High possibility of a major U.S. stock crash increases

This isn’t a long-term story.

On a closing basis, the S&P 500 peaked at 4,796.56 on January 3 of this year, and since then it has continued to decline. This trend is expected to continue for the next two years, meaning that it is highly likely to fall to around 1,600 this year and next year.

This is not a prophecy. It is a forecast based on analysis of the past.

The background is,

(1) when U.S. stock prices were undergoing adjustments from a mini stock-price bubble, large-scale monetary easing and fiscal stimulus were implemented as measures against the spread of the new coronavirus, creating a large stock-price bubble.

(2) Those measures also created inflation.

(3) As inflation containment measures began (shifting from tapering to monetary tightening) and stock prices began to adjust (around November last year),

(4) the Ukraine crisis occurred. This served to make the stock-price adjustment more certain.

The above story was written in February 12 in “Snowy Charts: When You Should Not Buy Stocks,” so please take a look.