Hi there,
Comparing the charts (before 1929 to 1929) and (before 2021 to 2021), they are scarily similar, with many similar patterns, from the perspective of only purely TA, this could be the scenario playing out, but we need some strong fundamental reason for this to happen, what could it be?
Since the start of the covid 19, we saw the market crashed, but in the end, we found out it was purely a correction, but there is one reason, that could be the consequence of the next global depression (?), that is the printing money, cannot just solve a recession.
Imagine this scenario:
Where the only good in the economy is rice and rice costs $1 a pound, and imagine you and all others earn $100 a month. Each month you buy 100 lbs of rice exchanging $1 for 1 lb of rice; so the real value of $1 is 1 lb of rice. Now suppose the government simply prints more dollar bills and gives you and everyone else an additional $100.
If you want to eat more than 100 lbs of rice a month, now you can do so, but, since others like you also want to do the same, the demand for rice in the economy would go up and very likely its price as well. Now you would have to give up, say $2 for each lb of rice . This, is inflation , and it is decreasing the real value of your dollars, you are getting less rice for every dollar than you used to. This would be the perfect example, but there is a problem in 2021, which is that the wages are not following the massive increase of inflation , due to the massive printing we had, so instead of having $200 to buy 100 pounds of rice, you still have $100 to try to buy 100 pounds of rice($2 each pound of rice now). In conclusion with this scenario, this will have consequences in the long term to the bad numbers of the unemployment and which will cause trouble in the economy, and thats when we start heading for a recession.
Back to the charts, all of this bearish price action, can it be the top of this bull market? It looks like it, we could still have another rally, another top, but the top I would say its very close, and this last bearish price action is very similar to a top out back in 1929.
I will short Dow jones to the targets mentioned in the charts, but remember, its a long term investment.
Comparing the charts (before 1929 to 1929) and (before 2021 to 2021), they are scarily similar, with many similar patterns, from the perspective of only purely TA, this could be the scenario playing out, but we need some strong fundamental reason for this to happen, what could it be?
Since the start of the covid 19, we saw the market crashed, but in the end, we found out it was purely a correction, but there is one reason, that could be the consequence of the next global depression (?), that is the printing money, cannot just solve a recession.
Imagine this scenario:
Where the only good in the economy is rice and rice costs $1 a pound, and imagine you and all others earn $100 a month. Each month you buy 100 lbs of rice exchanging $1 for 1 lb of rice; so the real value of $1 is 1 lb of rice. Now suppose the government simply prints more dollar bills and gives you and everyone else an additional $100.
If you want to eat more than 100 lbs of rice a month, now you can do so, but, since others like you also want to do the same, the demand for rice in the economy would go up and very likely its price as well. Now you would have to give up, say $2 for each lb of rice . This, is inflation , and it is decreasing the real value of your dollars, you are getting less rice for every dollar than you used to. This would be the perfect example, but there is a problem in 2021, which is that the wages are not following the massive increase of inflation , due to the massive printing we had, so instead of having $200 to buy 100 pounds of rice, you still have $100 to try to buy 100 pounds of rice($2 each pound of rice now). In conclusion with this scenario, this will have consequences in the long term to the bad numbers of the unemployment and which will cause trouble in the economy, and thats when we start heading for a recession.
Back to the charts, all of this bearish price action, can it be the top of this bull market? It looks like it, we could still have another rally, another top, but the top I would say its very close, and this last bearish price action is very similar to a top out back in 1929.
I will short Dow jones to the targets mentioned in the charts, but remember, its a long term investment.