The least tempting stock market charts ever

Topic: a negative view of the Swedish stock market chart

Conclusion: not quite a bargain is it? -50% would be more than reasonable.

Does this series of charts look tempting to you?

(The Swedish OMX stock market index)

First, in the very short term, there seems to be a psychological barrier around 1650. After 3 attempts buyers are giving up. The break out in April looks more and more like a false, last hurrah.

Observing the index from a slightly longer distance, the similarities with the last peak are striking. Even more alarming is that we didn’t manage to get above the levels of 18 months ago. If stocks are this weak when US indices are hitting all time highs every day, there’s something rotten in the state of Sweden.

Seen from the beginning of the cyclical bull market, the double top of 2015-2017 looks even more ominous. Maybe there’s room for a third top before normality ensues, maybe we’ll go right through 1250. No matter, I think 1250 is where we’re going to start with. We’ll cross the bridge of “bounce back to the 1600s, or crash trough to triple-digit territory” when we get there.

In a 2-decade perspective, the current formation looks surprisingly tiny, like a “no volatility, great moderation tremble”, rather than a true wash out and re-set of the greatest monetary scandal in history.

My guess is that the latter is what we have before us.

The question is “just” how many more rounds central banks have left before they’re empty. In any case, looking for bargains here when stocks haven’t even visibly corrected in the chart just doesn’t make any sense to me. It’s as if Under Armour first raised prices by 200% and then put up signs with “SALE -5% OFF“. Tempting?

What to do about it? Get out of stocks unless you have insight in some very specific individual companies. Go cash, or buy something that’s currently unloved such as gold, gold mines, uranium or soft commodities.

Read more about the case for a -50% leg on the US stock market here LINK

NB: My next post will NOT be about financials or the stock market.

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4 Replies to “The least tempting stock market charts ever”

  1. Why should I leave Swedish stock market which is valued lower than 17 years ago for something “unloved” which is up 300% in same period?

  2. Thanks for another sound and sane analysis! Some sort of turnpoint has been reached. Bitcoin graph looks close to a collapse. Gold should be a reasonably safe and sound bet on a few months perspective.

  3. Mikael, what’s your take on “unloved” uranium? My opinion: Energy will remain at the core of the economy for the foreseeable future, and there are only two energy sources that can sustain civilization through the 21st century. These are uranium and thorium, and of the two uranium is well established while thorium is a wild card. However, either is a very long term bet, and there is a grave risk to uranium. Stockpiles of “depleted” uranium are large, and technology already exists that can make use of it. Better technology could render uranium /mining/ of no more value than snow in Lapland.

    1. Here I take the typical man on the street view, i.e., I go with what I can actually see right now:

      need for reliable energy production until better batteries
      shrinking stock piles
      increasing investment in standard power plants
      lower spot prices than production prices

      However, I agree on:

      better mining tech

      But I think both are longer off than I need for spot prices to rise as well as profits for mining companies.

      …a lot of “think” and “ass u me” there, but it’s all I’ve got.

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