Constant Money

Published 07/21/2022, 01:31 AM
Updated 07/09/2023, 06:31 AM

About a week or so ago, I shared this chart of the S&P 500 divided by the M2 money supply in order to create a more realistic picture of the stock market’s valuation, normalized for the trillions of dollars of new fiat sloshing around.

SPX:FR:WM2NS Chart

I used the Transformer feature in SlopeCharts to thumb through my set of index charts, and I found a couple of interesting ones with the same “divided by M2” alternation. The first is the Dow Jones Composite, which, as with the S&P 500, never came close to besting its year 2000 peak.

COMP:FR:WM2NS Chart

Of more interest to me was the oil index XOI which has surged to a nice, clean downward-sloping resistance line.

XOI Index Chart

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