All good things must come to an end. This includes central bankers propping up global asset markets. I’m assuming you know that central bank actions and threats of actions to “spike the punch bowl” have been nonstop over the past several years — frequently within 48 hours of me doing an interview or blog post that a drop was imminent and thus preventing the expected drop. With Fed Chair Powell’s speech in the rearview mirror and equity markets plunging because he gave no hint of slowing his planned pace of taking the punch bowl away, it appears central bankers for the first time since October 2014 are not going to stop a stock market drop before it burns itself out.
I present the Greedometer sequence of 2007-2009 since it is instructive here.
Here’s what the Greedometer sequence looks like as of 2 weeks ago. I’m looking for a 2,000rpm drop in Greedometer values with this SPX drop –as was seen in July-August 2007.
Either this week or next week will see the mini Greedometer stop dropping and begin bouncing back. It will then bounce all the way back to the topline while the SPX re-tests a top. Here’s a great example from 2007. Look at the July to October period.
And for those that are video-inclined….