SPX500 Pattern Repeating with EERIE overlay
The REAL S&P500 Index is plotted here from the data on 
SPX and 
CPIAUCSL which is CPI-All Urban Consumers which allows us to see the "REAL", or inflation-adjusted S&P500 (excluding dividends) over the long term.
Most people forget the impact that inflation has on the price of stocks because it gets complicated and small increases in price compound significantly over the the long term.
So, to get down to the impact of this pattern that I have reported on several times in the past (see links below), the market has had a long sequence of progress along with crises along the way in the form of financial panics, tax-law changes, banking system stress, real estate market collapses, trade wars and technological innovation cycles.
To break it down into the pattern, take a note of the 1955-1985 time frame and notice how there is a "mode" across that time frame which touches 13 different years.
In 1984 the market "expands" upwards as denoted by the yellow triangle, surging up by more than the previous year's range, which implies the start of a new trend. In this case, the trend is estimated to be 13 years because 13 years touched the same price. 1984 + 13 years sets up a new mode in 1997 which is where the new mode formed through 2012.
In 2013, the market surged upwards or "expanded" higher to indicate a new 11 year uptrend since there were 11 different years that touched the mode as shown.
The INTERESTING PART is that we had similar types of activities AFTER this new trend kicked off: Notice the yellow circle which encompasses the 1987 stock market crash and 1990 bear market in a wild, sideways, choppy market environment.
The same thing also happened after the current uptrend started with the 2016 election, 2020 covid crisis and even later the 2022 bear market (which is outside the circle).
The GREEN "BARS PATTERN" is a copy of the 1984-current market and then pasted to the start of the same structure in 2013 where the current uptrend started from the 'mode'.
Look how the market has moved rather in-synch with this pattern and I haven't even adjusted it for the 2-less years at the mode or 4 less years overall for the pattern from 1955-1984 (20 total years vs 13 years at one price) vs the 1997-2012 (16 total years vs 11 at one price).
We can start analyzing similar news and technological changes to look for interesting stories to compare the two time frames. See what you can find.
The AI craze now is certainly similar to the development of the internet bubble in the late 1990's. We have certainly heard this comparison before but this nails down the comparison into a more structural pattern that can be analyzed and used for making general projections.
I'll follow up on this and let me know if you have any questions.
Tim
10/16/2024 10:19AM EST
SPX and CPIAUCSL which is CPI-All Urban Consumers which allows us to see the "REAL", or inflation-adjusted S&P500 (excluding dividends) over the long term.Most people forget the impact that inflation has on the price of stocks because it gets complicated and small increases in price compound significantly over the the long term.
So, to get down to the impact of this pattern that I have reported on several times in the past (see links below), the market has had a long sequence of progress along with crises along the way in the form of financial panics, tax-law changes, banking system stress, real estate market collapses, trade wars and technological innovation cycles.
To break it down into the pattern, take a note of the 1955-1985 time frame and notice how there is a "mode" across that time frame which touches 13 different years.
In 1984 the market "expands" upwards as denoted by the yellow triangle, surging up by more than the previous year's range, which implies the start of a new trend. In this case, the trend is estimated to be 13 years because 13 years touched the same price. 1984 + 13 years sets up a new mode in 1997 which is where the new mode formed through 2012.
In 2013, the market surged upwards or "expanded" higher to indicate a new 11 year uptrend since there were 11 different years that touched the mode as shown.
The INTERESTING PART is that we had similar types of activities AFTER this new trend kicked off: Notice the yellow circle which encompasses the 1987 stock market crash and 1990 bear market in a wild, sideways, choppy market environment.
The same thing also happened after the current uptrend started with the 2016 election, 2020 covid crisis and even later the 2022 bear market (which is outside the circle).
The GREEN "BARS PATTERN" is a copy of the 1984-current market and then pasted to the start of the same structure in 2013 where the current uptrend started from the 'mode'.
Look how the market has moved rather in-synch with this pattern and I haven't even adjusted it for the 2-less years at the mode or 4 less years overall for the pattern from 1955-1984 (20 total years vs 13 years at one price) vs the 1997-2012 (16 total years vs 11 at one price).
We can start analyzing similar news and technological changes to look for interesting stories to compare the two time frames. See what you can find.
The AI craze now is certainly similar to the development of the internet bubble in the late 1990's. We have certainly heard this comparison before but this nails down the comparison into a more structural pattern that can be analyzed and used for making general projections.
I'll follow up on this and let me know if you have any questions.
Tim
10/16/2024 10:19AM EST
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