SP500 versus 1926-2020 semi-log trend with Fibonacci mirror
已更新
Inspired by jbrothersjr blog :
I revamped an old PineScript of mine, which you can hopefully access directly from within the chart on this posting, or perhaps I will have to post it separately. I have "hidden" many of the lines on the chart, but if they pop up then you should hide all but the [SP500, the 1926-2020 trend, the 10 year T-bond rate].
tradingview.com/chart/u4klPKBn/
The general idea is to show the SP500 trend based on 1926-2020, and see how the last 5 years compares to that. If you view the 5-year timescale for this chart, it appears that the massive "covid pumping" of the market by the US [Federal Reserve, Treasury] via low interest rates and heavy Fed bond purchases, led to the massive financial asset inflation we've seen, without a corresponding Consumer Price inflation uptrend until last summer (it wasn't considered to be real at the time). Investors were of course estatic, confident that the reason they were becoming rich was because of their superior intelligence and NOT because of the "rising tide carries all ships" theme.
Recent small increases in the interest rates, and maybe-not-even-started-yet bond sales by the Fed, are corresponding to a correction of the markets. The net effect seems to be that private investors pumped huge money into the markets to help mitigate nasty effects of covid shutdowns (one is not allowed to suggest policy insanity), and will be relieved of some part of their brilliant gains by the reversion to the long-term mean of the markets. Now everybody is brilliant :
1) the Fed & Treasury because they effectively expropriated the wealth of a hated sub-class of society, without even needing to change the constitution or laws.
2) Investors, who not only made a ton of money, but who, out of the goodness of their hearts, donated some of it back to helping their fellow Americans. In some cases they were so generous, bei late to the game, to donate much MORE than they made. Pretty nice of them, eh?
3) Altruists (scientists, politicians especially) who fought bravely to save us all from a situation that could have killed even more than the small percentage of the population that died anyways. Of course, we'll have to the 150 years to confirm this, in case it turns into one of the great pandemics of old. No problem : votes and funding have already been received, so [scientists, politicians] are very happy.
Long-term trends - these are my fit periods:
SP500 1926-2020 semi-log trend = 10^(0.792392+2.89587*10^(-2)*(year - 1926.25)) price revolution*
SP500 1872-1926 semi-log trend = 10^(0.784617+1.40925*10^(-4)*(year - 1871.08)) price equilibrium*
*David Fischer 1996 "The Great Wave, Price revolutions and the rhythm of history"
More recent trend that I keep on the chart for now, as I suspect that until very recently, much of the market really was hoping for the 24% financial asset inflation that occurred well into the Feb, Treasury] pump period :
SP500 Fibbonacci(0.0) ~upper bound 15Apr-06Sep2021 :
semilog trend = 10^(3.5018 + 0.0940601*(year - 2020.02))
effective rate ~= ((10 power semiLog_slope) -1) : 24%/year
this mis-adjusts somewhat as time progresses from ~06Jan2022
I revamped an old PineScript of mine, which you can hopefully access directly from within the chart on this posting, or perhaps I will have to post it separately. I have "hidden" many of the lines on the chart, but if they pop up then you should hide all but the [SP500, the 1926-2020 trend, the 10 year T-bond rate].
tradingview.com/chart/u4klPKBn/
The general idea is to show the SP500 trend based on 1926-2020, and see how the last 5 years compares to that. If you view the 5-year timescale for this chart, it appears that the massive "covid pumping" of the market by the US [Federal Reserve, Treasury] via low interest rates and heavy Fed bond purchases, led to the massive financial asset inflation we've seen, without a corresponding Consumer Price inflation uptrend until last summer (it wasn't considered to be real at the time). Investors were of course estatic, confident that the reason they were becoming rich was because of their superior intelligence and NOT because of the "rising tide carries all ships" theme.
Recent small increases in the interest rates, and maybe-not-even-started-yet bond sales by the Fed, are corresponding to a correction of the markets. The net effect seems to be that private investors pumped huge money into the markets to help mitigate nasty effects of covid shutdowns (one is not allowed to suggest policy insanity), and will be relieved of some part of their brilliant gains by the reversion to the long-term mean of the markets. Now everybody is brilliant :
1) the Fed & Treasury because they effectively expropriated the wealth of a hated sub-class of society, without even needing to change the constitution or laws.
2) Investors, who not only made a ton of money, but who, out of the goodness of their hearts, donated some of it back to helping their fellow Americans. In some cases they were so generous, bei late to the game, to donate much MORE than they made. Pretty nice of them, eh?
3) Altruists (scientists, politicians especially) who fought bravely to save us all from a situation that could have killed even more than the small percentage of the population that died anyways. Of course, we'll have to the 150 years to confirm this, in case it turns into one of the great pandemics of old. No problem : votes and funding have already been received, so [scientists, politicians] are very happy.
Long-term trends - these are my fit periods:
SP500 1926-2020 semi-log trend = 10^(0.792392+2.89587*10^(-2)*(year - 1926.25)) price revolution*
SP500 1872-1926 semi-log trend = 10^(0.784617+1.40925*10^(-4)*(year - 1871.08)) price equilibrium*
*David Fischer 1996 "The Great Wave, Price revolutions and the rhythm of history"
More recent trend that I keep on the chart for now, as I suspect that until very recently, much of the market really was hoping for the 24% financial asset inflation that occurred well into the Feb, Treasury] pump period :
SP500 Fibbonacci(0.0) ~upper bound 15Apr-06Sep2021 :
semilog trend = 10^(3.5018 + 0.0940601*(year - 2020.02))
effective rate ~= ((10 power semiLog_slope) -1) : 24%/year
this mis-adjusts somewhat as time progresses from ~06Jan2022
注释
I added labels for the 1926-2020 semi-log trend, so that Fibonacci levels can be seen for the lines that appear in the chart. PineScript code for this was taken directly from TradeChartist 21Aug2020 "Simple Fibonacci Retracement" : 
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