The S&P500-0.05% , as viewed from the world by adjusting the S&P500-0.05% by the US Dollar-0.08% , had its 4th BEAR MARKET since the peak in 1999. I said "HAD" because the current rally has broken the 50% speed line of the decline, which is a simple way to measure the end of any trend.
The world may not exactly look at the market this way, but since the DXY-0.08% is a trade-weighted US Dollar-0.08% , it at least captures a sense of what our wealthiest trading partners are experiencing when they are watching the US stock market move up and down.
If you note each time the 50% speed line is breached, that there is at least a correction of some kind but I think it is safe to say that the low we made in the 1st quarter of 2016 was a meaningful low and it brought out a lot of bears and fear-mongers.
Please visit my other forecasts, particularly the one where I gave a long list of reasons for the market to be bottoming right when it was back in February. I hope you enjoy it and I look forward to your comments.
Tim West March 17, 2016 10:18PM EST
Kommentar
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Still holding up.
Kommentare
bracken
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I have some difficulties understanding what breaking the 50% speedline really means. If you take the 2007-2009 decline for example, the 50% speedline was broken at an early stage (2008-02) but nevertheless continued down much further. How do we know the same thing won't happen to the present decline that started 2014?
fb1807
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Yes the speed line is broken but like the article say there is always sometime afterward some sort of correction after the breach that is why you see some rally crossed back the went back up some other just went thru and corrected later. But this rally look like the cross of 2003 rally basically corrected on top of speed line and then shot up. The only thing that it confirms id that we will not see the low of feb 11 2016 cheap oil low us dollard and easing buy all the world bank set this up to have a new all time high. Let not kid ourself USA has the best technology the most lucrative financial system and now the cheapest oil on the planet if that does not constitute perfect condition for a thriving economy what will??? I am a bear but I must admit that this situation is a perfect combination for a all time rally.
timwest
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The problem we have here in the US is a very weak demographic whereby we have many more people retiring than we have new entrants into the workplace. It is very difficult to replace the spending power that is being lost with new spending power amongst a collapsing legion of 40-49 year olds, which are the prime spenders in any economy. Keep in mind that after 1965 in the US the amount of new births plunged by 40% and has stayed that low since then. It's hard to envision, but just imagine what 40% fewer people in their "maximum spending years" will do for an economy and that is why we have very slow large home sales compared to the boom into 2005. Cheap oil can't change demographics, so I'm afraid the US equity market is destined for sideways for the next 5 years or more.
AlbertCheng
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I also agree US stock market continues sideways. But in the short term, do you think SPX will rally to breakout 2050 upwards?
IvanLabrie
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The speed line is a nice touch Tim.
Very good alternate angle to look at the market.
kunsan
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Not correct. Both the SPX and DXY are trading at multi year highs therefore your chart should be showing a massive new high in Dollars. You need to Multiply not Divide.
likebike
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The chart is interesting, but your ratio is backwards. It should be "SPX500 * DXY", not "SPX500 / DXY". SPX500 already has a dollar component in its natural denominator, because it is priced in dollars. By dividing again by DXY, you are double-dividing by the dollar component, which will just produce garbage.