When I look back at prior historical periods in the market looking at monthly charts, it clearly shows a Bearish Top today. If we were to look at All Major Tops in the history of the Stock Market, they basically all look the same. Suttle differences, but still similar, and this is the case today. Typical is a rally off a low to test the monthly 20 SMA, now at SPX 2030.79. This would look very bullish on the daily chart and will always get the Bulls excited, thus the constant BS on CNBS about everything is OK and just Buy as we are Bullish on the market. Happens every time!
A couple of other things, in the last 9 months of price action, we have seen lower lows and lower highs, Not a good sign. Then consider the current CAPE ratio at 25.28. Looking back to the year 1900 and taking out the outlier periods of 1929 and 2000, if we look at around 1900 and 1966, we see the ratio was not to far off where we are today and the results after were not good as it took 20 years in 1900 to 1920 for the PE to drop to a below avg. value at 5. And looking at 1966, it took until 1982 or 16 years for the PE to get to below avg. value at 7. 1929-1932 hit 6 in very short order. The 2009 low PE was 15, a far cry from a 5 or 7, was likely saved by the FED.
So my thinking is this has set up one of those typical Bubble Tops in history that don't end well, but great for investors that can be patient and wait for VALUE in the market. There surely is little in the way of low value today. So at this time, unless something changes that throws history way off of typical norms, we should see this market decline longer term, not hit new all times and go much higher. I know Armstrong says much higher as money flows from Europe to the US as a safe haven, but the charts say otherwise at this point in time. So we will watch and see how it plays out and what the historical chart will look like in the future. I bet Down!
