means that fear has crashed
Stocks are expensive relative to 10-year average earnings. We are above number 24 which is much higher than the long-term average of 16.
Relative to GDP,the US stock market looks very expensive
Now look at the chart below. As you can see there is the VIX indicator, SPX (S&P500 index) and 10-y Bond (blue line). I found interesting correlations between these instruments. As you can see, before every market crash we had scenario when VIX fell and Bonds rised. Afterwards bonds lost their value,VIX skyrocketed and SPX and economy crashed. These days we have a lot of "positive" sentiment in Bonds and we are grateful that VIX is falling...really ? look at the chart...VIX is falling and bonds are rising. From history performance I expect an upcoming market crash in 2022...and in my personal opinion I expect this carsh in the beginning of June.
Take it serious, I am not joking and I put a lot of my time into this research.
@Mazsi, Thank You! You can better see these movements on NQ100 chart
Mazsi
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@JanKoristka, I’ve looked at some past market crashes too, after that I found 2008.. I would say we are 2x faster now then 2008, some moves are 3x faster. VIX has similar structure too. We already have the big rally up above the 200 ma. Now we are in the second rally phase. 4200 in the cards. We should see the freefall within 2 weeks. The model worked like clockwork since the top. This is coincide with your analysis.
JanKoristka
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@Mazsi, I agree. I think we could see one of the biggest crashes ever. But I am not a financial advisor and this is just my honest opinion. But I am really surprised and glad to see that my prediction more than one year in advance really worked out. As you mentioned, it is good to study history about market crashes so you can see indications in the future. Definitely well spent time!
Mazsi
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@JanKoristka Furthermore I’ve bought VIXL when VIX was at 18,57 holding it until the freefall zone
emiliolicon98
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I ain’t expert I’m just saying there wasn’t a stimulus package during those Market crashes , the stimulus helped the market go to record highs, like I understand the analysis you provided but don’t you think that it is possible that the stimulus may help the market again? Plus reopening ? Like a lot of stocks dropped but it was a healthy one & spy wasn’t hurt that much so Idk tho just my opinion but please educate me if you can if I’m wrong or misleading.
JanKoristka
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@emiliolicon98, The stuff around the corona like lockdowns and higher unemployment opened eyes of many newbies who‘ve seen "free money" in the market. And those stimulus packages just gave them their money for "gambling". This all stuff together caused the huge euphoria and I think this is just a beginning. Yes, stimulus packages can help the economy but in a long-term run it doesn‘t seem to me like a wise option. The market crash is coming,the question is not "If" but "when". I am not the person who is expecting crashes every week 😀. But this is just going to happen.
emiliolicon98
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Yeah i know definitely not very good for the long term it’s just right now, I’m just debating because everyone keeps saying it will crash like very soon like having a peak these coming weeks but then crashing, I definitely agree that the market will crash it’s just when, but I think it will happen after another bullish year or the momentum it has because once spy goes to that peak a big crash is coming, I just don’t think soon but who knows honestly because we don’t control the market , I mean the big dogs could make the market crash at anytime with even having every analysis possible, but if it ain’t manipulated I believe we will just have one more big bull run & that’s it bc it will come down hard.
JanKoristka
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@emiliolicon98, Yes, I definitely agree. It is too soon in my opinion as well. That‘s why I expect our crash in June 2022 (Based on performance and market behaviour). Well,I am not an expert on market crashes. This prediction is my first but one day I would like to predict these crashes successfully.
By the way, Thank you for Your feedback ! Really appreciate it !