{"id":131554,"date":"2018-08-07T07:36:23","date_gmt":"2018-08-07T11:36:23","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=131554"},"modified":"2018-08-08T17:59:52","modified_gmt":"2018-08-08T21:59:52","slug":"part-i-us-markets-higher-until-november-2018","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2018\/08\/part-i-us-markets-higher-until-november-2018\/","title":{"rendered":"PART I \u2013 US Markets Higher Until November 2018"},"content":{"rendered":"
August 7, 2018<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

Our research team at\u00a0Technical Traders Ltd.\u00a0have been laboring over the recent market moves attempting to identify if and when the market may be likely to turn lower or contract.\u00a0 We\u2019ve been pouring over all types of various data from numerous sources and have concluded the following is the most likely outcome for when the US stock markets may find a reason to pause of contract.\u00a0 As you read this research post, please allow us a brief introduction of the facts that supported our research.<\/p>\n

\"\"(source:\u00a0https:\/\/palisade-research.com\/warren-buffet-indicator-signaling-market-crash\/<\/a>)<\/p>\n

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First, our research team started this investigative work after watching the Buffet Indicator climb from the 2015~16 rotation levels to new highs and achieve some recent news events.\u00a0 This indicator, being one of Warren Buffet\u2019s favorite tools for understanding market valuations in comparison to debt levels provides some interesting components for our team to study.\u00a0 Yet, we believed this indicator chart lacked something relating to the global markets and the use of the debt capital to spur future global economic activity.<\/p>\n

Therefore, our team went off in search of something that could help us rationalize these high Buffet Indicator levels in true relation to the global markets and in relation to the capital shift that we believe is currently taking place throughout the planet.\u00a0 The first component of our assumption about the global markets is that capital is rushing away from riskier markets and towards more stable markets.\u00a0 The second component of our assumption is that national debt obligations are being re-evaluated based on perceived risks and contagion issues throughout the globe.\u00a0 The last component of our assumption is that the new US President is shaking up quite a bit of the old constructs throughout the globe and that the processes and policies put in place by President Trump are creating a very dynamic global capital market environment at the moment.<\/p>\n

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When you consider these three components and their combined results on the global capital markets, we have to understand that there is a very strong possibility that the largest GDP producing countries on the planet, and their banking, institutional and investor classes, are all operating within some aspect of these three components.\u00a0 This means there is a potential for at least $7 to $15 Trillion (10~20% of total global GDP) US Dollars that are actively sourcing and seeking secure returns while avoiding risks and debt contagion.\u00a0 This is a massive capital shift that is taking place currently \u2013 likely the largest the planet has ever seen.<\/p>

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As the Buffet Indicator is showing, the US stock market is nearing or passing all-time highs in valuation in relation to US debt levels.\u00a0 Yet, how does the Buffet Indicator correlate the global capital shift that is taking place and equate these dynamics into fair value.\u00a0 The US market, being the likely target of this massive capital shift, is a fair source for valuations comparisons, but we are experiencing a capital shift that has never before been seen at the levels we are currently experiencing.\u00a0 Sure, there have been shifts of capital before \u2013 but not at the $10 to 20 trillion USD level.<\/p>\n

If we compare the Buffet Indicator to this Fred Global Stock Market Capitalization to GDP chart, some interesting facts begin to take shape.\u00a0 First, the peaks in 1974, 1999, 2008 and 2018 on the Buffet Indicator are not as evident on this chart.\u00a0 The 1974 peak is relatively nonexistent.\u00a0 The 1999 peak is a much more muted (28%) peak than on the Buffet Indicator chart and the 2008 and 2018 peaks are relatively correlated to the Buffet Indicator chart.\u00a0 One should be asking the question, \u201cwhy are the two most recent peaks more correlated than previous peaks on this global capitalization to GDP chart?\u201d.\u00a0 Our answer to that question is that after the 1999~2000 US market peak, the globe entered into a much more cooperative economic phase with the EU, China, South America and many other nations operating as global peers vs. global competitors.\u00a0 It was after this time that the capital markets began to \u201csync\u201d in some form to the central banks policies and the unification processes that were taking place throughout the globe.<\/p>\n

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We should, therefore, assume that any global market contagion or crisis will likely take place in some measured form throughout nearly all global markets when it happens.\u00a0 Additionally, as regional debt or capital market crisis events occur in certain nations, capital that was deployed in these nations or capital markets will likely rush to new, safer environments for periods of time.\u00a0 Capital is always hunting for the safest and most secure returns while attempting to avoid risk and devaluation.<\/p>\n

The central bank policies of the past two decades have allowed a massive increase in the available capital throughout the globe.\u00a0 Global GDP has risen from $33.57 Trillion in 2000 to $80.68 Trillion today \u2013 a whopping 140% increase in only 18 years.\u00a0 Historically, global GDP has risen by approximately these levels every 15~20 year for the past 50+ years.\u00a0 This is likely the result of the US moving away from the Gold standard and foreign nations following along with fiat currency central banks since after the 1960s~70s.<\/p>\n

This tells us that the peak in 2000 on this global capital market to GDP chart resulted in a moderately isolated capital market peak that was uniquely available within the US and major economies \u2013 not globally.\u00a0 The 2008 peak represented a more globally equal capital market peak.\u00a0 This means the majority of the global capital market experienced capital appreciation.\u00a0 The same thing is happening right now \u2013 the global markets are experiencing an overall capital market appreciation that is a result of the past 20+ years of central bank policies and economic recovery efforts.<\/p>\n

Stay Tuned for PART II Next with Charts and Trading Analysis!<\/em><\/strong><\/p>\n

53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our\u00a0stock and ETF trading alerts\u00a0are readily available through our exclusive membership service via email and SMS text. Our newsletter,\u00a0Technical Trading Mastery book, and\u00a03 Hour Trading Video Course\u00a0are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.<\/p>\n

PART II<\/strong>\u00a0\u2013 US Markets Higher Until November 2018<\/a><\/u><\/h3>\n

By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com Our research team at\u00a0Technical Traders Ltd.\u00a0have been laboring over the recent market moves attempting to identify if and when the market may be likely to turn lower or contract.\u00a0 We\u2019ve been pouring over all types of various data from numerous sources and have concluded the following is the most likely outcome for when […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-131554","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/131554","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=131554"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/131554\/revisions"}],"predecessor-version":[{"id":131629,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/131554\/revisions\/131629"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=131554"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=131554"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=131554"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}