Nobody was prepared the time when the 2020 Black Swan came. But the location of the Swan is very interesting:
First, SPX: Not very interesting of a spot... In the middle of nowhere really.
Now, DJI/M2SL There has been an impenetrable ceiling for more than 10 years. We almost hit it a third time since 2008, and then the crash came.
Long-term Inflation (Gold*PPIACO) divided by money earned from bonds (modified-yields*M2SL) Note that this chart above does not include equities.
DJI/(modified-yields) This chart above measures the rate equities become worthy compared to the cost of money. In a sense, as the chart increases, equities take more of the form of "gold" compared to bonds. More about this in the following idea.
These charts above show that the Swan occurred in a significant ceiling. A lockdown does not necessarily lead to massive wealth transfer to big companies, and an immediate crash.
This chart below shows that the Swan came as an LPSY phenomenon, in the short-term recession no-one remembers. DJI*(modified-yields) vs DJI
So in a sense, long-term charts prove that there was not much room above when the Swan occured. And the short-term chart proves that the event occurred at the absolute last moment, when there was no "supply" left (LPSY). The crash was so fast because there was not much volume left in circulation. So the sell-off was quick. The recovery was immediate because the 2020 Swan by itself didn't create structural issues in the economy.
Tread lightly, for this is hallowed ground. -Father Grigori
PS. I could get my account banned for spreading conspiracy and misinformation. I really don't care.
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Look at these unbiased trendlines, drawn using magnet tool. With Green and Red arrows, I have marked the points I used to draw the rays.
These long-term rays, prove as significant resistance. Hitting one of them, was a fundamental reason the Black Monday was so severe.
Drawing the 1932-1999 trendline, using the magnet tool, on the 4M chart, we see the following: We hit it in the LPSY DAY. MINDBLOWING!
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Do you know when the fakeout occurred? On the Monday after the 2020 US elections.
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I'm calling it, DJI compared to yields to drop 70% from today's price. If yields stay constant, this will take DJI below the 2008 peak. Crazy right? In my opinion, not that crazy...
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Pattern taken from 2008 and narrowed appropriately. It fits like a glove! Similarly, the target is below the 2008 peak. Note that the chart above is about SPX*(modified-yields), not the standard SPX chart. Since yields are in 2008 levels, the target for SPX to be below 2008 peak levels is confirmed.
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The violation of this trend marks the end of QE. This shows the true effect. I hope you all understand it. With Green and Red arrows, I have marked the points I used to draw the rays.
These long-term rays, prove as significant resistance. Hitting one of them, was a fundamental reason the Black Monday was so severe.
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The game is set for an upcoming black swan event. Volatility is warning us. More specifically, the VVIX/VIX ratio. Get ready.