DOW Recession Theory (If this is indeed the top) Post comments!
Updated
The main purpose of this chart is to point out a couple of interesting points and channel trend lines going back to before the 2008 recession. This information is purely skeptical and should in no way be used for, or is intended to influence investing decisions.
1: A misshapen tripple top formation -
As shown on the chart above, in 2014 the DOW broke out of the major recovery channels started in 2008 and then proceeded to post monumental gains all the way until December of 2018. My personal opinion is that the majority of stock price gains from 2014 through 2018 was contingent on firstly; a republican president being sworn in for the first time in 8 years who has implemented sweeping tax reform benefiting the rich and major corporations, most importantly the tech giants. And second; this coupled with a massive influx of stock-buyback programs from the wealthiest companies in America created a perfect storm that sent stocks soaring. The problem with all this growth is it doesn't seem to be based on the actual production and performance of the largest companies, and instead growth is driven by the re-injection of corporate profits into their own stocks while piggybacking off lower tax's to keep cash stores high. All of this nonsense value had to come to a headwind eventually, culminating in the impressive 5000 point sell off starting in December of 2018 and into January of 2019.
From the first wave down beginning in January of 2018 we can see a clearly formed, but not perfect, head-and-shoulders pattern emerge continuing to present. The reason I believe this is not a conventional head-and-shoulders pattern is because the price of the DOW had to continually press to knew highs after major market sell-offs to complete the formation along with steering clear of a recession in the medium-short term. If the DOW is actually projecting a completion of the triple top formation we could see markets take a dive all the way back down to pre-2016 prices. Interestingly enough that formation perfectly correlates with the intersection of some major trend lines as highlighted by the clear circle in the chart above. While this is most likely nothing more than coincidence, I do believe markets adhere to strict longterm growth averages which we seem to be well above of at the moment.
2: Where could the markets go?
Based on the chart above and personal projections I see one of two scenarios play out over the coming months and years:
1. Markets have another round of massive gains, hopefully then sending gold into the handle stage, and culminate in a barley calculable sell off beginning at the start of or into 2020 when another round of disappointing candidates are chosen to fight over only, you know, running the most powerful country in the world.
2. We see markets sell of in an equally less calculable way to complete the head-and-shoulders pattern and restore wallstreet to proper value investing.
3. Markets never go down, we all live in a simulation...
1: A misshapen tripple top formation -
As shown on the chart above, in 2014 the DOW broke out of the major recovery channels started in 2008 and then proceeded to post monumental gains all the way until December of 2018. My personal opinion is that the majority of stock price gains from 2014 through 2018 was contingent on firstly; a republican president being sworn in for the first time in 8 years who has implemented sweeping tax reform benefiting the rich and major corporations, most importantly the tech giants. And second; this coupled with a massive influx of stock-buyback programs from the wealthiest companies in America created a perfect storm that sent stocks soaring. The problem with all this growth is it doesn't seem to be based on the actual production and performance of the largest companies, and instead growth is driven by the re-injection of corporate profits into their own stocks while piggybacking off lower tax's to keep cash stores high. All of this nonsense value had to come to a headwind eventually, culminating in the impressive 5000 point sell off starting in December of 2018 and into January of 2019.
From the first wave down beginning in January of 2018 we can see a clearly formed, but not perfect, head-and-shoulders pattern emerge continuing to present. The reason I believe this is not a conventional head-and-shoulders pattern is because the price of the DOW had to continually press to knew highs after major market sell-offs to complete the formation along with steering clear of a recession in the medium-short term. If the DOW is actually projecting a completion of the triple top formation we could see markets take a dive all the way back down to pre-2016 prices. Interestingly enough that formation perfectly correlates with the intersection of some major trend lines as highlighted by the clear circle in the chart above. While this is most likely nothing more than coincidence, I do believe markets adhere to strict longterm growth averages which we seem to be well above of at the moment.
2: Where could the markets go?
Based on the chart above and personal projections I see one of two scenarios play out over the coming months and years:
1. Markets have another round of massive gains, hopefully then sending gold into the handle stage, and culminate in a barley calculable sell off beginning at the start of or into 2020 when another round of disappointing candidates are chosen to fight over only, you know, running the most powerful country in the world.
2. We see markets sell of in an equally less calculable way to complete the head-and-shoulders pattern and restore wallstreet to proper value investing.
3. Markets never go down, we all live in a simulation...
Note
Also the head-and-shoulders pattern can also be viewed as a tripple-top pattern, either way two very well know patterns setting up so perfectly seems like a strong caution for the markets.
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