DJIA/Gold Ratio & 30-year Bonds/Russell2000 in Phase Transition!
Atualizado
The Dow Jones (IA) / Gold Ratio and the U.S. 30-year Treasury Bonds / Russell2000 Index Ratio are coinciding at key levels. Both ratios are at historic turning points, foreshadowing their respective Phase Transitions! (and as such, indicating highly volatile, multi-standard deviation moves in the global equity indexes.) The title chart is an extended (120 years) view of the ongoing DJIA / Gold analysis, this time applying the same metric as used in the earlier US 30-year Treasuries / Russell2000 Ratio analysis;
... For easy comparisons.
U.S. Market Capitalization / U.S. GDP now having exceeded 2.75 while the Historic Norm (not the low) remains 0.78 - i.e. ~70% below current levels(!!) -, it is rather self-evident that these phase transitions are likely to result in major (equity) market declines, and on a global scale. U.S. Margin Debt / U.S. GDP has also surpassed all previous, historic records (by a very wide margin!), not only in nominal measures but also in relative terms! I.e. Once this trap door opens (forced liquidations??... The most likely, least resistance path, catalyst) an initial 20%-25% decline in the SP500 would be well within the minimum expected.
... For easy comparisons.
U.S. Market Capitalization / U.S. GDP now having exceeded 2.75 while the Historic Norm (not the low) remains 0.78 - i.e. ~70% below current levels(!!) -, it is rather self-evident that these phase transitions are likely to result in major (equity) market declines, and on a global scale. U.S. Margin Debt / U.S. GDP has also surpassed all previous, historic records (by a very wide margin!), not only in nominal measures but also in relative terms! I.e. Once this trap door opens (forced liquidations??... The most likely, least resistance path, catalyst) an initial 20%-25% decline in the SP500 would be well within the minimum expected.
Nota
Charts of the two, most critically dislocated measures;Total U.S. Equity Market Capitalization / nominal U.S. GDP;
hussmanfunds.com/wp-content/uploads/comment/mc210315p.png
Margin Debt / Nominal GDP;
hussmanfunds.com/wp-content/uploads/comment/mc210315r.png
Nota
This is the analog version and close-up of the main chart - DJIA/XAU;... as it currently stands on the Weekly. - A major SHORT!
Nota
Was Graham right, back then - and ever since?..."Making money in the stock market was now the easiest thing in the world. It was only necessary to buy ‘good’ stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic.” - Graham & Dodd, 1934
Blue Chip Performance: 1973-1974
- Du Pont -58.4%
- Eastman Kodak -62.1%
- Exxon -46.9%
- Ford Motor -64.8%
- General Electric -60.5%
- General Motors -71.2%
- Goodyear -63.0%
- IBM -58.8%
- McDonalds -72.4%
- Mobil -59.8%
- Motorola -54.3%
- PepsiCo -67.0%
- Philip Morris -50.3%
- Polaroid -90.2%
- Sears -66.2%
- Sony -80.9%
- Westinghouse -83.1%
... Just one of the many period examples, since then (1934).
Nota
BTW, here is Bitcoin;
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