SP500 Special - It won't go up foreverToday we will release a special analysis on the long term state of the stock market in the United States following the recent events (inauguration of President Joe Biden).
As you can see from the chart we are in a big uptrend that started in 1872 (yes, we have data from that time in Tradingview) with some corrections, the most notable being the 1929 Depression and the price structure that was formed from the 2000 Tech Bubble burst (started April 2000) and the 2008-09 Recession (ended March 2009). If you follow the price structure along the way up you can see smaller correction that have always pushed the price higher after their completion (April 2011- October 2011, April 2015 - March 2016, Jan 2018-Jan 2019). The recent COVID 19 pandemic created a sharp drop in Feb 2020-March 2020 followed by the powerful continuation of the uptrend backed fundamentally by the FED printing trillions of dollars to support the economy.
It is obvious to anyone who has studied market cycles and knows how the markets work that an uptrend or a downtrend won't go on forever. Even if it is for the American economy to continue to push higher at some point it will need a correction that will be bigger that the smaller ones mentioned in the above paragraph. The dangerous scenario here is a reversal from uptrend to downtrend that will possibly mean a stagnation period of several decades for the American economy even longer if we take into account the notion that correction are time wise bigger than impulses.
When will this happen? No one knows, it may well be that markets push higher for the next 5, 10 or 20 years before some bigger correction will start but as winter follows summer it is bound to happen.
We are surely living in interesting times!
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Disclaimer: The analysis provided is purely informative and it should not be used as financial advice. We do not recommend making hurried trading decisions. You should always understand the risk that trading implies and that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
