You want doom, depression, and agony?
I got it.
Bears will love this.
Bulls will cry.
But the reality is that charts don’t lie.
Almost a haiku but screw it, let’s immerse ourselves on some real dead of summer doom and gloom.
For those who have not noticed, I have evolved over the past year and learned to start using the S&P 500 Equal Weighted index to give a more realistic approach to prices and pattern recognition. Today I decided to open this up to the long long term view and guess what?
My wife doesn’t know it but we’re building a bomb shelter.
First let’s look at the last five years and review what has happened:
Outside of the period of the hidden 2019 banking crisis and the pandemic, prices almost always go up. But after making a new top over 6500, things begin to fluctuate, then drop, the rise, but never back to new all time highs.
This has happened before and I’ll let the dates on this chart speak for itself:
Good times there folks.
So what does the chart look like over its entire 20 year history? Not good. The financial pumps have been wide open since the .com crash and it would appear that barring an obvious major economic correction to normalize economic growth at lower levels, there is a lot of hurt heading America’s way:
I peg final resistance to a complete 1929 style crash between the two Fibonacci retracement numbers on the chart above. If we reach the lower band, everything shuts down; banks, markets, everything. But if the government intervenes with the central banks and stops the decline by buying everything and backstopping the little guy and the big guy, all bets are off. I put that number at the SPXEW somewhere into the 1800-2000 range. By then it would be an epic economic disaster which will change our society for half a century to come.
If that’s not enough doom for you, stay tuned. I’ll have more tomorrow.