So, we all know the stock market was in a historic bubble -- in fact, that was the point of the chart I posted in August of last year, showing that SPX had roughly tripled in a parabolic move that began in 2020.
Then again, maybe I shouldn’t say “we all know,” because apparently a lot of people don’t — because you hear it echoed everywhere now: “Tariffs caused the crash!” This is one of those statements that sounds right, but is fundamentally wrong.
If you're driving drunk with your eyes closed and I sneeze and you jerk the wheel and crash, you might say I "caused you" to crash. But that's inaccurate for the same reason: The crash wasn’t caused by my sneeze. It was caused by the fact you were driving drunk with your eyes closed.
In other words, you placed yourself in a position where a crash was the inevitable outcome of your actions -- and that outcome was effectively guaranteed, one way or another. If I hadn't sneezed, the road would have eventually curved and you'd have run right off it, even without me.
Now, in the case of both my sneeze and Trump's tariffs, you could correctly say they were each the catalyst for the crash. But they were not the root cause -- and I can prove that with today's charts.
Starting with this one:
nd for exhibit 2 (or exhibit 3, if we count the very first chart), we have BKX, which shows an impulsive decline from its 2022 peak, which was labeled "1/A" at the time -- meaning 2/B and 3/C would still be needed. In fact, in April of last year -- long before tariffs -- I reminded everyone of the lingering 35+/- target for red 3/C down.
Long time readers know I'm allergic to BS from any side of the political aisle. I try to align, first and foremost, with truth -- even, and especially, when it's uncomfortable. This isn’t about tribal politics. It’s about one thing:
We need to learn these lessons once and for all.
Because if we blame the wrong things, as we ALWAYS DO, then we won't learn anything. Just like we learned nothing in 2020. And in 2008. And in 2000. And basically every year since the Fed took it upon itself to act as a market participant.
And learning nothing would mean we'll repeat the same mistakes yet again (as we always have). The lesson is that the Fed cannot endlessly support the market with liquidity created from thin air. The lesson is that free markets should remain free. The lesson is that endless debt is unsustainable. So it is to the benefit of all of us -- and to all future generations -- if we resist the urge to behave tribally and instead behave rationally and ethically.
Even if you hate Trump with a passion (and plenty of people do), I urge you to please resist joining the chorus of uninformed pundits. Instead, argue for the truth as often as you can.
Blaming "the other tribe" is easy. Telling the truth is hard, especially when it's unpopular.
But only one of those prevents us from repeating these errors forever.
Now let’s get to the remaining charts. COMPQ has just about reached its first target/inflection zone (this zone is plus/minus a bit, as they all usually are). The question is whether the first "?" generates a bounce, or if the market falls right through this.
Keep in mind that if this is (in TRAN and BKX) WAVE 3 of a SUPERCYCLE DECLINE -- then it could very well turn into a historic crash. So whether these support zones will do anything at all is an open question, and bulls are running out of chances to stick save this thing.
Let's look at an even longer term chart of COMPQ. This is one of the charts that kept me bullish during the 2020 Covid crash (the annotations from that time are still on the chart, in fact):
Finally, let's end this with SPX:
In conclusion, if bulls can't get anything going soon and this is indeed the start of a Supercycle decline (Primary/Cycle wave 3/c down in TRAN and BKX and Primary 1 down in SPX, INDU, etc.), then this is only the beginning and we're years away from the bottom. This is a very dangerous market right now. I keep looking for "long term bull options" and there are still some stragglers -- for now -- but bulls do need to get something going to keep any hope alive whatsoever. The lower the market goes, the deeper the technical damage. Trade safe.
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