Economy crash =/= stock market crash?

beavere38

FTSE has broken through the upward support line, rallied to retest the line then should drop. 

sevenhills

beavere38 said:

I'm still confident the markets have topped out at the previous all time high so FTSE approx 7220, Dax approx 15800 and Dow approx 35090. Gold has one more dip maybe to 1737 then it will rally again. The upward movement last couple of days on the indices is IMO just a bear rally before we head down for real. 

If you look at the FTSE all share, it is now at the same level it was in May 2017 and it was higher in 2018 and 2020. So maybe it has room to climb?

Then compare it to other countries markets, many are much high now than they were 2/3 years ago.

I do share your concern that COVID and maybe Brexit has done us harm.

https://tradingeconomics.com/stocks

beavere38

German Dax showing the same - trendline break then a pull back to the line before heading down

beavere38

Type_45 said:

beavere38 said:

I'm still confident the markets have topped out at the previous all time high so FTSE approx 7220, Dax approx 15800 and Dow approx 35090. Gold has one more dip maybe to 1737 then it will rally again. The upward movement last couple of days on the indices is IMO just a bear rally before we head down for real. 

How are the "heads & shoulders" and "candles" looking?

Which head and shoulders pattern are you referring to? I'm not posting charts to boost my ego, I am trying to alert you to what I can see and it doesn't look good for the bulls. I posted my warning that the market may have topped 2 days after the all time high on the FTSE and Dax. We have not had new highs since so I am not wrong yet. If we get new highs then I was wrong and fair enough you can laugh at me.

sevenhills

Todays value of FTSE is the same as it was in May 2017

beavere38

sevenhills said:

Todays value of FTSE is the same as it was in May 2017

Looking at that chart what has always happened historically when the FTSE gets to this level? 

Type_45

beavere38 said:

sevenhills said:

Todays value of FTSE is the same as it was in May 2017

Looking at that chart what has always happened historically when the FTSE gets to this level? 

What has happened historically after each crash? 

beavere38

Type_45 said:

beavere38 said:

sevenhills said:

Todays value of FTSE is the same as it was in May 2017

Looking at that chart what has always happened historically when the FTSE gets to this level? 

What has happened historically after each crash? 

It goes back up again. BUT each crash gets larger. We have to ask will the pattern repeat or will it be different this time?

sevenhills

beavere38 said:

Looking at that chart what has always happened historically when the FTSE gets to this level? 

It's below the long-term average, although it's the facts around borrowing, debt and potential profits that is important.

beavere38

These are some of the reasons attributed to the stock market crash of 1929. The 1929 crash started on 24th October 1929, exactly 1100 months ago from today.

1. Investors leveraged using margin, encouraged by low interest rates. 

In the past, a big surge in margin balances tended to precede history-making stock market declines. Margin debt has soared to over $260BN.

More info and charts: https://wolfstreet.com/2021/03/17/stock-market-leverage-spikes-in-historic-manner-another-!!!!!!-chart-of-a-zoo-that-has-gone-nuts/ 

2. A struggling agricultural sector.

There are plenty of struggling sectors at the moment.

3. Low wages

Yes. Prices are flying up and wages are not. Many people have been on furlough at a reduced wage. Many likely to lose jobs soon.

4. Stocks soaring to unrealistic valuations.

The market cap to gdp ratio (Warren Buffet indicator) is currently over 200% It has never been this high and usually only spikes briefly over 100% 

Historically, the Buffett indicator average has been around 65%. The ratio dipped below 30% several times throughout the Great Depression and then briefly in 1982. The ratio peaked at 88.3 prior to the market crash in 1929 and at 136.9 during the dot-com bubble in 2000. The ratio hit an all-time high earlier this week.

5. Proliferation of debt

6. An excess of large bank loans that could not be liquidated