| | | A lot of discussion lately on the market and charts shown to point out different aspects of what is going on, and what this might mean for the future. Certainly that is good because the better we can understand where the market has been and where it is going helps everyone make better decisions in investing in the semi area. With that said, let me throw in a long term, 20 year chart of the SPX(S&P-500) to give some long term perspective.
Over the past 20 years, the SPX has gone through 2 cycles and we are presently somewhere in 3rd cycle. I call the first 2 cycles the "dot com" and the "housing" cycles. Others might choose to call them something else, but this is what I like to call them. The present cycle I like to call the "asset" cycle. To describe these cycles, countless articles and many books have been written, each with their own points of view. I don't want to dwell on those, but rather look at the time frames of the cycles, and to give a "picture" of where the market is now in the 3rd cycle.
The following listing of numbers and time periods are approximate and not precise in order to try and make some larger points.
+ The dot com bubble was about 4 years to the upside to the 1520 area, and then 2 years down to the 800 area, a -750 point downside.
+ The housing bubble was abut 5 years to the upside to the 1550 area, and then 1+ years down to the 700 area, a -850 point downside.
+ The asset bubble is ongoing. It has taken about 6 years to reach the present peak of about 2130. In the last several months it is now down to about 1820, a change of about -300+ points. Where does the market go from here? Just from history of the past 2 cycles, it would seem that the last few months of downtrend would not stop here but rather fall to lower levels. The downtrend has about another -400 points to go in matching the last 2 cycles, and from a percentage point of view could go even further to say maybe another -700 points over the next 1/2 to 1&1/2 years.
The foregoing is not a prediction, just something to think about. RtS has been making the point that further market reductions are possible because the technical elements haven't coalesced yet to compare with previous bottom patterns. Certainly from a fundamental point of view the present and near term future does not look very bright. We may have awhile yet to find "the bottom" of this cycle.
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