NYSE Composite Monthly (Log):
- Despite last years decline, the technical trend remains intact.
- Last years high to low decline covered 25%. Post “Greenspan Put” declines have covered -42%, -60% and -40% respectively. The 25% drawdown seems incomplete to me. Particularly against an environment in which the Fed is deemphasizing asset prices and concentrating on keeping inflation inbounds.
- Both policy vectors (Fiscal and Monetary) are negative and are unlikely to provide support. This may change if rising rates break the weakest financial link and forces the Fed to pivot to address a systemic issue or the building recession threatens to become a hard landing.
- Of the 19 bear markets since 1929, 15 have been accompanied by rising inflation . Rising inflation is by far the most consistent/reliable of the bear market factors.
- I believe that the period of very low inflation created by globalization, good demographics, and several other factors has reversed. With higher underlying inflation rates, central banks won’t have the luxury of combating weak asset prices with unlimited liquidity.
And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum.
Stewart Taylor, CMT
Chartered Market Technician
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.