• 14 hours China: The New King Of Caviar
  • 20 hours Gold Mid-Tiers Rally On Fresh Earnings Reports
  • 2 days Can The British Pound Overcome Brexit?
  • 2 days Is A Gold Breakout Near?
  • 3 days Federal Reserve Downgrades U.S. Growth And Cuts Rate Hikes
  • 3 days Disney Beats Out Comcast In $71.3B Mega-Merger
  • 3 days The Feds Continue To Prop Up Equities Markets
  • 3 days Bejing's Sway In South China Sea Is Fading
  • 4 days Saudis Eye Billions As Stocks Get Emerging Market Boost
  • 4 days Airbnb In Acquisition Mode Ahead Of IPO
  • 4 days Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 4 days Champagne Sales Slow As European Economic Worries Grow Louder
  • 5 days Putin Signs “Digital Iron Curtain” Into Law
  • 5 days Russian Metals Magnate Sues U.S. Over Sanctions
  • 5 days Tesla Looks To Jump Into Indian Market
  • 5 days Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 6 days Homeowners Experiment With Risky New Investment Trend
  • 6 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 6 days De Beers To Expand World’s Most Profitable Diamond Mine
  • 6 days Ford CEO Gets Raise After Massive Layoff Round
Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

The Chatroom Cartel Running Global Bond Markets

The Chatroom Cartel Running Global Bond Markets

Eight major banks have been…

  1. Home
  2. Markets
  3. Other

The State of the Trend

In a year full of surprises and challenges, the major averages had a very conformist performance deviating little from established precedents.

For example, in May '16, based on annual price advance and bottom reversal data, we gave an end-of-year price target of 2240 for the SP500.

The major averages followed the 20 year seasonal and 100 year decennial pattern very closely as well:

Dow Industrials Correlation

SPY Correlation

QQQ Correlation

The more pressing question now is what can we expect from 2017? Looking at the decennial pattern, the picture is mixed: 6 bullish and 6 bearish years. Year 17 in the 20 year cycle, however, tends to be more bearish than the average, and produces steeper declines.

20-Year Cycle

1987 stands out as the DJIA closed barely positive following a 43% drop in October. It should be noted, however, that the index had risen about 250% between 1982 and 1987. Currently, the DJIA is up 100% from the 2012 low, and 200+% from the '09 low.

In terms of longevity, this is the second longest lasting rally of the last 130 years. Therefore, odds favor a 20+% correction any time now.

Dow Historical Rallies 1896-2014

Going back to the decennial cycle we notice that bullish and bearish years follow a different seasonal path. Bearish years usually follow a down-up-down-up pattern (May 19, July 14, October 27), while bullish years follow an up-flat-up-down-up pattern (January 20, April 7, July 25, October 31).

For now, we'll start with a clean slate based on average projections and a few key angles:

S&P500 Daily Chart Projections
Larger Image

 

Back to homepage

Leave a comment

Leave a comment