18% Inflation - The Real Rate

According to US treasury department, Trump increased national debt by 33.1% while Biden increased debt by 8.8%.  Economist Roubini warns that a Trump re-election is the biggest threat to US economy.  Proposed tax cuts and import tariffs could worsen global economic recovery, inflation and fiscal deficits leading to a financial crisis.

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The market goes through ups and downs...peaks and valleys

I'm talking strictly charts here

If you zoom out the sp500 chart u can see it is an over-extending bubble with not much for support levels on the way down

Maybe the bull run goes on another 10 years after the FED fed the market with trillions

@Inblood

 Wages didn't surpass inflation until well after inflation kicked in. Not to mention, inflation doesn't actually gauge what most people HAVE to spend their money on so the inflation numbers that are compared to wages are not even close to what real inflation is. 

@dubz4dummyz

Where exactly do you see this on a normal historical S&P chart?  

How exactly are you determining an 'over-extending bubble' just by looking at an historical chart with nothing else to compare on the chart?

There are plenty of support levels on the way down.

I am not sure what you are referring to by either of those statements?

@Raiders22

Peaked sometime in 2000 then dropped back to 1996-1997 levels in 2003

Peaked sometime in late 2007 the dropped back to 1997-1998 levels in 2009

The bull market commenced from there 

Tiny pull back in 2015...little bit of a support level built

Then covid hits. Markets panic. Huge sell-off, even among most of the ultra-rich, hence the quick plunge.

FED steps in. "Saves the 401k's" but really  adds a huge amount of free money to the ultra-riches pool to play with (the market)

All-time highs

I see a bit of support at 3800-4000 with 4000 being a key number but not much else. Its been pretty straight uphill since 2020...since 2010 if u wanna scale out further to the full current bull run

@dubz4dummyz

Yessir.  Those are pullbacks and dips.  But you cannot just look at a chart and say it was a bubble without other information.  

The ENTIRE history of the chart has ups and downs.  They can be bubbles, they can be profit-taking, they can be pandemics, they can be normal ebbs and flows over time.  Some are recessions due to factors outside the markets themselves; some are simple corrections that come with a long upward trend.  But you cannot infer a bubble AND you certainly cannot say it is overvalued based on the simple historical context.  You need a lot more information to confirm this.

You are entirely incorrect on the support levels.  If you go to any technical website they will list you many, many levels of support depending on what type of 'charting' you are interested in.

Yes, key round numbers can be psychological support and resistance levels.  But many, many other factors can be considered.

For example, the SPY ETF is one of the indices a lot of traders use.  That has shown a pretty clear support level due to accumulated volume at around 494ish.

The standard day-trading supports are around 516, 517, & 518.

You can look at the standard $SPX and you will see support levels pretty clearly at 5194, 5177, 5160.  Even when you factor in the standard deviations you will find support levels at 4880, 4750, 4640.

You can use all sorts of methods besides just round, even psychological numbers -- those for sure can be support levels also.

Yes, it has been in an upward pattern.

THAT is my point to people that sit on the sidelines and wait, or those that try to time the market -- stop doing that.

START investing and get in on a trend that has always been upward over a multi-decade timeframe.

@dubz4dummyz

 Let me put it another way.  If you were to take this:  I see a bit of support at 3800-4000 with 4000 being a key number

Then use this as your key number(s).  At what point do you ever decide to get in the market?  

For example, go back to late OCT of last year and see the dip to 4138?  Assume that is a very key number because that is the low point before this current upward run.

Do you think it is a good plan to wait until it gets to that point to buy into the market?  

What are the chances that the market will ever get to that level anytime soon, if ever?  It is very unlikely to get that low again.  So, what is the plan for investing now?

Now, I can understand a reasonable idea -- like waiting for a correction of a 10% drop or a recession drop of 20% or so.  But think of all of the missed dollar-cost averaging and reinvested dividends you are missing out along the way -- while you wait for a number that might never be reached again.

@Raiders22

 History tells us the market will drop back...bull run will come to an end as all cyclical events do...we are currently in a bull cycle...

There are 0 support levels above 5000 besides the standard flats (5100, 5200)...we just reached it and have gone straight up...

The market has back tested 3800-4000 once

And has back tested 4100 most recently in October 2023. And have have skyrocketed up to today's highs from there

@Raiders22

 494 494 corresponds to 4940 on the sp500 chart...on the spy chart it will probably appear to touch it more often as the numbers as smaller....

But the reality is it touched it and busted through and we are now in the 500s on spy and 5000s on the sp500

It has touched it basically once and blown through it...

@dubz4dummyz

Yes, there will be pullbacks.  But why exactly do you say there are zero support levels above 5000?  The charts completely disagree.

Are you talking about a 'certain' support level.  If so, which one? 

I would still say look at any technical website and they will point out several various support levels.  

@dubz4dummyz

Correct, more or less because it is just the ETF that tracks the S&P 500.

But it does not appear to touch it more often.  In fact, it has not touched it at all since it cleared it.  The point was that is simply one of many support levels, depending on what you use to set your supports.

So, again, my question is why does this matter to person that is on the sidelines?  Is there a pre-determined entry point based on this?  If so, where is that point?

@Raiders22

well depends what chart ur looking at. Sp500 1-year has some support at 4650-4750 in dec.23/jan.24

Then we go straight up. Basically no support. The chart is just flucating upwards on daily trading/volume/news following the current bull cycle. Not much for re-testing numbers other than daily flucations (news cycle, earnings, etc...)...again we must remember a lot of this is because of the FED dumping trillions in market in 2020

Pull back to 5-year and the above is amplified

Its touched 4700 twice on the 5-year. Dec.2021 and jan.2024

Decent at 4480-4550

And the 3700-4100 range has been tested well

Because if you are Joe Blow (some 30-50 year old) and you buy in at an all-time high and we go on a 10-year bear run your money is trapped for 10 years unless you wanna take a loss...and say some random emergency pops up but your 20k in stocks is now 10k.. Obviously if your young enough you wait it out

Remember a good majority lives paycheck to paycheck or off a credit card

Now if your already in ...of course, ur laughing.  Just keep reinvesting dividends and buy more stock if u please....no harm in upping your average price a bit 

This is what I was looking for

Care to expand on the bold?

@dubz4dummyz

Why do you see that support at 465-4750 on the 1-year?  Once it cleared those levels it has never been anywhere near that again.  The only thing would be that it was touching the 20-day MA at those points.  It is well above the 20-day MA now and is far from going anywhere near those levels again.  If you use that as your support level for entry -- you might never get in the market.  A better support for that could even be argued that once it cleared the 200-day MA way back at 4200 or so.  But why wait on those points to invest?  Sure if things go very bad you can buy more on sale then or add to your positions if you have cash that is freed up.

On the 5-year during the DEC 21 That would be more of a resistance level.  Then you could argue that once it cleared it it became a support level.  So, if you assume a 10% correction is due and that is your new support level -- is that your entry point?  Because it has not touched that again once it cleared it.

Is that what you are saying?

@dubz4dummyz

The issue is you are trying to time the market -- that does not work.

You are missing out on gains all along the way.  Especially, as the market has always gone back up.

So, what if it drops?  If you are constantly investing all along the way down -- you are buying on sale.

@dubz4dummyz

Chances are it WILL go down--it always does.  But it goes up MORE than down AND always has.

BUT will it go down to WHERE you want it to?  Maybe, maybe not.  BUT that should not matter to the average person at all!  Because they should have been in already and riding out the dips.

ALWAYS remember that you are investing for the longterm for your retirement.  UNLESS you are day-trading or something along those lines.

IF you are always in the market you ALWAYS get the advantage of the dips along with the long runs up.  The long runs up matter far more than the dips do.

EVERY SINGLE point on the chart was an all-time high point at some point in the past.  Yet, the market has ALWAYS cleared them and left them behind.

You cannot start investing and in the back of your mind say what happens if you NEED to pull the money out when it is a dip.  

If you are not careful you will never start investing because you will always find reasons to NOT invest.

The compound return on your money from the market is very, very hard to beat.  Get in a matching 401k and max it out.  Get in other outside-of-your-work investing vehicles as well.  This is money for your future -- not money for NEEDS or emergencies.

You cannot worry about trying to time the market.  Get in and let it grow for you!

@dubz4dummyz

 Maybe you're looking for "be fearful when others are greedy, and be greedy when others are fearful"- Warren Buffet. What state do you think the market is in? 

@dubz4dummyz

 I day trade nearly all of the markets.  This is an entirely different style than investing for your retirement.

I am absolutely trying to time the markets.  BUT when the market looks weak I will be short somewhere in the market so that I am making money if I am right and the market goes down.  This is not something you want to attempt to do with your retirement-type monies and it is not easily available in, say a 401k, anyway.

BUT charts and resistance and support levels should NOT matter to someone that is investing longterm.

So, I would not worry about when the market is going to pull back or drop.  It will -- but who knows when.

A lot of us have been 'forecasting' a recession later this year.  I have plenty of ways to move cash around and take advantage if this happens.  BUT what if the recession NEVER comes? Then you need to be in the market and riding the upward wave.  

So what if the wave up lasts another 10-20 years?  Do NOT miss out.

IF the market does drop and you have some free money --absolutely, add into the market.  Because it will be on sale.  BUT do NOT wait to get in now.

@BigGame90

 Well I'm on the pessimistic side for sure, which is why I wanted raiders to expand on why he thinks all those numbers are in the past as if they are 1998 numbers

He some what did... but basically with the generic/standard sayings

Did inflation/covid really crush the value of a dollar so much that now the aug.2015 sp500 value of 2000 has gone up over 150% to the current 5200 levels (someone mentioned stocks moving with inflation)

With the economy being shut down for around 2 years  smack in the middle...

Yes, these are now the supports on the way down, whenever that is

The more they are re-tested over time the stronger support they will become

Bears will assume them as targets where stops are most likely  set

Right now we are just flying by everything. Broke through  5000 like it was a joke of a number (its not)

@dubz4dummyz

So, you are going to wait around for one of these points to be reached?

@dubz4dummyz

They will always be generic reasons by definition, because no one can predict when and if -- or how much -- the market will drop.

BUT the overwhelming evidence that it will continue upward is what you need for longterm investing.

If someone could predict exactly WHY and WHEN it WILL drop -- then those support levels are important.

But no one can predict the next pandemic or recession -- let alone a depression.

That is why you cannot be on the sidelines, ever.