Waiting for a new market high

CORRECTION: 1/5/21 - admitted to SPX 500 not DJIA

The press has called the market at new all time highs, some indexes are.  I always use the S&P 500 for it represents the top 500 companies presenting a more realistic value in the market health, over cherry picking the top 30.

Recently Tesla and Etsy have been admitted to the Dow Jones Industrial average AFTER they had an epic run in value appreciation.   Would have been nice if they put these stocks into the index BEFORE their epic run.    We will see if in 2021 these two stocks beat the value appreciation now that they are in the index.  I suspect smart money is unloading their positions at a profit to the people buying the index.  We shall see.

Back to my point about the S&P 500, currently SPX stands at 3,756, which beats the old high in February 19th 2020 at 3,386.    The USD was valued at  99 compared to other currencies, and is now valued at 89.   That is a full 10.1% drop in US based asset values.  Adjusting the latest high at 3,756 we get  3,380.

So the overall US stock market still hasn't beat it's old high after the US Government spent Trillions of dollars, with the FED spending 4 Trillion buying private assets.

I wrote this previously in Resuming the Market Decline ahead on December 2nd, I am of the opinion once Biden takes office the Republicans will start to beat the deficit drum and curtail all government spending after the worst economic downturn since the Great Depression.   The irony of course is during the greatest economic era ever declared in January 2020 we had an annual deficit spending of  1 Trillion. (984 Billion on the books).

So with the fragile economy, its a no brainer 3 Trillion isn't outrageous with such huge economic challenges.  If the Democrats win both senate seats in Georgia, the market should stay within a 25% lower low in my opinion as the Democrats dish out free money to everyone.   Assuming they don't win those seats, the cut in spending will result in sky rocketing foreclosures and cascading deflationary outcome. A stock market 60% lower over the next 4 years would not surprise me.

I am writing this for the benefit of my future self, when I can hear as we enter the 2024 election how the Democrats wrecked the economy  and we need to elect a super-right wing person to whip this nation into shape.  For the record, above is what will determine the outcome.

If the Democrats do get full control, I do expect the USD to hit new lows relative the the world.  We could have a market that hits SPX 4,000 but USD is down 30% from the highs.  In a deflationary collapse the USD will regain its value but the market will suffer greatly.  Remember all imports get more expensive as each USD is worth less.

Either way, that is why I am in Gold and Bitcoin.  Bitcoin hit 33K and I still think 100K is a possibility in 2021.  My target date to get nervous is after Biden assumes office and Trump has admitted he is no longer president.

Good luck!