YOUR MARKET ANALYSIS SITE

During the article I am going to draw various conclusions. These conclusions are from my opinion and not financial advice. Firstly, I will analyze the evolution of the value of the American stock market based on the SP500 index. This analysis will be adjusted to the dollar index (DXY). In the next chart, you can see the upward trend it has had since the recovery from the 2008 crisis and how it has perfectly followed the phases of Wyckoff’s theory

Source: Chart done with Tradingview.

We are reaching a resistance level for the third time. After the Wyckoff phases, we would now enter a distribution period. This period can be long (between one and two years). There is volatility. The value can move in a range of 30%, or even higher. You can set support zones to enter (never long-term), and resistance zones to enter short.

Therefore, the first conclusion is that the market is entering a long stage of lateral movement. This will occur before a big decline at the end of 2025 or 2026.

The value of stock market indices is highly correlated with the amount of existing money. That is why to measure the economic cycles, I weight the value of the stock market with that of the money supply (M2), obtaining the following chart:

Source: Chart done with Tradingview.

We see how after 2008, business cycles of about 4 years have been established and that, in addition, we are now in an already mature bullish phase. This bullish phase will conclude with the distribution phase mentioned above, with the first resistances at the maximum value of 2007, and the maximum value trend line that continues since 2011 that has recently broken to the upside.

It strikes me that we are not better off now than in 2007 or in 2000, despite all the debt created and the amount of money printed along the way.

Business cycles and the value of Bitcoin are highly correlated. In the following chart, we see the value of Bitcoin in dollars, weighted by the dollar index and the money supply of Bitcoin itself:

Source: Chart done with Tradingview.

Here we can see that Bitcoin would have a pending rise above the trend line and that it would now be in a re-accumulation phase (this would be the most likely scenario). This also indicates that there is one year left to finish the cycle.

The catalyst for the final rise of Bitcoin, would not be so much the cycle of the United States, but of China (we can not forget the Asian giant). China has not accompanied the United States in the last cycle and is at the bottom of the channel as we see in the following chart:

Source: Chart done with Tradingview.

The Chinese stock market is now in a support zone that can lead to a recovery. Although it does not seem that it will be a very big recovery, it will be enough to take it into account during the next 12 months.

CONCLUSIONS

As conclusions we see (consider it can be wrong and monitor all the data along the way):

1.- We are in a still bullish business cycle that may last more than a year.

2.- The value of the American stock market enters a distribution phase, prior to a great decline.

3.- Bitcoin will be bullish next year.

4.- The Chinese stock market will be bullish in the coming year.

Do you think the predictions are reasonable?