This is a terrifying chart of $AAPL
A gravestone doji is forming on the log-scale quarterly chart of the ratio of #AAPL and the risk-free asset (a 10-year U.S. Treasury bond).
This gravestone doji is forming right at the +2 standard deviation of the log-linear regression channel formed over the entire history of this ratio.
From a conceptual standpoint, what this chart indicates is that there's far too much optimism in the market about Apple's stock for the yields on the 10-year Treasury to be as high as they are.
Indeed, earlier this year, there was more fear in the market about a default on U.S. Treasurys than a default on Apple's bonds. This should never happen.
A private company, no matter how great its business model, does not have the power to create money, as does the federal government. Therefore, no corporation's bonds should be perceived as safer than a U.S. Treasury bond. Yet, this is effectively what this chart is illustrating is occurring right now. In so much as this ratio has reached its highest standard deviation from the mean ever, the market is far too optimistic about Apple's stock price when there's so much fear about Treasury bonds (and the U.S. Treasury's ability to repay its debts).
Since the U.S. Treasury bond underpins the global financial system by serving as the (theoretically) risk-free asset, there's never an instance whereby extreme volatility on Treasury bond yields won't eventually transmute into increased volatility for riskier assets, including stocks.
Very rarely do you see a higher timeframe chart this extremely over-extended on a log scale. A chart like this is something one would expect to see at the end of a supercycle because a reversal on this timeframe could last for many years. While it's certainly very possible that Apple's nominal stock price may continue to reach new ATHs, this chart is as worrying as a chart gets from a long-term perspective.
I'm worried about the many investors getting trapped at this supercycle high. Too many people believe that the central bank has achieved a soft landing and that the #Fed will cut rates. Too many market participants are wrongly assuming that a return to monetary easing will cause tech stocks to balloon in price again, as happened in 2020-21.
The coming recession will be much different. This time around, when the Fed cuts rates, inflation will quickly resurge causing central bank monetary policy to enter a period of whipsaw (where rates are cut and hiked erratically due to stagflation, similar to what happened in the 1970s/80s).
Although the Fed will indeed begin increasing the money supply dramatically in 2024 (it actually already started to do this), be cautious in assuming that this money will flow directly into tech stocks. Instead, the newly created fiat currency will increasingly flow into commodities as they continue to take up an increasing share of the total money supply. Commodities will take up more of the money supply because of rising conflict, deglobalization, economic protectionism, climate change/the effects of a transition to sustainability, and aging and less productive global demographics.
I hope that time proves me wrong because if I'm right, a lot of people are going to be very disappointed about Apple's real performance in the years ahead.
#AAPL / #Apple / #QQQ / #Nasdaq
This gravestone doji is forming right at the +2 standard deviation of the log-linear regression channel formed over the entire history of this ratio.
From a conceptual standpoint, what this chart indicates is that there's far too much optimism in the market about Apple's stock for the yields on the 10-year Treasury to be as high as they are.
Indeed, earlier this year, there was more fear in the market about a default on U.S. Treasurys than a default on Apple's bonds. This should never happen.
A private company, no matter how great its business model, does not have the power to create money, as does the federal government. Therefore, no corporation's bonds should be perceived as safer than a U.S. Treasury bond. Yet, this is effectively what this chart is illustrating is occurring right now. In so much as this ratio has reached its highest standard deviation from the mean ever, the market is far too optimistic about Apple's stock price when there's so much fear about Treasury bonds (and the U.S. Treasury's ability to repay its debts).
Since the U.S. Treasury bond underpins the global financial system by serving as the (theoretically) risk-free asset, there's never an instance whereby extreme volatility on Treasury bond yields won't eventually transmute into increased volatility for riskier assets, including stocks.
Very rarely do you see a higher timeframe chart this extremely over-extended on a log scale. A chart like this is something one would expect to see at the end of a supercycle because a reversal on this timeframe could last for many years. While it's certainly very possible that Apple's nominal stock price may continue to reach new ATHs, this chart is as worrying as a chart gets from a long-term perspective.
I'm worried about the many investors getting trapped at this supercycle high. Too many people believe that the central bank has achieved a soft landing and that the #Fed will cut rates. Too many market participants are wrongly assuming that a return to monetary easing will cause tech stocks to balloon in price again, as happened in 2020-21.
The coming recession will be much different. This time around, when the Fed cuts rates, inflation will quickly resurge causing central bank monetary policy to enter a period of whipsaw (where rates are cut and hiked erratically due to stagflation, similar to what happened in the 1970s/80s).
Although the Fed will indeed begin increasing the money supply dramatically in 2024 (it actually already started to do this), be cautious in assuming that this money will flow directly into tech stocks. Instead, the newly created fiat currency will increasingly flow into commodities as they continue to take up an increasing share of the total money supply. Commodities will take up more of the money supply because of rising conflict, deglobalization, economic protectionism, climate change/the effects of a transition to sustainability, and aging and less productive global demographics.
I hope that time proves me wrong because if I'm right, a lot of people are going to be very disappointed about Apple's real performance in the years ahead.
#AAPL / #Apple / #QQQ / #Nasdaq
Note how high this ratio has risen. It's nearly double the peak value reached in the lead-up to prior recessions. (The red-shaded areas highlight previous U.S. recessions).
Never has the S&P 500 been as overvalued as it is now when compared against the 'risk-free asset' (long-duration U.S. Treasurys). In fact, the S&P 500 is so overvalued that the sell-off in 2022 merely brought the Shiller PE Ratio down to about the same level as the peak before the Great Depression.
What concerns me the most about this SPY/TLT ratio chart is the unprecedented confluence of higher timeframe charts. The ratio is about to begin oscillating down on the monthly, quarterly, semi-annual, and yearly charts at the same time.
My conclusion is that the coming recession will likely last quite a long time, or that it will come in waves as occurred during the stagflation of the 1970s (when several recessions occurred within the span of about 10 years).
Although it's easy to believe the proposition that a soft landing has been achieved when the VIX is 12 and the SPY is near an ATH, be aware that higher volatility will ensue from the record-fast rate hiking cycle. There is always a long lag between when interest rates rise and when the broad economy is impacted.
Many charts continue to confirm that strong stagflation is coming. While I am a stock market bull over the long term, I remain convinced that an economic storm is coming.
They fail to realize that Bitcoin's 5,583,371,195% return against the dollar since 2009, represents the dollar crashing in value.
If Bitcoin's price temporarily comes down against the dollar in 2024, what's happening is that the dollar's ongoing crash against Bitcoin is taking a temporary respite.
$GOLD / #Gold / #XAUUSD / $GLD / #Fed / #FOMC
During the #FOMC press conference, the #SPX briefly exceeded the Bollinger Bands' +3 standard deviation on the daily timeframe. This event rarely occurs, and only occurs during extreme market optimism.
The #VIX did not confirm the higher move-up as it created a higher low over yesterday's trading session while the #SPX created a higher high. The last time this type of divergence occurred was 6 years ago in November 2017, about two months before a significant #volspike (VIX went to 50).
The current S&P 500 environment remains consistent with the end of a business cycle when the Fed stops tightening and the market believes a soft landing has been accomplished because the ensuing recession has not yet started. More often than not the #SPX reaches new ATHs during this period.
So far in December, the VIX futures term structure remains in deep contango and the yield curve remains deeply inverted, both of which further confirm that we're at the end of a business cycle.
An economic #recession is likely to begin in the U.S. by the end of 2024. It will likely be stagflationary with inflation remaining high even as demand continues to cool.