Dow Jones Industrials - Monthly - Fed Chairman Pattern
4 out of 5 times the market is down (after inflation, not counting dividends) 71 months after a changeover at the Fed.
We are approaching the best performance for the stock market where there is minimal upside potential and maximum downside risk. The odds are stacking up that the future will not be as rosy as the past based on the historical performance of this pattern.
See if this simple analogy has any merit. Consider this an "OPEN SOURCE RESEARCH PROJECT" and post your findings here that support it. I'm only asking for interesting comments that support it. Can you think of reasons why the former Fed chairman might want to "walk away" when they do? Volker exited very timely at the end of the 1987 bull market in stocks and real estate (prior to the 1987 crash and prior to the S&L disaster) when Greenspan took over. Greenspan was clever to leave at the end of the real estate bubble that he helped create and he warned for many years that the Gov't shouldn't back up the mortgage market. Bernanke... has he left because of the bubble in the bond market? We may look back at the ridiculous price of US Gov't Bonds and the low rates that have done so much damage to the markets and given the US Gov't a very low cost of borrowing despite terrible financial cash flows for the past decade. Either way, I researched into Burn's tenure and while he came into position after a similar bubble in stocks and real estate, I could stand to do more research to provide deeper insights.
I think this indicator is more similar to when a CEO retires from a public company after a long winning streak. There are great trades that setup from that perspective and I hope we can delve deeper into the rationale and reasoning for this pattern.
The 80% odds is so STACKED against historical probability. I think there is a 66% chance the market is UP over a 71-month time frame with a fairly tight standard deviation and this has to be 4-6 standard deviations away from that estimation. I look forward to your comments and cajoles.
Tim 12:25PM EST Friday, March 13, 2015
We are approaching the best performance for the stock market where there is minimal upside potential and maximum downside risk. The odds are stacking up that the future will not be as rosy as the past based on the historical performance of this pattern.
See if this simple analogy has any merit. Consider this an "OPEN SOURCE RESEARCH PROJECT" and post your findings here that support it. I'm only asking for interesting comments that support it. Can you think of reasons why the former Fed chairman might want to "walk away" when they do? Volker exited very timely at the end of the 1987 bull market in stocks and real estate (prior to the 1987 crash and prior to the S&L disaster) when Greenspan took over. Greenspan was clever to leave at the end of the real estate bubble that he helped create and he warned for many years that the Gov't shouldn't back up the mortgage market. Bernanke... has he left because of the bubble in the bond market? We may look back at the ridiculous price of US Gov't Bonds and the low rates that have done so much damage to the markets and given the US Gov't a very low cost of borrowing despite terrible financial cash flows for the past decade. Either way, I researched into Burn's tenure and while he came into position after a similar bubble in stocks and real estate, I could stand to do more research to provide deeper insights.
I think this indicator is more similar to when a CEO retires from a public company after a long winning streak. There are great trades that setup from that perspective and I hope we can delve deeper into the rationale and reasoning for this pattern.
The 80% odds is so STACKED against historical probability. I think there is a 66% chance the market is UP over a 71-month time frame with a fairly tight standard deviation and this has to be 4-6 standard deviations away from that estimation. I look forward to your comments and cajoles.
Tim 12:25PM EST Friday, March 13, 2015
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