S&P500 value zones identified

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arbusers
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S&P500 value zones identified
« on: March 23, 2020, 07:06:31 PM »
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Covid19 represents a lethal danger for humans, but it is not unprecedented. We have seen ordeals like this in the past and in all of them humans survived.
I will plot all possible scenarios for S&P500 in a graph, and I will explain a strategy in order to create wealth on a long term basis. Of course, each and every one of us is in different circumstances and one must think for himself before making conclusions and decisions.

I identified 4 value zones depending on 3 different support lines coming from the past, some of them coming from 1987 or even before that year. At this point, no-one knows which one of them will be the stopover for the index. The picture will offer more clarity as we are nearing each zone and we observe the behavior and the psychology of investors. These are times when computers stop and humans take over. Mr. Market, with his manic-depressive character, will swing from his very pessimistic to his wildly optimistic faces.

So far we haven’t seen any capitulation in the market. We need to see capitulation before we invest our hard-earned money.

SPX.001.jpeg

Value zone 1 is based on a support line underpinned in 2000 and 2007. The support is very typical from the technical analysis’ view. There is a 50% downfall from the top. This 50% is a dream for every value investor. This is a zone we could invest some money.
Value zone 2 is based on a support line underpinned in 1987, 2009 and possibly 1990. This is far stronger and sneaky support. It is sneaky because it comes from very deep in the past. Usually, analysts don’t pay attention to these lines deeply rooted in the past. S&P500 has a tradition of not stopping in the lines where most people believe it will stop. This support demands a 69% downfall from the top. That would be my best guess and if achieved, some more money should be invested.
Value zone 3 is based on a support line underpinned in 2002 and 2009. This support is also very typical and easy to be identified. I believe that if the 1st support is broken, then all analysts will think of the 3rd while skipping the 2nd. It demands a downfall of 80% from the tops. This downfall should be the 2nd biggest in the history of the US stock market, right after the big depression. Again, funds should be available to be invested.
Value zone 4 is uncharted waters. Life as we know it will change there. It is not underpinned from past performance. It comes with a downfall of approximately 90%. Again money funds should be available here as well.

In the coming days, I m about to present more investing ideas and analysis on equities. As this plan is not a short term trade, I m looking for both price value and dividend performance. It is important to identify what should be bought at each line.

Please notice, the exposure should be limited as this one in a generation ordeal has a bumpy road. Firepower should be available at any point, as we don’t know when it is needed once again. The general idea behind my thoughts is to create a portfolio that will perform for years to come. This is not a short term trade.

Information is not intended to be and does not constitute financial advice or any other advice. Information is general in nature and is not specific to you. You should not make any decision, financial or otherwise, based on any of the Information without undertaking your own due diligence.

We revisited our analysis here:
https://arbusers.com/index.php?topic=7153.msg76162#msg76162


* SPX.001.jpeg (439.37 kB, 1024x768 - viewed 895 times.)
« Last Edit: April 05, 2020, 09:56:31 AM by arbusers » Logged
arbusers
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Re: S&P500 value zones identified
« Reply #1 on: March 24, 2020, 05:04:52 PM »
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I am now presenting a graph showing the P/E of S&P500 for the last 140 years.
Today's P/E is 18.19.
The average P/E is 15.89.
It is easy to understand that when P/E is below the green line (15.89) we have value. The lower the P/E is, the bigger the value is.

SPX P:E 140.png

To have a real value, we need a P/E under 15. This will be achieved at a 20%-25% lower level for S&P500. Of course, we will always have pockets of value at this height of P/E as we had pockets of value when it was 24, or even 30.


* SPX P:E 140.png (343.27 kB, 2046x920 - viewed 591 times.)
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arbusers
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Re: S&P500 value zones identified
« Reply #2 on: March 27, 2020, 03:44:39 PM »
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The US heading for a lockdown rapidly. A matter of some days. Some minutes ago.
Pence: Previous modeling on coronavirus spread seems to be 'really wrong'.
Pence: We're applying China's lessons on the coronavirus
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arbusers
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Re: S&P500 value zones identified
« Reply #3 on: March 31, 2020, 09:06:17 PM »
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Yesterday we had a very rare and at the same time very credible technical signal that we are in a recession. The signal is called ''The Death Cross'' and it appears when the 50 days Moving Average is crossing the 200 days Moving Average downwards.

See the following graph.

Death Cross.png

Of course, we have seen fake signals like this in the past and the last time it occurred it was at the end of 2018 but most of the time this signal is credible according to the bibliography and the stock market practice.
To make a long story short what it tells us is that we are entering a long recession that will last for a substantial amount of time. It rejects what many believe, this is a short bear market caused by Coronavirus. If it wasn't the virus it would be something else.


* Death Cross.png (150.11 kB, 1464x966 - viewed 489 times.)
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arbusers
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Re: S&P500 value zones identified
« Reply #4 on: April 03, 2020, 05:52:40 PM »
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I would like t present a correlation I found between the 2008 and 2020 crisis. I m also attaching the typical bubble phase scheme so we have a better understanding of where we are and what will come shortly. Right now, we are in the ''Return to normal'' phase. To get the general mood, all you have to do is watch CNBC, Bloomberg, and all similar channels. Last week we have seen a parade of top bankers and officials that presented a reality where everyone is rushing to buy something before the chance flies away. The term ''Buy stocks'' skyrocketed in Google as you see in the following graph extracted by learnbonds.com

Google search.png

This is an obvious sign that dump money is searching for chances and most probably already bought assets. We have not seen fear, we have not seen capitulation yet. In the following graphs, you will see the exact correlation and the phase I believe we are in right now.

Where are we now?.png

Some believe that we can't go that low according to the identified value zones of the opening post of this thread. I have reasons to believe this will be a generational chance to buy stocks. A chance that appears once every 4 generations, or once every 80-100 years. This should not be taken for granted as we need more data and facts to underpin this opinion. At this stage, I would like to show you the US jobless claims since the 60s.

Jobless claims.png

As you see, claims created a wall and they continue to climb. This is unprecedented. We don't have stats that go back to the 1920s, but it seems to me, the rate that people lose jobs is not seen before. Human loss is also immense.

The approach of the market should be an intelligent investor's approach.
The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists. Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.


* Google search.png (248.77 kB, 1184x790 - viewed 441 times.)

* Where are we now?.png (554.6 kB, 2024x1440 - viewed 451 times.)

* Jobless claims.png (142.58 kB, 1442x836 - viewed 441 times.)
« Last Edit: April 03, 2020, 05:55:25 PM by arbusers » Logged
CharlieSheen99
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Re: S&P500 value zones identified
« Reply #5 on: April 03, 2020, 09:16:47 PM »
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Ok, so your advice right now is to wait some months or bet in short positions.

Are u talking just about SP500? Or every index could be in a similar situation?
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arbusers
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Re: S&P500 value zones identified
« Reply #6 on: April 03, 2020, 09:33:31 PM »
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Shorting has nothing to do with value investing.
This thread is about S&P500. This is the biggest index globally and inevitably it influences many others.
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arbusers
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Re: S&P500 value zones identified
« Reply #7 on: April 05, 2020, 09:54:57 AM »
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I am revisiting the identified value zones with new and more accurate data.

The last bull market lasted 11+ years. The average cycle of the market is 7 years. This bull market went way too far. The longer a bull market lasts, the more severely investors will be afflicted with amnesia. After 11 years of profits, many people no longer believe that bear markets are even possible. According to Benjamin Graham, all those who forget are doomed to be reminded and, in the stock market, recovered memories are always unpleasant.

In situations of minimum visibility, an investor should take help from history and a bucket of analysis that includes technical analysis, the Elliot wave theory, and of course value investing psychology.

In this post, I would like to talk about history.
I identified a support line that comes from 1932 and it was confirmed in 1942, 1974, 1982 and 2009. Deeply rooted since 88 years ago, and underpinned 5 times, this support line is as powerful as it gets.
Here is the big picture:

The Big Picture.png

Not that we know what the big picture looks like, let's revisit our value zones. You will notice that our support line coming from 1932 and the support line underpinned in 2000 and 2007 are coming about to cut each other somewhere at the beginning of 2022. Combined, they create a fortress or a Maginot line. Thus, our value zomes 1 and 2 are now merged and positioned in the same neighborhood. Zone 1 refers to the 2000-07 line, while zone 2 refers to the 1932-2X line.
Value zones 3 and 4 remain in the same position as before.
Here is the picture of our value zones revisited:

Value zones.png

Please notice, the exposure at each zome should be well calculated as this one in a generation ordeal has a bumpy road. Firepower should be available at any point, as we don’t know when it is needed once again. The general idea behind my thoughts is to create a portfolio that will perform for years to come. This is not a short term trade.

Taking our analysis for S&P500 as a blueprint, you can make your own calculations for other indexes as well. We intend to analyze a number of equities in the coming period.

Information is not intended to be and does not constitute financial advice or any other advice. Information is general in nature and is not specific to you. You should not make any decision, financial or otherwise, based on any of the Information without undertaking your own due diligence.







* The Big Picture.png (463.05 kB, 2810x1464 - viewed 408 times.)

* Value zones.png (534.05 kB, 2044x1528 - viewed 407 times.)
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Alfa1234
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Re: S&P500 value zones identified
« Reply #8 on: April 07, 2020, 09:53:53 AM »
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"The market can stay irrational much longer than you can stay solvent".  It seems this quote is more appropriate than ever these days, but the other way around.  10% up in 2 days with nothing but bad data coming out everywhere and predictions ranging from a -10 to a -24% growth quarter.  There is no reason at all for this big jump in stocks these days.  A last convulsion before the inevitable fall?
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arbusers
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Re: S&P500 value zones identified
« Reply #9 on: April 07, 2020, 10:22:11 AM »
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10% up in 2 days with nothing but bad data coming out everywhere

Typical relief rally.
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elabor7
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Re: S&P500 value zones identified
« Reply #10 on: April 07, 2020, 07:04:32 PM »
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With the S & P500 ETF, I built a long-term retirement plan without paying financial advisors or banks.
In practice I buy shares of this ETF free from contractual obligations, and I buy when I can or reach a certain share of my earnings
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arbusers
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Re: S&P500 value zones identified
« Reply #11 on: April 14, 2020, 05:30:00 AM »
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One of the greatest confusions ever in the stock markets is the one we have seen between Zoom and Zoom Technologies.
If you invested in Zoom (Ticker ZM), the real video chat service that many schools use in the era of Coronavirus, you would have been up 100%.
But if you invested in Zoom Technologies (Ticker ZOOM), a random company that makes cell phone parts and I am sure that most of us never heard before, you could have been up 1800%.
Now the SEC removed ZOOM from the stock market.
See graph:

93301996_10163678059785790_225410994774474752_n.jpg


* 93301996_10163678059785790_225410994774474752_n.jpg (40.69 kB, 800x800 - viewed 299 times.)
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arbusers
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Re: S&P500 value zones identified
« Reply #12 on: April 21, 2020, 06:44:58 PM »
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A death cross, followed by 50 days moving average bounce, followed by a broken trend line.

3 bearish signals.png



* 3 bearish signals.png (446.16 kB, 2822x1512 - viewed 249 times.)
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bookieslayer
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Re: S&P500 value zones identified
« Reply #13 on: April 26, 2020, 12:08:44 AM »
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Solid value postings recently Arbusers 🤗 Exciting times
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balls of steele
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Re: S&P500 value zones identified
« Reply #14 on: April 26, 2020, 06:14:00 AM »
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I do not see any value in arbusers posts. More or less it is a simple coverage of the market. I could have the same just by watching CNBC or CNN, where at least the girls are pretty.
A successful prediction from arbusers should include an entry point on March 23rd or near that date. We have seen a 35% rally since that date and arbusers is still staying in the sidelines.
Pretty much is the same with his analysis on the Greek stock market where he lost a 3 years move from 2016 to 2019.
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