Politics, Markets, & Waves: The GrandSuperCycle Wave ② Down Bear Market

The 2016 market bottom and Trump-rally

On February 12, 2016, the SPX bottomed at 1810. And then, on November 4, 2016, four days before the November 8, 2016 U.S. presidential election and nearly nine months after the SPX had bottomed at 1810, the Trump-rally started. Between the 1810 February 12, 2016 low and the January 8, 2021 3827 record-high, the SPX has rallied 111%.

Trump will leave office on January 20. Henceforth, the Trump-rally, in political terms, ended on January 20, after Trump is no longer president. The Trump rally should coincide with a market top in the SPX in technical terms, although this forecast may be off by a few months. In technical terms, the rally will end once the SPX crosses 4000 and we run out of bullish individual stocks ideas. MSFT, FB, and AMZN still have to exceed their 2020 record highs, before the bull market can end.

Trump movement between 2016 and 2020 was wave 1 up in a new political order

The Trump movement that started with the Trump presidency was wave 1 up in a new political order. As Trump leaves office, the Trump movement will suffer a retracement or setback, labeled wave 2 down. Wave 2 down in the new political order will coincide with a big decline in equities, as the old political order reasserts its power. The old political order is comprised of politicians, rather than businessmen. Politics since Bush Sr. assumed office on January 20, 1989 can be defined as the old political order. Between January 1989 and January 2025 or for 32 out of 36 years, the old political order has and will have governed. This old political order is near its end. It must crumble under its own weight, as it is an outdated system. The four-year Trump presidency was an exception that emerged as an offsetting force within this old system, hence the name the new political order.

Old political order should end on January 20, 2025, coinciding with market bottom at SPX-1800 and with a rise in wave 3 up of the Trump-movement

The demise of the old political system should coincide with a decline of GrandSuperCycle degree during the Biden-presidency between 2021 and 2024. Near the end of the Biden-presidency, the bear market should end coinciding with the start of wave 3 up in the Trump-movement. The Trump-movement should be a bullish force that offsets the large market decline and brings about a better political system and more efficient and fairer free market economy. This new world order, a positive development, should emerge post-2024, labeled GrandSuperCycle wave ③ up in equities and wave 3 up in new politics. Wave 3 up in the new political order should coincide with a much-improved Trump movement, regardless of whether Trump is re-elected president in 2024. The Trump-movement will have learned from its prior mistakes, after the Nov. 2020 election loss, and will reemerge more polished and reformed.

55% market collapse is big enough

If this equity-politics analysis is correct, the SPX should NOT decline below the 1810.10 Feb. 12, 2016 low. If, during the looming GrandSuperCycle wave ② down bear market, the SPX declines below the 1810.10 Feb. 12, 2016 low, something far worse is transpiring that could bring about economic calamity, which we refuse to forecast at this juncture. Our objective is to look for a happy ending within this sad story, which is an inevitable and looming bear market. We are still optimists within the negative technical framework we are foreseeing. A 55% SPX-collapse between 4000 and 1800 is a big enough bear market. No point in forecasting anything bigger, at least for now.

GrandSuperCycle wave down forecast in SPX & DOW

The GrandSuperCycle wave ② down forecast on the SPX and DOW is as follows (charts attached):

§ The SPX is finishing Grand Supercycle Wave {5} of ① up. The upside target for wave {5} of ① is 4000. The downside target for Grand Supercycle Wave ② is 1800.

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§ The DOW is finishing Grand Supercycle Wave {5} of ① up. The upside target for wave {5} of ① is 32500. The downside target for Grand Supercycle Wave ② is 15000.

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Isaac Gilinski is the owner of Brickell Analytics, located in Miami, FL.

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