Some very basic charts to try and see what we are dealing with here.
These are all the DOW on different time frames...weekly, monthly, quarterly and yearly.
*Weekly... the rise from 18,000 to 27,000 corresponds to the last year of Obama and the first 18 months of Trump. Under Obama the US economy was already recovering, Trump then added tax cuts and some business friendly reforms. The World economy was also on the improve. Notice the much increased volume starting in ~2017. This corresponds to 2 things... corporate buybacks became a dominant characteristic and the Bank of Japan was buying US equities [both of these have largely stopped.. Japan seems now to be a net seller and the Trump tax cuts were front-end loaded meaning the incentives for corporate buybacks are now much reduced].
Late 2017 the Fed has started raising rates and begins QT and the Dow drops ~2,500 points but stabilizes and begins to recover. Mid 2018 Trump starts the trade war and the market drops ~2.000 points but then hovers for a bit. Last couple of weeks Fed continues tightening and hostilities between US and China ratchet up. Dow drops ~2000 points in 7 days.
Comparing this fall with the worst days of 2008 you can see there is a move of similar dimensions on high volume. The market held that level [with volatility] and later dropped another 2,000 points over 3 months... then... the coordinated central bank support kicked in and the beginning of a 10 year bull market began.
On the weekly chart I would nominate several support levels. Minor support @ 22,000 [meaning there could easily be another 400 points downside be fore it stops falling]. Another minor support @ 21,000. Below that nothing much before 19,000 which is a major support and 16,000 is a floor [which if it was breached it's back to the caves guys]
*The monthly chart... really shows the downward momentum for the recent fall is something new. This is a much stronger move down than was seen even in the worst days of the GFC fall. My guess is the brakes are going to fail... [if I was trading a stock and I saw this on a chart I would not be trying to catch the knife]
*The quarterly view... doubly emphasizes the size of the recent move. Compared to 2008 in one quarter the Dow has fallen about 3x's faster in points terms this time around. In percentage terms it won't be so dramatic but it is impressive none the less.
*The yearly view... this includes the 87 crash [in which the Dow fell 25% in one day]. 1987 crash came and went and overall doesn't even register. It can be seen that the Dot.com crash and the GFC events are clearly visible and on a points basis this year is equal to the the 2000 crash. [On a percentage basis it is probably about half the size].
Overall impression.... we are witnessing a significant moment. I don't see anything yet which suggests it is over.... my guess is ...the recent momentum indicates a major shift in sentiment.
Just as a footnote.... for anyone thinking the Fed/and other central banks will reverse course and reinstate QE this is an interesting example from history [the 1790's in France]...i.e we have seen this all before... https://mises.org/library/revolutionary-france’s-road-hyperinflation
(20min delay)
