Stock Market Big Picture Analysis - 2026 Mid-Year Analysis and Long Term Projections

[00:00:00] Speaker 1: This is Big Picture Analysis, Mid-Year 2026 Long-Term Projections for the Stock Market and the Bond Market. This is normally available for our members levels 2, 3, and 4, and then we put it up in social media with a delay later on in the month. So we're going to start out just briefly talking about market cycles. We do cycle analysis, and this is something I've studied since the mid-70s. And some of the most important things to understand about using cycle analysis is that we look at it as the rhythms in the market, the heartbeat of the market. It is essentially a visual way to see the money flow. Now, what I'm going to show you today are charts that go all the way from quarterly on the Dow Jones Industrial Average down to the weekly as we look at the S&P 500. The key thing to think about is that the longer the time frame, the longer the holder. In other words, when we look at quarterly charts, these are investors that it's pretty hard for them to give up positions. They hold them for, well, years or maybe decades. When we look at the monthly charts, well, these are more like maybe investors, but still longer-term holders that may actually actively manage their accounts. And then when we look at weekly, we're actually getting into the active investor, self-directed investor. The longer the holder, even swing traders, get some information off the weekly charts. The longer the holder, the more influence it has on the market. And the shorter the holder or the shorter the time frame, when those move with the longer time periods, then you get big moves. You get a synchronization in how these holders of these different periods act. So when they're all aligned on the upside, you get big upside moves. When they're all aligned on the downside, you get big downside moves. And you're going to see that. This is the theory of cycle analysis. And, of course, we put in other things like support, resistance, momentum indicators. We have several proprietary indicators we use. And that gives us a sum of the evidence analysis when we look at it. So that's kind of the very basics of what I'm going to show you. We're going to start out looking at a very amazing chart of the Dow Jones Industrial Average. This is where I've done my quarterly work. And you're going to see what I mean by significant market rhythms that have held up for a long period of time. Let's switch over now to the Dow Jones Industrial Average, and we'll take a look at that chart. So here you go. And what we're looking at is a quarterly chart, Dow Jones Industrial Average. So each of the lines that you're looking at here is three months, basically, a quarter. The average cycle can be seen by the bracket on the bottom. And you can see that there is movement in the markets that match that. That's how we look at it, from significant trough to significant trough, as you see right over here. So what's amazing is how they line up. And what we're looking at is these 4.4 quarters, which is essentially the seven-year cycle that we see repeating that's in here, approximately seven years. And I put the recessions in in gray. And what I want you to see very clearly and significantly is, well, you can go all the way back here to the crash of 87, and it's barely visible, of course. And this is where decline was in here from the Great Bond Massacre here back in 1994. Here's your tech bubble. There's your long-term LTC crisis and the tech bubble and the corrections. You'll notice in here the corrective period as it aligned with that cycle period right there of where that trough came. And there was also a recession in that period. Now, the Dow fell 40%, but we know that the NASDAQ fell over 80% in that decline. Here's the Great Financial Crisis, and look how that lined up right over here, and, of course, that recession. Here is a mini bear market that came after the Bernanke-Yellen bubble after that. The Dow was down about 17%, the S&P 500 about 21% on the downside. And one of the really significant things when you look at cycle analysis is the translation. What that means is that, you know, how does the cycle formation translate into information? And when it makes a peak way on the right side, there's very little time to fall. Even in this case, where you had a 55% drop, it came pretty late, but the drop was very steep. The message being that even though a cycle is late, here you look at six quarters, in other words, a body close to a year and a half, where the market was able to fall pretty sharply. And when you're looking at a quarterly chart, it doesn't look like that much time. Here you see all of this volatility right over here, and this decline into here into the COVID crisis. And this is where that COVID recession was. However, that was kind of in the middle of the cycle. And sometimes when that doesn't quite fit, the real corrective period comes in line and on time, as it did right over here, with about a 23% decline in the Dow that occurred right there in 2021. So let's discuss where we are right now. And I'm just going to bring this a little bit, zoom it in a bit for you to see. So here we are with the market having corrected here 23% in 2021. And I'm sorry, 2022. And then you had this unbelievable rally moving to the upside. And you ended 2025 with an amazingly high, almost record, Buffett indicator of 24%. That's the measure of the stock market to the GDP. Now, here we are in July 1st. Actually, that date is wrong. It's 2026, so I'll fix that. Where the Buffett indicator is at a historic level at 232%. Of course, we are in a period of the AI surge that we've had. And also, interestingly, a mega cap, the Magnificent Seven in their own bear market. Many of those stocks with big breaks and a very big rotation going on right now. That's why the stock market is at an all-time high, while we've had some of these major high cap stocks plunge. And at the same time, money has been moving into the AI stocks very significantly, specifically the semiconductors. And a very significant rotation going on, especially into small cap stocks, which we know often happens late cycle. Where are we now at an all-time high? 52,903 on the Dow. So now let's look at the cycles. And we're going to break this down into the monthly as I look at the S&P 500. And you'll see what my projections have been and what they look like. And then we're going to look at the bond market, which has significance, because yields tend to move with stocks. And when stocks have big downside moves, yields have big downside moves. All of these big downside moves, and they're right in here, were with bond market rallies. Money moving out of stocks and into bonds, so yields fell. If you look here where we are right now, of course, we have yields fairly high moving up and some anticipation that there will be increases in interest rates. I have my doubts about that. Maybe we get one, but I think basically interest rates are going to go down in the bond market rally, and I'll show you that. So let's just talk about where we are right now on this bigger picture. This looks like a decline in somewhere is going to start out over here, and I don't know where yet, that will take you into this 2029 period. It's fairly likely that a bear market will come. It's the average bear market lasts about 11, 12 months, and it's about one-third loss, about 33%. If you look at these measurements right over here, and the Dow tends to be somewhat less volatile than other markets, than the other S&P 500, or much less volatile than the NASDAQ, right over here, 28% drop would be about, if it fell straight from today, about 38,000 on the Dow. That's optimistic, if you ask me, based on historic bear markets, but I wanted to put some numbers in there that made sense. You see, this says cycle low timing range. That means somewhere in here, from late 2028 into 2030, is going to contain this next trough. I say that with some certainty, because when I look back at all of these cycles that you see right in here, every one of those seven-year cycles brought sharp declines. The best one, 17% down in the Dow, 21% down in the S&P 500, in an extremely bullish situation. Now, what you're looking at over here is the reversal scout on the monthly, and that reversal scout, as you can see, has not lied as it turned up over here, telling you way back in 2011 that this bull market was intact, and it remains intact. Though, you can see that every one of these declines gets down below that very important average. So, the downside is going to start, very likely, sometime, I don't know, in the next year, and it's going to be fairly significant on the downside. Now, that's a wide range, a big range, and a guess as to when that peak comes. But I'm going to narrow it down for you a bit as we look into the other charts that we're going to take a peek at. So, you can see quite clearly in here, it leaves no doubt, there are cyclical movements. They average about seven years from trough to trough that have been very clear going back a long period of time. It's hard to see when I go back further because the prices are so low, but it goes back, way back, way back into the 1930s, where there's a very, very strong alignment to these rhythms. And I can tell you, looking at this, there is a high probability, a very significant bear market will occur. And that probably will trough somewhere in 2029. So, now let's move into the shorter time frames and get a little different sense for what I'm looking at. So, this is the monthly chart. Now, we're moving to the S&P 500. And the S&P 500 has its own very distinctive cyclical patterns here on the monthly charts. And you can see in here, there's that mini bear as it showed up right there in 2016, where it fell fairly significantly. This is where that pandemic low came that was kind of out of place in here. And this, you can see, is where that real bear market came of about 27.5% on the S&P 500. And let's just look at where we are right now. So, at the beginning of the year, I said that there was likely going to be a corrective, a rally first. And I thought that the S&P 500 would get at an extreme as high as 74.50. Of course, it exceeded that now by 170 points. The sense was that sometime into the March period, there would be a correction to March, April. And that correction, I'll show you when we get over to the weekly chart. And I thought there'd be one into June. And we had actually both of those. The conditions that you see right now are quite strong. And that is, these two cycles are in nice rising phases, and the market is moving up on this monthly chart. There's nothing in here that suggests any kind of a peak yet. And as I made a note right over here, the first negative weekly cycle is probably going to set a peak. Well, we haven't had that opportunity yet. And this market still is extraordinarily strong when you look at it on the monthly chart. The upside target right up over here, if you look at that next minor extension, is at about $8,200 on the S&P 500. But on the weekly chart, there's some closer resistances that we'll look at. Here I have the rising supports that are in there right now. But we have no peak and no sense of anything that will decline. Here is that bigger cycle that you can see right over here, which goes into 19-20, into 20-29. Interesting, 19-29 was the big crash, of course. And this is a hundred years later coming down into 20-29. That aligns with that quarterly chart that I showed you on the Dow. So somewhere in here, there's likely to be a peak that is set. And this period over here, through somewhere into 20-28, 20-29, is likely to have a very severe decline. In the meantime, the market is still positive. So selling is only anticipatory. And for investors that are understanding that, well, the market levels that we're seeing are extraordinarily high. The concentration is extraordinarily high. And at some point, there's going to be a tone change that's going to bring sellers that cause very significant declines, a lot of volatility in the market. Right now, we don't see a reason for that, though I do believe that anticipating it for investors makes sense. And lightening up on risk makes sense when you get to these extraordinary valuations. So let's now move on from the monthly chart to the weekly chart in the S&P 500 and see how this turns out. So remember that this minor cycle here points out into 20-27 right there. And that's significant, but that may only be a first leg of a bear market right there. And this is where they all three come down together. And that's where significant declines do occur. So let's take a look now as we look at the weekly chart. So as I've shown week after week here, we've been in a range with the market trading in this diamond formation right there. Now, diamonds are, well, when they're really big, they can make major tops. So when they're small, and on a weekly chart, this one is relatively small, it's often a consolidation period. So with momentum strong pointing to the upside on the weekly chart, on the monthly chart, momentum strong, you see that reversal scout. The indication is that the highest probability is that the highest probability is that this will break out on the upside, and that we'll see higher highs. Here's your resistance right over here around 7,800 on the S&P 500. And that's reasonable right now to see the market consolidate here and then move up and move up to those levels. That minor resistance level right over there on that Fibonacci extension is at around 76.28, which is about where we made the hot. So if the market breaks out of this triangle, gets up there, fails, and rolls over, it's going to be a bad message. In the meantime, what we're looking at here on the weekly chart are three cycles that are going to be entering into a corrective period. Here's where the last time all three went into a corrective period, and that's when you get into a period of risk, as noted right over here. So this is the short to intermediate term projection, is that we'll probably get an upside move in here that fails, and then a sharp move to the downside here into this August-September period. So again, I was looking for three corrective periods this year. I thought the June one wouldn't be very deep, and it was only about 5% making the bottom of the diamond. Here's the one into March. Here's the one into June. And I think this period of risk into this August-September is going to bring a harder sell-off. I would look for that to get down here to somewhere between 69.70 or 68.12. It's not really that far when you look at it, and it might be deeper than that. There's a major level right over here at 61.60 approximately. I doubt it's going to get that low, but if it did, it would have a pretty negative message. For the bigger picture for the stock market. So when I look at the overall summary in here, the sum of the evidence basically is positive, except for this corrective period, which is likely to bring a decline into this August-September period. I think it could be steep. It could be kind of a shakeout. But then when you look here, September, October, November, you can see that if there's a downside break in here, it's likely to be moving back to the upside in here. And when you look here at the monthly chart, you can see that it makes sense that it's fairly early in these rising phases, and that if you've got a break here into this period, I would say that would be an opportunity to be adding longs. Now, I just said, if you're a longer-term holder, it made sense to be changing your allocations and reducing risk. So it's actually both, because I think that the market is basically fully priced. You could get the 7,800 or 8,200 on the S&P 500. That only matters to the short and intermediate-term holders, not to the longer-term holders, because the longer-term holders are the ones that are going to influence the market to the downside in those bigger waves through 2027 and into 2029. So if I were an investor, and of course I am, and I've taken these actions, I'm certainly lowering risk as the market moves up and changing my allocations, which right now are very heavily in the bond market and extraordinarily low in equity exposure as we get into these periods of risk that I'm talking about. So what's the summary in here? Well, the summary is the bigger picture, the market is rising, as we looked at the quarterly information right over here. And that quarterly information is telling us that there is big risk into 2029, but we need to see the topping first. Here, when we look at the monthly chart, it is still rising, and we're in a rotationary period, and there's no reason to be trading short in this market right now that I can see at all, because unless you're a short-term trader looking for little blips on the downside, the power of the market is moving to the upside. And that's very clear, and that's very clear, and when that changes, well, the market will make it clear. Here, what we have is a positive condition. You can see the miner cycle right there having made a trough, and the right side triangles, it's two triangles in here, the left and the right, make up the diamond, is likely to break out to the upside, and then test the all-time high, and then test the all-time high, or maybe get to higher levels that are 2% to 4%, maybe higher than we are right now, is my upside target, before we get into a more corrective period. A risk of sharp downward decline here into the August-September period, and then a risk after that to the upside, that whatever the decline is in here, the market's going to get a rebound into Q4 this year. So if I were to extrapolate that information, I would say that what we're going to see is something like this in the stock market, maybe deeper, and then after that, a move up over here, where there is a potential to get back up to the highs. That's kind of how I would project this year, and this downward move in here, the market has only been able to move down in panics. It hasn't been able to have any real extended downside moves of significance. This one into March, only about 9.8%. So I think if it's going to fall, it's going to fall in a way that is kind of shocking, where it moves down very quickly, but then, as I said, moves up again pretty significantly. So let's go back to discussing the big picture for one second, because what I'm talking about over here on the quarterly chart is that there's likely to be a significant bear market that comes and occurs, and that would take you down in two waves, 2027 is the one I showed on the monthly, and into 2029, where you have a full alignment of all of the cycles, I think, in a pretty significant bear market. Now, if I go here into the bond market, because remember, I said the bond market gives you a sense of timing also for the stock market, because it tends to move inversely. Of course, we had this big bond bear market right in here, as I look at the TLT, but then if you look over here for the last four or five years, it's been in this, I think, bottoming, a major bottom formation there, and this last cycle right over here, and look at the beautiful rhythms that you have in here, in this bear triangle that we've been forming in here, the rhythms are perfect, and now look where we are, we're moving into this rising phase. So TLT looks like it's moving up. Now, I'm projecting in here into 2027, which is, of course, where I see that next big wave to the downside, or the first big wave to the downside in stocks, where we could see TLT moving up in here to these resistance levels. This is around 90, this is around 94 up there. Just now, in the second month off of that bottom, that says to me that there's a pretty good likelihood that despite what the markets are saying, or despite what analysts are saying about the Fed raising rates, or that Warsh has walked into this problem right now that Powell left him with huge inflation going on, well, maybe not huge historically, but much higher than the Fed has wanted, with the 2% target exceeded now by 63 straight months, and inflation now up over 4%. So the likelihood of the bond market moving up, based on everything we see here, seems like it would be counterintuitive. However, what the markets actually do is they end up acting in ways that are, when you look at the longer-term bonds, that are more as a projection of future inflation than they are actually as a projection of Fed actions. So the Fed actions show up in the shorter term. You'll see that in the T-bills, or you'll see that up to maybe the 2s or 5s. But here, when you get into the 20s and 30s, they're going to start trading based on inflation, which I think is going to start to subside, and the discussions of it will, and also the likelihood that money moves out of the stock market, because I think it's going to get scarier in there, and into the bond market. So this is very early stage, monthly pattern, that looks like it's about to move up. So that would tell me that, you know, we should have an interest rate pattern in here that looks like it's going to move down. There should be some important inverse correlation to what I'm seeing here. So I'm going to go to TNX. TNX is the 10-year. Let me just get this to show up properly. And here is the 10-year note on the monthly. Look at the cyclical action in here. This is crazy. This is the bear market right in here for the stock market. See how yields plunged. This is the bear market for the great financial crisis. Look at how yields plunged. Euro crisis yields plunged. Pandemic yields plunged. And look at how it comes into these cyclical patterns. Here's that mid-cycle right there. Here's the mid-cycle right over there. And here is the mid-cycle right in over here. So where are we right now when we look at this? Well, we have this triangular shape going on. Well, I showed you the triangle in the TLTs in the 20 years. Well, it would make sense that there's a triangle here also. Now, when you look at this and you look at this 2027 period right in here, remember, I said the 2027 period is where the stock market's likely to have a first wave maybe of the bear market. That would mean that money would move into bonds and yields would fall. And look at that beautiful alignment for the interest rate low. That aligns with the stock market low in 2027. So while I'm thinking that, well, the stock market probably is okay, has a downside move now, then moves up into Q4, that would then set up a decline in interest rates into 2027. And you can see how that aligns. This to me is confirmation when I look at this, that money will move from the stock market into the bond market, into 2027. That only happens in any significant way when stocks fall sharply, as money moves out of stocks and into bonds. This alignment right over here says to me, while there's likely to be a further choppy period out in this triangular formation into sometime later this year, that sometime later this year into 2027, there's going to be a sharp move down in yields. Because it aligns perfectly with these two cycles, and that aligns perfectly with what we said in the stock market, that the first wave down in the stock market in what might be the bear market, comes into that 2027 period. This is still the Dow here. And into 2029. Let's take a look here at the S&P 500. You can see in here that first down wave here into 2027, right over there. That's that alignment that I think is going to happen with yields falling. And that's where I think after we make a peak sometime this year, we're going to see a first leg to this bear market that I believe is coming, that starts late this year and then goes well into 2027. So what did I just look at here? I looked at the longer term picture of the Dow. And that shows you that we're likely to see a bear market after this upside move that goes into 2029. When I look at the monthly charts, I see the stock market in good shape right now. You know, no reason to believe that a peak is in. And if we get a pullback here as I'm looking into August, September, it's likely to move up again into the fourth quarter of this year and still be okay. When I extrapolate the rest of the information, it says to me that there's likely to be a decline of some significance into 2027, which I think is the first leg of the bear market for the stock market. That aligns with a bullish period for the bond market where yields are likely to move down pretty sharply. And all of that says that we're in for some significant volatility ahead. And a likely bear market ahead, however, not yet. We need to look very clearly at what the market tells us each day, each week. And right now, the market is solid. It looks bullish. And I say that as I look at this short and intermediate term, outside of what looks like might be a quick move to the downside of some significance into August, September. That probably is going to be a buying opportunity when that comes. I showed a lot in here. And if you're a level two, three, or four member, and you have any comments or questions, you can send those to team at AskSlim.com, and they will send those to me. Thanks a lot for watching. That is Big Picture Analysis Mid-Year 2026.