Here is long term monthly chart of the VTI, which takes out a lot of the noise, as it is a proxy for the total stock market in the USA.
What if … this current pullback is a repeat of 2015 and 2011, where we had consolidation bull flags, before another leg up?
If this thesis is correct, the current pull back could be forming an expanding bull flag, with a potential resolution to the upside later this year, as the credit cycle kicks into gear again. China is reflating already with a massive liquidity injection, which normally takes 2 to 3 quarters to find its way into the global economy.
BHP Billiton Ltd is already sniffing this scenario out. Brazil (EWZ) a commodity producer also is sniffing something afoot. These could be early movers, anticipating whats coming … another 6 to 7 years upleg in global equities and commodities?
What if … ?
A proxy for the global 18 year economic cycle and the 60 year K wave is the global real estate index $DWGRS.
I have overlaid the various cycles on the chart to show where we are in 2019.
We should expect a mid-cycle slowdown this year, before market prices begin their next leg up later this year, into the cycle peaks in 2026, for a 6 to 7 year leg up in this secular global bull market in financial assets.
We should see boom conditions from 2024 to 2026, with a major blow off, then a bear market into the end of the decade, after 2026 peak.
The Chinese are starting another credit injection impulse, and this should kick into the global trade in Q3 and Q4 2019, to set the scene for the next leg up from 2020. It takes about 6 to 9 months for these credit impulses to work their way through the system.
Perhaps all the central banks are going for another credit injection? This lines up with the cycles. Sure, the global debt is high, but we should not underestimate the ability of the central banks to create something of biblical proportions in global financial assets.