S&P500 Bear Markets

Hey everyone and thanks for jumping back Into the equity verse today we're going To talk about the S P 500 comparing the Bear markets if you guys like the Content make sure you subscribe to the Channel give the video a thumbs up and Check out into the crypto versus premium At into the cryptiverse.com we of course Do have several tiers that you can Choose from to get access to various Types of content now what we want to do In this video is to just sort of follow Along with the S P 500 bear Market Because we've been following this for a Long time might as well continue to Follow it until it's decisively over now This chart shows you every single bear Market and the S P 500 going back to the Great Depression now of course it's very Convoluted to look at it this way so we Will quickly hide all of them and pull Up the current one that we are currently Living through Now what's interesting is we can go Through and compare this bear Market Individually to Prior bear markets and We are going to start off by doing Exactly that The first thing I want to look at is to Compare this to the financial crisis From 2007 2009. now there of course was The bear Market from you know 2020 but It was really short-lived and then the FED just printed our way out of it and

Arguably led into you know the crisis That we are living through today with High inflation and the FED having to Raise interest rates much higher than They have in a long time Um as a cycle goes on right If you look at this bear Market compared To the financial crisis it has followed It somewhat closely now that's not to Say that you're going to have to see a Major meltdown like the one we saw back In 2008 but we have to admit that it is Always a possibility I mean you know This bear Market over here continue to Put in lower highs and lower lows and Then eventually the floor fell out one Positive thing usually with the floor Falling out is that you kind of get Further in right to the to the bear Market so to speak if you look at the 2000 to 2002 bear Market it asks it Actually lasted a good bit longer and One of the reasons arguably is just Because it remained a fairly structural Bear Market just for a long time there Wasn't really a major capitulation in The sense of what we saw during the Financial crisis where we just dropped Really really quickly And got to the end of the berry Market Much quicker The.com crash was more similar to just a Structural bear Market through and Through and it lasted approximately over

Over 900 days For context a current bear Market is About Just over let's see what is it at right Now about 330 days or so the cranberry Market is Is maybe 331 days or so again the one From the.com Crash lasted over 900 days We're not saying that has to play out The same way but it does give you some Context into what is theoretically Possible I mean if if 2022 has as taught You know people anything it should be That you know bear markets can last a While I mean at the beginning of 2022 When we started talking about The spare market and and how it it Easily could last for a while especially Given High inflation and the federal Reserve's response Um it's really no surprise that 2022 Will just simply be remembered as bear Market and of course the spare Market Could easily well extend into 2023. if you do compare this to a few Other bear markets we can go look at Periods of high inflation you had the 19 Early 1980s you can see that that bear Market while it did last a good bit Longer from where the current one is it Didn't actually go too much lower so When you think about bear markets There's two components to it right There's the the price component and the

Time component some bear markets Also like the 1946 to 1949 bear Market Some of them don't really go that deep Right so if you compare this one to that Bear Market they don't always Necessarily go that deep but what you Will see is that they can often last A while right they can last a couple of Years uh you know up to two or three Years just depending on how bad it is And so that is something I think it's Worthwhile to consider there's also the Bear Market that we experienced from 73 To 74. On this bear Market basically from these Levels more or less just went sideways For you know another 200 days more or Less before finally getting the final Capitulation into that final bottom one Thing to consider though I I know it can Be somewhat depressing to look at this Kind of stuff and you can already start To feel like the apathy setting in I Think for for a lot of different people It was interesting though right now I Mean the s p is actually sort of back at A at a you know somewhat major Resistance level but To a large extent especially in some Risk assets you know I think apathy is Starting to set in and it can set in if If the price just sort of goes sideways For a while and Trends down it's when it Gets that you know really apathetic is

Usually when you get really great value In long you know in with some of these Long-term Investments but one of the Things that you should look at not only Just comparing the bear Market is Actually take it out to the next Peak Right so it always puts into perspective The bear Market phase right like during The bear Market it feels like it's never Going to end but then typically once you Get out of the bear Market It just sort of seems like you know such A brief moment in time where we spend so Much time worrying about everything and Then eventually we we sort of come out Of it right this is coming out of the 73 To 74 bear Market Coming out of the financial crisis to The next Pete that's what it looks like Kind of crazy right like I mean if you If you just look at it to the bottom It looks quite scary if you take it out To the next Peak It's kind of like oh this was a great Opportunity right I mean that's the it's The point right this was a great Opportunity now living through it at the Time of course it probably wasn't that Obvious uh to everyone but it was in Fact a great opportunity and you can go Through and look at a lot of them right This is the one from 73 to 74. Um maybe already showed that one this is The one from 80 to 82. right so just

Comparing it to the bottom that's what It looks like going out to the next Peak That's what it looks like Getting through the bear Market is hard Right it's difficult a lot of people Capitulate all the way down and and Eventually you know the last person will Capitulate and then it's just you know We go back up for a while and then they Fomo back in and lead the rally on and Then we sort of rinse and repeat the Same cycle over and over and over and Then we can also compare this one to say The you know the bear Market from 1937 To 1942 1946 to 1949 56-57 Going through the bear market and then To the next Peak 61 to 62 bear Market into the next Peak This one looks more optimistic right This one paints a more optimistic Picture 66 for the next Peak the 68 to 70 bear Market to the next after the bear Market Into the next Peak And so on and so forth right you get the Idea the general Point here is that Bear markets in the S P 500 you know They vary in linked I mean sometimes They last about a year sometimes they Can last three years but Betting against the US economy over say Like 10 to 20 years typically doesn't

Work that work out that well right the The US economy is have proven itself to Be fairly resilient Um over longer periods of time and and The people that just sort of stick it Through ultimately do well over the Macro scale now zooming into where we Are today I guess is is somewhat Relevant right and we've been following This for a while So I thought today might be a good you Know good day to make a video now if you View this on a log scale right if you do This on a log scale you can kind of see That we are At this downtrend line So we hit it in January And in March and in August And now again in December We've put in new lows in January And in February In May In June and in October So far this remains a fairly structural Bear Market Now there's no evidence clearly yet that We're going to break out of this and go To new highs and if we do come back down I think probably the first area to look For would be around that 3 400 level Right a 30 if it goes back down to 3 400 That would more or less represent a a Pullback of approximately 30 percent or So which is also equivalent to the

Pre-pandemic high right about a 30 Drawdown from the all-time high and if It bottoms there if if that's ultimately The bottom assuming the Bottom's already In right but if that's ultimately the Bottom then you could argue that it's a Soft Landing right so like if this comes Down in Bottoms sometime in in the first Quarter or something of 2023 at around 3 400 then I think you could argue that That is a soft Landing if on the other Hand we capitulate much lower and go say To 3 000 or some 3000 that would be Defined by a hard Landing in my book The Reason I say that is because you know if You look at at prior bear markets with The S P 500 you know a lot of people Don't like to look at these bear markets But this drawdown here was in fact about 50 percent and then this drawdown over Here was also just north of 50 55 Percent or so so far the s p has really Only Fallen about you know 28 or so if It were to fall 50 percent you know that Gets you to 2400 right if it falls 40 Percent it gets you to Um around 2 900 and a 30 drop gets you Just below that 3 400 level which again Is the pre-pandemic high so you know I Still do think it it makes sense to Watch this relatively closely you know Don't don't I wouldn't necessarily get Super Um excited about immediate new all-time

Highs even if this breaks right I mean It could just break and be a false Breakout and then come back down Um and then of course the other way to Look at it is just probably a preferred Way is to not look at on a log scale and And look at it on a linear scale and if You look at it on a linear scale you Might even be able to say it already Broke above it a little bit right we Already sort of broke slightly above This level but again I mean these are These are major resistance Levels by the S P 500 and and until proven otherwise Until proven otherwise you know I Assuming it's just a structural bear Market so far has worked out pretty well Right now eventually that thesis will be Wrong but so far I mean it's worked out Relatively well and I mean even back Over here in August you know I mean There are so many people calling for a Melt up to new all-time highs that Didn't happen it's gonna it's gonna Happen literally every single counter Turn rally along the way and and this Sort of keeps people fomoing in right I Mean you know they fomo in at these sort Of tops And then they capitulate at the bottoms This is not the person you want to be Great this is not the person you want to Be so you know I look at this I look at The overall structure here

Um If I can go back I look at sort of the overall structure Here of this bear market and More or less just assume that it's Likely going to continue playing out for A while I think the main the main issues That we have right now are the treasury Yield curves right you look at the Spread on it The three month and the 10-year I mean This is a fairly Steep inversion and it's lasting you Know several days several weeks so I Think there's some Merit to it normally When this happens we end up getting a Recession the reason why that's Important is because bear markets that Include a recession tend to last a lot Longer than bear markets that don't Include a recession The yield spreads right the yield curve And the spread on the yolk curve of the Three month and the two ten year and the Two year and the ten year both suggest a Recession is on the way I don't know exactly when it's going to Occur Um I mean if I had to guess I'd say 2023 But they might not declare it until like You know the third quarter or something If you look over here back in you know Back in 2006 there was an inversion but The recession didn't start till 07 right

So it inverted in all you know in summer Of 06 and then we had the recession Starting in November of 07. if you look Back in you know during the.com crash we Inverted in the summer of 2000 and the Recession started in in early 2001 and Then here we've inverted If we zoom in here you can see that we Really started to invert in October so I Mean the recession by the way they're However they're going to define it With unemployment starting to go higher And maybe the the yield curve Uninverting we could still be six months Away from that okay now if the recession Is included in the spare Market Then there would still be some evidence To suggest that the structural bear Market could continue to go on for a While just like you know just like what Happened Um in the.com Crash Or or the financial crisis right I mean These bear markets lasted a long time And both of them Also had a recession in them right so Important things to consider I mean Important things to consider as we Continue to navigate the equity very so You know I I really am curious as to What the s p is going to do here if we Just get simply get another rejection Note that we are right above the 200-day SMA as well

Um you know last time we got to the 200-day we got rejected off of it at the Downtrend line now we're slightly above It We also went slightly above it back in March And we got rejected from the downtrend Line again So and then the last thing I want to Look at just briefly is the 200 week Because you know the 200 week is where We bounced off of recently right we sort Of bounced off right here the 200 week And if it were to follow I mean if you Go back and look at where where this Where the s p has previously bounced I Mean you can see there have been some Fairly significant bounces at the 200-week SMA so I don't think you should I don't think you should just completely Discount it as as irrelevant right but Also remember that we did not have high Inflation during you know 2016 and 2018 And we were not really looking at an Inverted yield curve either so just Because we bounced off of it over here Doesn't mean that this Bounce has to be Sustained it will really much be Dependent on on a lot of macro factors That haven't haven't you know haven't Really yet been fully fleshed out and if You go back to say Um The dot or the financial crisis you can

See we bounced off the 200 week and when We bounced off of it All right when we bounced off the 200 Week if we just take it from the 200 Week we bounced up about 11 if we take It to the wick below it it was about a 15 bounce and then if you go back over Here and look at the wick just below the 15 or the 200 or the 200 week we're Currently sitting at about 16 to 17 Percent above it so I'm I mean as we get At the end of the year I mean I know People are talking about like a Santa Rally and everything and and that might Be possible I think the biggest risk to Traditional markets right now is what Happens next quarter and in Q2 of 2023 When we start to get earnings for a lot Of companies that are finally starting To feel the effects of all the rate Hikes that occurred in 2022 so inflation Was the 2022 narrative I think the 2023 Narrative is going to be earnings and How badly did the FED go or how high did The FED go and how badly did it hurt the U.S economy I'm not saying they shouldn't do it I I've been clear all year that I think It's what they have to do they have to Get inflation back down and raising Rates is a good way to at least try to Do that But Um still still think it's it's

Worthwhile to consider that inflation's The Narrative of 2022 good chance it Starts to come down in 2023 but that Doesn't mean the berry Market we can't Still be somewhat bearish in 2023 you're Probably going to see earnings be Affected by a lot of the interest rate Hikes remember it takes like three to Four quarters for these interest rate Hikes to be fully felt and if you go Look at when they started Um raising interest rates right I mean You can see they didn't really start Until early 2022. so once we get into Early 2023 or even right now you could Argue some of these companies are Finally starting to feel the effects Therefore that could be The Narrative of 2023. but anyways I hope you guys enjoy The content make sure you subscribe if You're not again check out these the uh Into the cryptographers premium we have That link down in the description below We have several tiers as well make sure You guys check that out and I will see You guys next time bye