This time is...⏰ Market exuberance:New secular bear market? 🐻Hi mates, stock market is probably near top and next huge market meltdown is next door . Why i think so?I want to share with you some pieces of my analysis:
📌S&P500 vs. Utilities sector ratio
It seems it could forecast short and mid term corrections in stock market but it looks like its good indicator of broader market cycles as secular bear/bull markets. A secular market trend is a long-term trend that lasts 5 to 25 years and consists of a series of primary trends. A secular bear market consists of smaller bull markets and larger bear markets; a secular bull market consists of larger bull markets and smaller bear markets.
📌Yield spread
Inverted yield curve is leading warning indicator of future recession.
The basic principle is whe yield spred inverted (was in negative territory) you can expect recession in next 12-months.It happened when Dot.com bubble bursted in 2000-2001 and so in Great financial crisis in 2007- 2008 as you see in chart.
📌Put/Call ratio
The put-call ratio is calculated by dividing the number of traded put options by the number of traded call options.
You can use it as contrarian indicator to determine how much Bullish/Bearish the market is.
An extremely low ratio means the market is extremely bullish. A contrarian might conclude that the market is too bullish and is due for a pullback.
Contrary extremely high ratio means the market is extremely bearish.
In my analysis i using 20day MA of Put/Call Ratio an looking up for divergencies.
📌VIX divergence of 20 MA
📌Nasdaq vs Russlel 2000
Just so similar pattern on monhly chart of Nasdaq and Russell 2000
📌Other factors
Margin debt acceleration is another sign of speculative frenzy in the market
Margin debt is not a technical indicator for trading markets. What margin debt represents is the amount of speculation that is occurring in the market. In other words, margin debt is the ‘gasoline,’ which drives markets higher as the leverage provides for the additional purchasing power of assets. However, ‘leverage’ also works in reverse as it supplies the accelerant for more significant declines as lenders ‘force’ the sale of assets to cover credit lines without regard to the borrower’s position. Here is chart
Total market cap of negative earnings of IT firms near $1 trillion its more than 2000 -2001 Dot.com bubble. Source:KailashConcepts
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