It was five years ago today that I first got it into my head to write about the markets. SPX, in particular, seemed like it was topping out. I wrote two posts that day that laid out what I thought was a pretty good charting argument for a decline:
My charts were arguably simpler and easier to read back then — as were the markets.
As it turned out, May 2, 2011 was the high for the year. SPX dropped from 1370 to 1074 before it was all over. It included a nifty analog that allowed us to call the July/Aug correction to the day/dollar, thus cementing my confidence in chart patterns.A lot has happened in the past five years, and that confidence has been tested many times — chiefly because central banks around the world have decided it’s not enough to establish monetary policies that would be beneficial to markets.
They’ve taken it upon themselves to reinflate the bubbles that existed in 2007 via the yen carry trade, suppressing interest rates, injecting vast sums of money directly into fixed income and even equity markets, and of course, the constant threat of more QE.
They, and their functionaries, have also made a concerted effort to understand, anticipate and deliberately bust major chart patterns that might have facilitated corrections — hence the countless H&S Patterns which have failed to play out over the years.
This morning, they (predictably) trotted out Warren Buffet to quiet the markets. But, the fact remains that a number of factors that have wrestled stocks higher over the past several months, not to mention years, are broken.
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