SPX | A Trader's Mind
Updated
The anxious moment when your investment goes through a period of slowdown or drop.
When everything is good, everyone is happy. Nobody thinks twice when a market is growing.
It's at that point of the first lower-low, when an investor loses their sleep. And it can be suffering when insomnia is prolonged.
The 2022 Recession will be remembered as the most confusing and pressured of all. One whole year later, and still we don't sleep all that well. We hoped that things would clear out by now. Instead, the situation is more confusing and chaotic than ever!
Being in a period of all-time-high records, I feel proud. Yet, the responsibility in my work is most important than ever.
And there are many records occurring right now...
For the first time, Money Supply has taken such a dramatic downturn, with an incredibly steep yield-curve inversion.
With 470B burned until now (M2SL chart) and with such a prolonged inversion, it seems that a new era begins right before our eyes. A period when money is scarcer and scarcer.
We were crying all these years that money loses it's value. Now that money is getting much more powerful, we are still crying.
This kind of mentality doesn't help us. It can certainly get us pretty far, but in the wrong direction. We should dedicate our thoughts and efforts into deciphering this incredible new era. I am not optimistic for this new era for many reasons, an explanation of these reasons is not fitting in a trading platform. We are facing serious humanitarian problems that we choose to avoid, or problems that we create (un)willingly.
To figure out what happens, we should begin thinking spherically. Isolating equities doesn't get us far. It is the balance of powers that is changing in an instant.
-- Tricky Bear Market Trendlines
Bear market analysis is not as simple as many expect. The bottom is not that easy to pinpoint. There are many bottoms that precede the terminal bottom. In each one, everyone trades as if the bottom is in. Most of these times, the bottom is not in...
I've seen innumerable charts this past year, claiming that the bottom is in and that we should trade it. Yet, none of them ended up true
Breakout, divergence, MA crossover, over and over and over again...
The same mentality occurred in previous recessions...
After these instances, more downside followed. Are we sure we are out of the woods?
-- Hollow Equities
The Stock Market is not what it used to be. The major indices are not priced just by stocks, but from derivatives also. The following chart attempts at calculating the percentage quantity of derivatives. The higher it gets, the more "hollow" prices get.
More info in the following idea:
How much should we trust index prices given that they are filled with weapons of mass destruction?
-- Cash instead of Stocks
From 1920 to 2020, Equities were the go-to investment. Currency was just the mechanism to buy into equities.
Now a paradigm change is beginning. Progressively higher yields and steady equities shape an entirely new understanding of what investment is. From investment in equities, to investing in money itself.
A horizontal movement is expected for DJI against yields. Equities can increase as much as yields allow them to. Not the other way around.
Until now, equities dictated yields. If equities stagnated, yields had to drop to stimulate the economy. Now, equities may increase only when yields allow them to. The FED is showing that rates will not lower even if this ends up in severe financial crises. Money has to remain strong for those who have it. In periods of war, financial advantage is more important than growth.
Surviving against the enemy is a priority. Talking about a paradigm shift!
-- Commodity Inflation
Commodity inflation is brewing. Now it is beyond brewing, it is getting explosive...
Inflation is getting so severe, that it is bull-flagging against money supply itself! At least according to my charts...
And if Bitcoin can be considered a commodity, it is showing the same dynamics as material commodities do. And in an even higher degree!
To NDQ Bulls, the big-tech bubble appears to have already ended!
Perhaps we have not seen just yet the dynamics Bitcoin can get. It is proving an investment that is progressively accumulating incredible amounts of idle wealth. High amounts of money are "parked" in Bitcoin, sitting idle.
This chart is very simplistic. One more experienced with Bitcoin analysis can make a more thorough analysis. If one of you does, please inform me because it is very interesting for me!
There is much more occuring. Housing is one important market, on which I am not experienced to analyze.
As a conclusion, I advise every TradingView user to concentrate their efforts into deciphering the future. In this new era of progressively stronger currency, equities and investments will not perform like they did the past 40 years of QE. There is much work to do for us to financially survive in this environment.
PS. To get something out of the way, I don't give trading advice. My charts are drawn with arrows so as to explain more easily my thought process. I post these ideas to provoke conversation and logical analysis. I can always be wrong in my thought process. If you disagree with a chart, please disprove it with a chart. Not with texts of semi-logical reasoning and by calling me crazy or conspiracy theorist.
Of course any comments and corrections are welcome! It is when you want to disprove something that requires you to send counter-evidence.
Tread lightly, for this is hallowed ground.
-Father Grigori
When everything is good, everyone is happy. Nobody thinks twice when a market is growing.
It's at that point of the first lower-low, when an investor loses their sleep. And it can be suffering when insomnia is prolonged.
The 2022 Recession will be remembered as the most confusing and pressured of all. One whole year later, and still we don't sleep all that well. We hoped that things would clear out by now. Instead, the situation is more confusing and chaotic than ever!
Being in a period of all-time-high records, I feel proud. Yet, the responsibility in my work is most important than ever.
And there are many records occurring right now...
For the first time, Money Supply has taken such a dramatic downturn, with an incredibly steep yield-curve inversion.
With 470B burned until now (M2SL chart) and with such a prolonged inversion, it seems that a new era begins right before our eyes. A period when money is scarcer and scarcer.
We were crying all these years that money loses it's value. Now that money is getting much more powerful, we are still crying.
This kind of mentality doesn't help us. It can certainly get us pretty far, but in the wrong direction. We should dedicate our thoughts and efforts into deciphering this incredible new era. I am not optimistic for this new era for many reasons, an explanation of these reasons is not fitting in a trading platform. We are facing serious humanitarian problems that we choose to avoid, or problems that we create (un)willingly.
To figure out what happens, we should begin thinking spherically. Isolating equities doesn't get us far. It is the balance of powers that is changing in an instant.
-- Tricky Bear Market Trendlines
Bear market analysis is not as simple as many expect. The bottom is not that easy to pinpoint. There are many bottoms that precede the terminal bottom. In each one, everyone trades as if the bottom is in. Most of these times, the bottom is not in...
I've seen innumerable charts this past year, claiming that the bottom is in and that we should trade it. Yet, none of them ended up true
Breakout, divergence, MA crossover, over and over and over again...
The same mentality occurred in previous recessions...
After these instances, more downside followed. Are we sure we are out of the woods?
-- Hollow Equities
The Stock Market is not what it used to be. The major indices are not priced just by stocks, but from derivatives also. The following chart attempts at calculating the percentage quantity of derivatives. The higher it gets, the more "hollow" prices get.
More info in the following idea:
How much should we trust index prices given that they are filled with weapons of mass destruction?
-- Cash instead of Stocks
From 1920 to 2020, Equities were the go-to investment. Currency was just the mechanism to buy into equities.
Now a paradigm change is beginning. Progressively higher yields and steady equities shape an entirely new understanding of what investment is. From investment in equities, to investing in money itself.
A horizontal movement is expected for DJI against yields. Equities can increase as much as yields allow them to. Not the other way around.
Until now, equities dictated yields. If equities stagnated, yields had to drop to stimulate the economy. Now, equities may increase only when yields allow them to. The FED is showing that rates will not lower even if this ends up in severe financial crises. Money has to remain strong for those who have it. In periods of war, financial advantage is more important than growth.
Surviving against the enemy is a priority. Talking about a paradigm shift!
-- Commodity Inflation
Commodity inflation is brewing. Now it is beyond brewing, it is getting explosive...
Inflation is getting so severe, that it is bull-flagging against money supply itself! At least according to my charts...
And if Bitcoin can be considered a commodity, it is showing the same dynamics as material commodities do. And in an even higher degree!
To NDQ Bulls, the big-tech bubble appears to have already ended!
Perhaps we have not seen just yet the dynamics Bitcoin can get. It is proving an investment that is progressively accumulating incredible amounts of idle wealth. High amounts of money are "parked" in Bitcoin, sitting idle.
This chart is very simplistic. One more experienced with Bitcoin analysis can make a more thorough analysis. If one of you does, please inform me because it is very interesting for me!
There is much more occuring. Housing is one important market, on which I am not experienced to analyze.
As a conclusion, I advise every TradingView user to concentrate their efforts into deciphering the future. In this new era of progressively stronger currency, equities and investments will not perform like they did the past 40 years of QE. There is much work to do for us to financially survive in this environment.
PS. To get something out of the way, I don't give trading advice. My charts are drawn with arrows so as to explain more easily my thought process. I post these ideas to provoke conversation and logical analysis. I can always be wrong in my thought process. If you disagree with a chart, please disprove it with a chart. Not with texts of semi-logical reasoning and by calling me crazy or conspiracy theorist.
Of course any comments and corrections are welcome! It is when you want to disprove something that requires you to send counter-evidence.
Tread lightly, for this is hallowed ground.
-Father Grigori
Note
For some peculiar reason, the link to my previous idea is not loading the chart preview....
Commodity inflation is brewing. Now it is beyond brewing, it is getting explosive...
...
Note
One short explanation regarding these exotic equations I invented.This is the monthly chart if we try to compare SPX with the yield curve (US10Y-US02Y).
Maths teach us that dividing by something zero tends to infinity. The yield curve is a chart which is important for us to analyze it when it crosses this problematic zero.
One solution to the yield curve is to consider it as the ratio US10Y/US02Y
While this fixes most of our problems, one problematic period appears, when yields reached almost zero in 2020-2021.
We could plot US10Y/(US02Y+1) as a bodge. This will significantly mitigate this specific issue in time, but it is not a definitive fix. An exotic transformation however is what can fix our day!
More info regarding these peculiar calculations can be found in this following idea:
PS. Do note that DGS2 is a long-term alternative to US02Y. When I perform calculations using DGS2 I try to pair it with DGS10 (US10Y).
Curiously, US10Y shows longer-term data compared to DGS10, while the opposite is true for the 2-year bond.
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