I’m back in town after spending almost two weeks on the road for which I shall spin some supply chain sorrow later on, but now that I have had a moment to review the carnage, allow me to sum it up this way:
There has been a fair amount of pontificating on the Bubblevision networks about the markets possibly capitulating now, which they have not. Also how this could be another “ultimate buying opportunity” which means the “analysts” on their networks are stuck with garbage like HOOD or CVNA that they can not dump on the sheeple.
Thus let us do what we always do on these pages and think long term. As in real long term.
The following charts are of the three major indices as 25 year weekly charts with the 300 day moving average. I use the 300 day moving average as a fair approximation of available annual trading days along with tracking long term trend movements on weekly charts to point out trend changes outside of normal technical moves on daily charts for both individual stocks and broader indexes.
Let’s start with the NASDAQ Composite which has whipsawed investors for the last 25 years:
Notice the two previous bubbles of the modern era were relatively short in duration. It was not until the 2008 Great Financial Crisis that the central banks of the world decided to directly intervene in markets to a point where risk was removed from not only the financial system, but perceived risk to the citizenry was also given cover.
The Great Fed Bubble, as I like to call it, has lasted since March 2009 through November of 2021, despite the dead cat bounces in the markets this year. After twelve years of monetary excess, the failed fiat polices of the ECJ, BoJ, and of course the leader of the pack, the Fed, are now coming home to roost.
The S&P 500 while not as dramatic follows a similar pattern:
The low of the last 25 years was the infamous “666” in March of 2009. I find it highly unlikely we will see that low again in our lifetimes (you never know), but in reality the 300 day moving average test this year is a strong possibility. Once the markets kiss the 3100 levels, a break below that number is almost a mortal lock and penny puts are a lottery ticket waiting to happen.
Lastly the media’s favorite index, the Dow Jones Industrial Average:
A crash of the DJIA to the 26,000 level would be a crisis which would make 2020 look like a church picnic. Politically it is death to the party in power, the banks would once again be the focus of the ire of the masses, and worse, with inflation running amok there is little the Fed can do but to tighten causing a further downward cascade in equity prices.
Thus looking at this from this author’s predictive perspective, once the 4000 level breaks on the S&P 500, a short term rally which I term a “capitulation bounce” then wave 3 down as I discussed in another article will happen during the summer. Here is the pattern, although perhaps not identical, it is close enough to presume what will happen:
Everything is setting up for a major break in the late July through October time period which will bring echoes of 2008 back to the forefront, even though this has nothing to do with what happened at that time.
This is the bursting of The Great Fed Bubble where financial institutions, citizens, and governments lose faith in the system they gamed for over 100 years to manipulate currencies and create unsustainable levels of debt. Look for a test of the 3100 level on the S&P 500 to happen as early as the August to September time period and possibly even a break below the 2500 level which will follow at frightening speed. Even my optimistic forecast of a year end close between 2900-3200 for the S&P 500 looks like a pipe dream now as the politicians who are running our nation display incompetence at levels I have never seen in my lifetime.
Hell, Biden makes George W. Bush look like a Rhodes scholar.
The consequences of the coming shortages in America, rationing, global famine, wars, and collapse of the international Keynesian financial system can not be understated; our civilization is now potentially at the brink of a change which will extinguish freedom as we know it for decades to come.