Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Predicting All Major Stock Market Crashes Since 1965!

Stock-Markets / Financial Crash Apr 08, 2010 - 03:42 AM GMT

By: Francois_Soto


Best Financial Markets Analysis ArticleDiscovery
We unexpectedly discovered two sets of conditions preceding every major S&P 500 peak since 1965! We coined such signal the imminent Credit Complacency Crash - CCC. When these two sets occur, it always (so far) caused major stock market  crashes. We define a crash as a decline of more than -15%.

We believe our CCC model could have direct applications mostly in tactical asset allocation and risk management for institutional clients. How did we discover this innovative model? This time, we had the intuition of back testing both our Lending Cycle and Financing Cycle anticipatory indicators.

Both of these anticipatory indicators lead CB LEI Y/Y by at least 12 months.  Given the S&P 500 Y/Y lead Real GDP Y/Y by 3-6 months and CB LEI Y/Y had a consistent lead of 3 months over Real GDP Y/Y, we can estimate having between 6-9 months of lead on the S&P 500 when we combine both these indicators.


Before we display our results, take note we observed these two sets of conditions on a monthly closing basis. We used S&P 500 data as reference. We trailed all these signals for six months except for the P/E in order to match sub-signals. We also eliminated multiple signals by only taking the first signal given.

Take a look at the chart below. And no... We didn't cheat by manually pin pointing S&P 500 peaks on an Excel spreadsheet. These are the actual and concise results from rules explained earlier.  We believe these two sets of rules do make sense and respect our K.I.S.S. (Keep It Simple & Sweet) philosophy.

See below the summary of all CCC signals. First column is date of occurrence, second column is monthly closing price at signal, third column highest monthly closing seen following signal, fourth column is lowest monthly  closing seen following signal and fourth column is the awful S&P 500 return seen:

The average decline following our CCC signal is -32.0%. Note the loss in 1977 is more than -11.9% and below -15.0% if we are taking daily data instead. Moreover, S&P 500 declined more than -15.0% in 1998 and we didn't get a CCC signal but it is not an issue and debatable considering equity peaked in 2000.

How to exploit a CCC signal? When it happens, we suggest to closely monitor S&P 500 price movements with various tools for an imminent reversal. For example, simple technical indicators or sentiment indicators may help on a short-term horizon identify the right moment to adopt a more bearish stance.

Our CCC signal is probably one of the best indicator of S&P 500 peaks available and is yet undefeated with no false signal. Based on this model only, there is no equity meltdown in sight. This corroborates our view the U.S. economy recovered from the latest recession and is now back in expansion mode.

About Us
EMphase Finance is an independent investment advisor in the management of equity
portfolios for both private and institutional clients. More information:

François Soto, Chief Investment Strategist of EMphase Finance,
300 Ave. Des Sommets, Suite #1213, Montreal, QC, Canada, H3E-2B7, 514.984.9155

Annual subscription to one/first international or sectoral service                          = TBA
Annual subscription to 2nd & 3rd additional services                                = TBA
Annual subscription to 4th+ additional services                                          = TBA
Consultancy service available upon request                                                  = TBA

Accuracy of Information
This report is based on sources believed to be reliable or trustable and the information is provided without responsibility. However, EMphase Finance cannot guarantee its accuracy.

No Recommendation
This report is issued only for informational or educational purposes. This report doesn’t contain any solicitation from EMphase Finance to act as a securities broker or dealer in any jurisdiction.

No Responsibility
EMphase Finance will not be held responsible for any direct or indirect loss arising from any use of material included in this report and this to the full extent permitted by the law.

This report is the property of EMphase Finance. Reproduction may be permitted only by written consent. The use of any content and charts for any purpose is strictly prohibited.


By Francois Soto, President EMphase Finance

© 2010 EMphase Finance. All rights reserved. EMphase Finance strives to become one of the most important website in North America concerning fundamental analysis using traditionnal quantitative and technical analysis based on the Elliott Wave Principle. The website will contain detailed analysises concerning specific companies, commodities and indexes along with educational content.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules