Stocks Completing ~40-Year Advance
03/31/15 INSIIDE Track: “Stock Indices are in the process of transitioning into a new 40-Year Cycle, having just completed a 40-Year Cycle of Stock-flation – an inflationary advance in equity prices from Dec. 1974 into Dec. 2014. It is likely to take some time before the masses recognize this transition taking place.
This has been a replay – ’resembling’ what was seen between the early-1930’s and early-1970’s – a similar 40-Year advance…
From the Great Depression DJIA low of 1932, Stock Indices rallied for 40 years into 1972 (with an intervening, 35+% decline 5–6 years prior to that ultimate peak) – increasing more than 25-fold in the process. That rally lasted into Jan. 1973 – making it a total of 40 years & 6 months – and led to a 50% drop unfolding over the ensuing 2-year period.
From the Stock-flation DJIA low of 1974, Stock Indices rallied for 40 years into 2014 (with an intervening, 35–50% decline 5–6 years before the present) – increasing more than 25-fold in the process. That rally has lasted into 1Q 2015. Could a similar 2-year/50% drop unfold once a top is signaled?
And, of course, the 1932/1933 economic low (1933 was trough of Great Depression, spurred by massive gov’t intervention and policies) arrived exactly 40 years from the Panic of 1893.
Since a 40-Year Cycle is a much broader measure – with the potential for a 6–12 month variance – it is critical to look at more focused cycles & indicators for specific strategies. One comparison was described in recent Weekly Re-Lays and corroborates my expectation for the next decline to look a bit more like (resemble) the 2000–2002 decline:
And that has been described as a higher-degree parallel to what was seen ~90 degrees/days, ~180 degrees/days & ~360 degrees/days prior – with declines culminating in mid-April 2014, mid-Oct. 2014 & mid-Jan. 2015.
However, there is a better analogy to what has been expected & described…Traders need only to review the market action in Jan.–April 2000 for this parallel…
The Indices set new all-time highs in late-Dec. 1999–mid-Jan. 2000 and then experienced 3 rounds of significant selling in Jan. & Feb. 2000…
They then rallied into March 23/24th – with the S+P & NQ-100 setting new highs while the DJIA set a lower high… a bit like the divergent highs that keep unfolding now. In many of those Indices, they only broke out to new highs 1–3 trading days before their March 24th intraday peaks.”…
The focus remains on the second half of April 2015 for corroborating events – in and out of the markets – one of which could be the weekly trends turning down for the first time in many months.
3-6 month & 6-12 month equity investors should continue to lighten up on long positions as the Indices enter a period when a major decline could begin to take hold.”