The True S&P 500

Published 08/26/2022, 04:03 AM
Updated 07/09/2023, 06:31 AM

We haven’t looked at this fascinating ratio chart in a while, so let’s dust it off. This is the S&P 500 cash index divided by the M2 money supply. As a reminder, this is, to my way of thinking, a more honest reflection of the market’s value, since it is denominated by a “normalized’ dollar. Take careful note how, even in this laughably over-inflated market, we have never even come close to the peak of the true bullish prosperity of the late 1990s. We’re just been faking it for twenty-two years.

SPX-FR Chart

Looking closer, you can see how we are currently beneath a major (and I do mean MAJOR) Fibonacci retracement level, suggesting massive resistance in this zone. Indeed, I’m seeing a setup that is remarkably similar to the 2007 top preceding the financial crisis.

SPX-FR Chart

Jerome Hayden Powell………..….let’s dance.

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