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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude -- Ignore unavailable to you. Want to Upgrade?

To: Doug R who wrote (7452)	11/11/1997 10:20:00 AM
From: Tim Oliver	Respond to of 79378

Doug, I have a few observations that I would like your feedback on concerning the SPX: From 1950 to 1965 (15 yrs.) the SPX appears to have grown a little over 500% followed by the period from 1965 to 1980 (15 yrs.) of little growth at all. From 1980 to 1996 (16 yrs.) the SPX appears to have grown about 500% again. If the pattern continues, the SPX would be at the top of a flat period that would extend until about 2010 with a probable 33% drop to the bottom of the channel. As I look at the SPX adjusted for inflation over the same period, the flat period between 1965-1980 dropped significantly, indicating that excessive inflation may have temporarily "stalled" the market. Assuming that's the case, the current market may not be overpriced assuming that inflation will stay under control. The chart I used to see the inflation adjusted SPX is dent.gif at www.geocities.com. The chart is overlayed on a shaded background of the GDP. I think you've referred to this chart recently. The GDP in the next 15 years is projected to grow much faster than the trend from 1920 would indicate. The assumption made in the overlay is that the SPX will grow significantly over the next several years. If the trend were to continue in the GDP however, the growth in the SPX appears to be extended and will likely flatten somewhat after inflation. Any idea where the extremely bullish GDP came from? Finally, in the past 5 years, the market seems to have advanced far more when the 30 yr. bond drops from a high down to about 6% than when it hits 6% and starts moving back up like it appears ready to do now (between now and January). Since I don't have a longer chart for the 30 yr. bond (I used yahoo), I wasn't able to confirm this pattern over a longer period of time. The long bond cycle, the 15 year SPX cycle, the inflation cycle, and the GDP cycle (not the bullish projection but the trend since 1920) seem to correspond to a poor to mediocre SPX environment over the next 10-15 years. All of these things seem to point to increased inflation coming up soon and continuing for several years. I know that's contrary to conventional wisdom of the Fed's stated goal, but aren't major market cycle turns sometimes based on the things that investors are NOT betting on? Any thoughts? Tim