Happy Dump Year! What a shocking year... equities dropping, bond market failing and energy skyrocketing. Almost a perfect storm ain't it?
But something ain't right... Have we passed the dump year or are we just started? Which number will we be talking about in the future, 22 or 23?
And another question... have equities peaked?
For the past year, bonds have been outperforming equities.
But equities have been holding relatively strong despite the monumental increase in yields.
Now we might have reached the point of diminishing returns.
Every move we make is beginning to turn up against us.
The similarity to the Great Depression is stunning.
Stochastics don't help the situation much. Even if a total crash does not occur, the product looks fated to move horizontally.
The cover chart pinpoints us on a fib retracement, with much resistance above. The drawn levels were respected throughout the last 15 years.
Other equity comparisons follow suit...
The charts above attempt to objectively calculate the price of equities compared to the cost of money.
This chart below attempts to calculate the excess performance SPX has, compared to the performance of an investment in bonds. It is further modified by PPIACO, the producer price cost.
Printed on the chart are some beautiful bull flags, and some very historically-important retracements. Equities will have much trouble gaining traction compared to bonds.
This year, the relative performance of equities compared to bonds, showed a 60% drop.
So 2022 was definitely a Dump Year. This is massive of a figure for the equity market, measured as relative performance. Also the bond market has suffered a lot this year.
If equities have already sustained a massive hit compared to bonds, who will be the next to take the dive? Since their product (their cumulative profit) has just now showed signs of stagnation.
Will equities drop again or bonds, or both? It smells like 2023 will have some sort of dump...
An analysis of equity mutual funds compared to bond-focused mutual funds could have a lot to say... I leave it as an exercise for the TradingView community. Feel free to tag me if you analyze anything regarding it!
PS. Happy Dump Days as of now (The peak of the product chart), for the main indices are:
DJI: Nov. 8, 2022
SPX: Nov. 10, 2022
NDQ: Oct. 25, 2022
Take a look at price action of the indices after that day if you are curious on how real prices translated from that day onwards.
Tread lightly, for this is hallowed ground.
-Father Grigori
But something ain't right... Have we passed the dump year or are we just started? Which number will we be talking about in the future, 22 or 23?
And another question... have equities peaked?
For the past year, bonds have been outperforming equities.
Now we might have reached the point of diminishing returns.
Every move we make is beginning to turn up against us.
The similarity to the Great Depression is stunning.
The cover chart pinpoints us on a fib retracement, with much resistance above. The drawn levels were respected throughout the last 15 years.
Other equity comparisons follow suit...
The charts above attempt to objectively calculate the price of equities compared to the cost of money.
This chart below attempts to calculate the excess performance SPX has, compared to the performance of an investment in bonds. It is further modified by PPIACO, the producer price cost.
This year, the relative performance of equities compared to bonds, showed a 60% drop.
If equities have already sustained a massive hit compared to bonds, who will be the next to take the dive? Since their product (their cumulative profit) has just now showed signs of stagnation.
Will equities drop again or bonds, or both? It smells like 2023 will have some sort of dump...
An analysis of equity mutual funds compared to bond-focused mutual funds could have a lot to say... I leave it as an exercise for the TradingView community. Feel free to tag me if you analyze anything regarding it!
PS. Happy Dump Days as of now (The peak of the product chart), for the main indices are:
DJI: Nov. 8, 2022
SPX: Nov. 10, 2022
NDQ: Oct. 25, 2022
Take a look at price action of the indices after that day if you are curious on how real prices translated from that day onwards.
Tread lightly, for this is hallowed ground.
-Father Grigori
Komen:
Just a minor mistake on the main chart, oh well...
Komen:
We are entering a period of diminishing returns.
Until 1999, a small yield decrease had multiplicative effect. Even though there was decrease in yield output (bonds performed less as years passed), the cumulative performance of the US economy overcame this small loss from decreasing rates. With significant RSI divergence now, in overbought conditions, and with stochastics targeting the bottom, it seems that the exponential gains from QE are now over. Even if yields go to zero, the economy is not balanced to support the party we had since 1950.
Equities have little breathing room compared to bonds.
The pattern is taken from 1957. This is a probable effect of the 4.0 retracement in the years to come. Equities can increase compared to yields as far as yields allow them to.
Equities have little breathing room compared to bonds.
Komen:
RSI divergence is a long and painful story...
Komen:
Oil compared to yields is looking very strong...
Komen:
Striking similarity to January of 2002
Komen:
This point is also a long-term retracement.
An incredibly precise one...
Commodities to over-perform bonds?
Commodities to over-perform bonds?
Komen:
We got robbed!
Confusing I know...
Komen:
Gold and Production Cost are SWORN ENEMIES to equities.
(As @SPY_Master mentioned, DBC*GOLD is a very reasonable calculation of inflation. To analyze old data, the only "cousin" we have for DBC is PPIACO. This chart basically calculates how high SPX has gone / can go compared to inflation)
Isn't it interesting that in this chart, the 2008 recession is not apparent? It is part of the "Great 2000 Recession" which lasted more than 10 years.
There is a lot above us...
...and a lot of room to drop.
Back in 1980, SPX dropped to it's 2.0 retracement, compared to GOLD*PPIACO. It lost more than 90% of it's price compared to the "inflation" product.
Now we could very well reach the same. A 60% drop from today's price looks guaranteed...
Isn't it interesting that in this chart, the 2008 recession is not apparent? It is part of the "Great 2000 Recession" which lasted more than 10 years.
...and a lot of room to drop.
Back in 1980, SPX dropped to it's 2.0 retracement, compared to GOLD*PPIACO. It lost more than 90% of it's price compared to the "inflation" product.
Now we could very well reach the same. A 60% drop from today's price looks guaranteed...
And they are too hard for me to process to even understand them myself, let alone help you, as a reader, to understand them.
This profile is like a diary, like a notepad, I have no other practical way to write down everything I discover. And since charting is very exciting for me, I love sharing my passion with everyone, no matter how rough or immature certain ideas/explanations might be.
I could have a clean professional look to my profile and make more constructive ideas. While I certainly could do that in the future, for now TradingView is my playground, a place where I can express anything as childish as one can get.
Thank you for your patience throughout all this creative "mess"!
PS. I am usually drinking when I post these ideas, so you get the idea...