Understand that in the frenzy that led to 1929 and 2000 tops, there wasn't easy access to broad traded instruments, ETF's, etc. Commission on options were expensive and punishing to retail, so retail wasn't involved much in the leverage. Even the big dogs weren't as diversified. That's why I don't believe we see MASSIVE spikes to finish this thing off. There's just too many tradeable vehicles, too easy access to leverage, and the leverage is spread and diversified in a thousand different places. I still believe crypto and BTC are most likely stealing from the moonshot the nasdaq should be having. They are acting as proxies for one of the most innovative technologies ever created, with AI being the other that the Nasdaq is directly benefitting from. Take all the investment in crypto the last 10 years, and imagine a scenario where it all happened within traditional exchanges instead of outside the system, and you can only imagine where QQQ is today.
At the same time, the patterns that led to those mega tops were different than the load up that has led to this market since 2022. I had this potential as a low probability outcome, requiring a hold around the 5k SPX region on last year's selloff, and cautioning that because we seem to be in one large diagonal, the final wave is never guaranteed. It got just below that and as we know, reversed quickly. And we're now getting that 5th wave off the 2022 low. I considered it low probability, but that's because nothing off the 2022 low has been impulsive. I still view this 3+ year pattern as most likely being an ending diagonal. And the lack of even the smallest pullbacks since April has me continuing to go heavier in the thought that the finality is happening all at once instead of 3 clearly distinct segments. I have 6790-6835 as next resistance range. If that holds, support is 6615-6685. And should both of those ranges hit one after another, 6900-7100 should happen, and might be the top. Could even blowoff higher. But as I've warned before, and currently maintain, it doesn't matter much how high it goes. I think the top is followed by a multi-year drop, with the initial move down being quite quick and deep, ultimately getting back under 4k by the end of 2028, and most likely sooner.
I've been wrong plenty on the macro. And I don't really personally deploy funds into broad macro indexes or funds outside of short-term moves, mostly sticking with individual stocks, sector ETF's coming off significant supports, and metals. But my overall point, moreso than where I think SPX is going, is that THIS top is not likely to look like those previous ones. That's too obvious, there's too many people calling for it, and as I mentioned in my first paragraph, there's too many differences with this market. Another example of the differences is what Paul Tudor Jones mentioned this morning. 1999 was a rate hiking environment. We had a balanced budget. We are in a rate dropping environment with the most insane deficit imaginable. At the same time, the monetary and fiscal policies are going in opposite directions. As he said, this is frankly uncharted. But I don't think it ultimately changes the eventual outcome, while I think the change will be the look of the top and the confirmation of the reversal. Nobody rings a bell at the top, and they almost always completely surprise when least expected. Hence why I continually preach risk management. I'm heavily participating in this run, but I know where my fail points are on every single thing. I advise everyone to do the same. Like I said a week or two ago, emotions are much calmer during calamity when you are prepared and risk points are already identified and planned for.
