Goldman Sach's VS US Money Supply Is A Mean Reversion OscillatorHello friends. Time for us to blow your minds for the Nth time. Goldman Sach's VS US Money Supply Is A Mean Reversion Oscillator For Risk Assets. What do we mean?
Let's first start with what Goldman Sach's is. They are an American multinational investment bank and financial services company. Since they are perpetually invested into the markets, their stock naturally flows with the waves of risk assets just like most other stocks do.
Charted alone, their stock is not very interesting at all. Charted against the supply of the US dollar, it becomes far more interesting indeed. You see, it has not left the range it currently trades within since the Global Financial Crisis. Every time their stock becomes overvalued in comparison to the amount of dollars that exist, it ends up crashing down. Every time their stock becomes undervalued in comparison to the amount of dollars, it ends up pumping.
We are currently in the "Dead Zone". That means we can definitively say that Risk Assets are not cheap, but they also are notably not expensive either. Another thing we could say is that Risk Assets are in fact more cheap than they are expensive. This is to say that if risk were to rise to the "Expensive" band once again, it would appreciate by 58% wheras if risk were to fall down to the "Cheap" band again, it would only fall by 27%. This could be an argument for buying risk assets, but in reality it's not usually wise to trade in the middle of a range. Intelligent traders will wait to buy support and sell resistance rather than messing around in the middle where anything can happen.
We think that the odds favor risk falling another 27% over the next few years and tapping the cheap zone. From there we could see very wealthy investors start to prop up the markets, and eventually the prices can rally back into the expensive zone. Long term and patient investors can easily profit from this, but pigs will get slaughtered as always.
