Tuesday, July 30, 2013

Linear Trend Failures of the Day

Click to enlarge.

I have taken the liberty of running a red trend line through the blue points in the chart. Doesn't it just fill you with unbridled optimism?

Just because there have been three linear trend failures doesn't mean that there necessarily has to be a fourth. That's especially true now that the Fed has permanently put a stop to recessions.

Just because the overall long-term trend is down doesn't mean that it will necessarily continue to go down over the long-term. A ZIRP-induced prosperity wave could appear at any moment.

All sarcasm aside, I'm not attempting to predict the future here. I'm simply pointing out a very serious risk. If the downtrend continues, and it fails yet again, especially at a time when few others think a recession is even possible, then watch out below. It could get very ugly. It is definitely not a risk that I am willing to take with my nest egg. That said, what's new?

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

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