1973 to 1974: The markets could experience Deja Vu
The developments that occurred during the above timeline are similar to what is occurring right now.
- 1973 oil crisis
Ongoing war: Vietnam war. While a cease-fire was agreed on Jan 23, 1973, the war did not end until early 1975.
Highly inflationary period
Erratic president. Nixon desperately did not want to be the 1st president to lose a war
Current situation
Several stocks some of which are mega-players bottomed in advance of the major indices; GOOGL, AMZN, IBM, JNJ, VZ, SBUX, BABA, BIDU, etc. In fact, some Chinese stocks/ETFs exhibited very strong positive divergence signals; the following four come to mind, BABA, FXI, BIDU, DQ, etc, indicating all these chaps should outperform the markets.
- The market rallied for 3 plus days in a row on very good “UP” volume.
Bullish sentiment is below its historical average for several weeks on end. In fact, it has been trading below 20 for almost five weeks in a row.
The anxiety index has been in the extreme zone for months on end
Technically the markets are trading in the oversold ranges on the monthly charts and insanely oversold on the weekly charts.
Dow: Weekly close above 31,500
NDX: It would need to close above 12540 on a weekly basis and preferably twice. Or end the month at or above 12490
SPX: A weekly close above 3951
Conclusion
Certain Chinese stocks appear unusually strong, BIDU, BABA, DQ, JD, and FXI. Stock could decline for another 1 to 3 days and then they should continue rallying. If a second buy signal is generated then the markets should rally to Sept/Oct
If the 1973 to 1974 pattern completes, then the chances of Mother of all buys (MOAB) being generated will be close to 90%. And if The Kansas City Financial Stress Index (KCFSI) matches its 2008 to 2009 high, then the odds of the very rare FOAB being generated will be north of 81% and that is almost as good as 100% as to get 81% a lot of factors have to coalesce. In simple terms, a monumental opportunity is brewing. When a MOAB is triggered the buy signal lasts roughly 7X to 10X longer than the Sell signal. The last one was generated during the COVID crash and the rally phase was 7X longer than the corrective phase. When a FOAB is triggered the minimum phase is 10X longer than the corrective phase.
Geopolitical crisis
Energy wars which fall under the umbrella of Geopolitics will serve as the trigger for the next albeit more potent downward move.
Russia no longer has any interest in negotiating; all one needs to do is listen to the rhetoric emanating from its leaders. Europeans who are retired or can work remotely would do well to start looking to spend winter in Turkey (on the Mediterranean side). The climate is superb, the food is fantastic, and the Turks on the Mediterranean side are used to catering and dealing with Europeans. Rentals are incredibly cheap, and all in all, one could end up saving a handsome pile of money by putting such a plan into play
If you are unable to leave, then consider adding a wood-fired stove, wood pellet or possibly coal-fired stove to heat the house. It is going to get downright brutal in Europe this winter if Europeans don’t take a knee. Germany is already implementing draconian restrictions and it's not even winter. Public pools are being shut down, temperatures are being regulated in buildings, limited hours for taking a hot bath are being assigned, etc.
