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<\/a><\/p>\nSo the fundamental case for a 20 year bull run as BMO is calling for and \u00a0certainly many other banks seem to be onboard with that is not looking great YTD. \u00a0In fact, most perma bulls have shy\u2019d away from even mentioning fundamentals other than to say\u00a0that generally they aren\u2019t looking great but don\u2019t worry the Fed is still engaged. <\/strong>\u00a0 And so I feel its a worthwhile exercise to have a look at the technicals. \u00a0Thing about the technicals is that you can cherry pick any baseline point to really make any case, good or bad. \u00a0But if we take a look at a time period that encompasses several cycles we negate our ability to cherry pick the baseline and we can be much more confident\u00a0in our overall analysis.<\/p>\n So what I\u2019ve done is taken a two decade period of S&P pricing which encompasses several cycles. \u00a0Mid 1990\u2032s was a market mid cycle having recovered from the short recession of the early 1990\u2032s but before things really began heating up in the late 1990\u2032s. \u00a0If we just have a gentle\u00a0look at the chart we see we\u2019ve had a couple large cycles with fairly extreme booms and subsequent busts. \u00a0Currently we are in the midst of the third boom which has taken us to new all time highs. \u00a0Now even a 5 year old can look at the chart and say at some point this thing has a large down turn, same as it always does. \u00a0That\u2019s easy to see\u00a0and not many will argue it. \u00a0But as so many bulls remind us we could have said the same thing about this chart a year ago and we\u2019d have missed out on significant returns. \u00a0Very true. \u00a0So the key is then figuring out where the down turn begins. \u00a0I know I know that\u2019s the kind of stuff you have to go to biz school for eh. \u00a0Ok so let\u2019s first have a look at the easy chart.<\/strong><\/p>\n So pretty simple. \u00a0Two full cycles and into the third which doesn\u2019t tell us much. \u00a0Let\u2019s add\u00a0some markers to see if we can\u2019t pick up on some\u00a0technical cues.<\/strong><\/p>\n So what we\u2019ve done is run a 2.5 standard deviation Bollinger Band (BB)\u00a0using a 100 period moving average looking\u00a0at monthly returns because we are interested long cycle technical cues. \u00a0We\u2019ve also run Relative Strength Indicator (RSI) using 20 periods. \u00a0What we find is actually quite notable. \u00a0During\u00a0the tech bubble\u00a0cycle we saw the S&P rise\u00a0to the upper BB where it tracked the upper band for some time.<\/strong> \u00a0\u00a0During that same period we saw the RSI move above 70. \u00a0Now as the market peaked we saw the S&P move below the upper BB and we also saw a decline in RSI. \u00a0What is\u00a0very interesting is that the point where RSI dropped below 70 is the point the tech bubble burst and sent S&P into a free fall. \u00a0The market continued to sell until the RSI dropped below 30 at which point the market stabilized and reversed higher.<\/p>\n This took us into the start of the credit bubble cycle. <\/strong>\u00a0Here the RSI move up very quickly and plateaued just below 70 for several years during which time the S&P moved up but never quite made it to the upper BB. \u00a0Then in 2007 the RSI moved above 70 but then quickly reversed\u00a0back down below the upper band. \u00a0Interestingly again the RSI dropping below the upper band seemed to trigger the bursting of the credit bubble as we saw S&P again move into free fall.<\/strong> \u00a0Then here too we saw the market stabilize as the RSI moved through the bottom band.<\/p>\n And again this brought us into the latest Fed bubble.<\/strong> \u00a0Now during this latest cycle the RSI moved up but bounced off the upper band a few times without actually breaking through 70. \u00a0At the same time the S&P moved higher but with quite heavy volatility. \u00a0Eventually we saw the RSI move up and break through the upper limit. \u00a0It was about the same time that the S&P traded\u00a0higher to the upper BB where it tracked for some time. \u00a0However,\u00a0at the end of November 2014 the S&P started to dislocate and moving down below the\u00a0upper BB. \u00a0And then ominously January\u00a0of this year we saw the RSI also move below the upper RSI band.<\/strong><\/p>\n Remember this technical signaled the popping\u00a0of the past two bubble cycles. \u00a0Now February saw the RSI move back above the upper band but March moved back down below. \u00a0I would watch this very carefully now. \u00a0I would venture to say if April remains\u00a0below the upper RSI band we could very well have moved into the latest and perhaps greatest period of wealth destruction.\u00a0It is time to protect those assets.<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":" This Technical Signaled The Last Two Market Crashes And It Just Happened by Thad Beversdorf FirstRebuttal.com So the fundamental case for a 20 year bull run as BMO is calling for and \u00a0certainly many other banks seem to be onboard … Continue reading <\/a><\/p>\n<\/a><\/p>\n