It’s becoming clearer with hindsight and this is what I see.
1. The bull market topping process in equities kicked off January 2014:
2. Speculation peaks with the solar maximum, which was April 2014, putting equities on borrowed time after that:
3. US stocks measured in USD and relative to bonds both peaked mid-year 2014, compare to previous major peaks here:
6. The very last global indices peaked out at the end of 2014, with the peaks largely fitting the geomagnetic seasonal model (mid-year, end of year) and close to the new moons of June 27 and Dec 22:
(AAII equity allocations in December reached their highest since June 2007 too).
8. The final push from mid-Oct to late Dec was purely multiple expansion as shown below, as falling oil and rising dollar both cut earnings forecasts.
9. US leading indicators have dropped sharply since mid-year and echo previous major peaks:
10. Ditto financial conditions:
Plus, the US yield curve has flattened more sharply in December, whilst German and Japanese bond yields have reached record lows.
11. Meanwhile sentiment and relative value in the precious metals sector mirrors the 2000 major reversal in gold:equities.
Therefore, in keeping with the geomagnetic model, equities should tumble from here to a low around March-time, whilst gold breaks upwards. However, this does not preclude further oscillations in the near term. Short term, we are reaching several oversold readings in equities plus we are now through the full moon.
Trin and put-call could produce a bounce here. Capitulative breadth hit 3 yesterday, so not yet at a reversal reading but perhaps getting there with some more selling today/tomorrow.
To sum up, I see the effective peak in equities as the start of July 2014 and any rips in stocks to be sold (whilst gold should rise). Stocks may get a short term bounce but we should finally see the major drop in equities as we head towards March. Earnings season begins 12 Jan and ought to be a sell due to the sharp downward revisions. Historically, major price drops were swift, lasting just 2-8 weeks, so we need to be alert for signs the allocations and leverage is starting to be disorderly unwound.