WARNING: WHAT FOLLOWS IS RESEARCH, NOT INVESTMENT ADVICE. YOU INVEST AT YOUR OWN RISK, UNLIKE THE WALL STREET BANKS, WHO ALSO INVEST AT YOUR RISK.
I have previously shown how the current situation resembles that of 1972-1973: depressed Michigan sentiment, my animal spirits metric climbing above zero. If we follow the early ‘Seventies pattern, we are on the cusp of a severe recession (actually, I believe we will have to start calling it a depression in polite society if even the mal-measured unemployment rate climbs above ten percent and lingers there).
So it was of some interest to me to update my implementation of the venerable Coppock curve, a long-term stock market momentum indicator that gives a reliable buy signal when it turns up from a negative reading (the one false positive having been in the early ‘Oh-Ohs). In this light the stock market also resembles the early ‘Seventies situation, even to exhibiting a very well formed “killer wave,” a descent from a top with a hitch on the way down, very much as it did in the early ‘Seventies, and before that, coming off the major late ‘Sixties top. Here are the charts.
Scaled the same way, side by side (note the higher highs and the lower lows in the recent period):