The Roads Less Travelled

It has been a really interesting year on the markets so far for me but the winds are changing and I want to review where I think the equity markets stand and where we may see them go from here.

I was saying in a post back on December 2nd that 2025 might well be the most interesting year on the markets in a long time, and that has definitely turned out to be the case. I’ve had an amazing run this year which can’t and won’t last forever but has been a lot of fun.

In a post on 22nd January I was looking at possible new all time highs to set up big topping patterns on SPX, QQQ, DIA & IWM. On 10th February I was looking at getting those new all time highs on SPX, QQQ and DIA in the next few days. On 19th February, the day SPX made the current all time high, I showed the high quality double top targets on SPX, QQQ and DIA, and the lower quality H&S pattern on IWM. All of those patterns subsequently broke down and reached target.

After the highs I published a post on Monday 18th March looking at touches of the weekly 3sd lower band over the last few years and calling for a rally lasting at least a week or two based on the past history of similar setups on the weekly 3sd lower band, and we saw that. I published a post on Tuesday 26th March looking at the bear flags that had formed on that rally and saying that they looked ready to break down towards at least retests of the March lows and they broke down and retested those directly from there.

I published a post on Tuesday 1st April on my bigger picture substack arguing that tariffs would likely go ahead, that the odds of seeing a serious bear market this year were now high and that a full market crash this year was now potentially on the cards. IWM was already in technical bear market territory (decline of over 20% from high), SPX and QQQ reached the 20% level late last week and, at the low yesterday, DIA is currently down 18.383% from the high. I then published another post on Tuesday 1st April on my bigger picture substack looking for a downside target on SPX at 5100, and that was reached on Friday 4th April.

On 8th April I was looking for another rally lasting at minimum a week or two but potentially lasting several weeks, possibly to make right shoulders on much larger H&S patterns and that started the day after. On 17th April I was looking for some downside to set up possible bear flag support trendlines followed by higher highs after that to reach ideal bear flag resistance trendlines. We saw that decline and on 22nd April I was calling for another leg up into new rally highs who we can now seen on SPX, QQQ, IWM but not yet on DIA.

Before I get to looking forward let’s have a look at where we are on the current rally patterns.

I’ve left in all the arrows I posted on these charts on 17th April and while progress has been a little slower than I was guessing then, all four indices are still on track. I am seeing some weak negative divergence here and am wondering whether we might see a modest retracement in the next couple of days to resolve that.

In terms of the ideal bear flag resistance trendline I drew on SPX on 17th April, that’s still looking good and the current rally high is about 110 handles below that (rising) trendline. I think that trendline may well be hit in the next few days and that SPX may well find resistance there. On the 15min chart a weak RSI 14 sell signal and a full RSI 5 sell signal has fixed and there is also a fixed weak hourly sell signal on ES.

SPX 15min chart:

In terms of the ideal bear flag resistance trendline I drew on QQQ on 17th April, that’s still looking good and the current rally high is about ten handles below that (rising) trendline. On the 15min chart an both RSI 14 and RSI 5 sell signals have fixed and there is also a fixed hourly sell signal on NQ.

QQQ 15min chart:

In terms of the ideal bear flag resistance trendline I drew on IWM on 17th April, that’s still looking good and the current rally high is about six handles below that (rising) trendline.

IWM 15min chart:

In terms of the ideal bear flag resistance trendline I drew on DIA on 17th April, that’s still looking good and the current rally high is about four handles below that (rising) trendline.

DIA 15min chart:

I also drew then a possible bear market projection for the rest of the year, with the current rally forming the right shoulder on a possible large H&S pattern that might be forming on this rally. That too is still looking good but the winds are changing, and it’s getting hard to predict what will be coming the market’s way in terms of tariffs and other economic news in the next few months.

More on that after this next chart, and I am still liking this rally as a bear flag rally at the moment, but I have added another arrow to the chart below for the possibility that this possible H&S finishes forming and breaks down, and then rejects back into the all time high.

SPX weekly chart - bear market projection:

So what is changing on the picture looking forward? Well I understand that today is the 100th day of this Trump administration, and it’s becoming increasingly clear that on almost every metric it has been a political and economic disaster so far.

In terms of approval ratings Trump is hitting new lows since the start of modern polling about 80 years ago for the end of the first 100 days. Looking at the poll numbers from Fox, which are by no means the worst, Trump is underwater on everything except border security (+15%), with overall job performance at -11%, foreign policy at -14%, the economy at -18%, taxes at -15%, tariffs at -25% and inflation at - 26%.

This is very important as Trump’s so far very impressive control of house and senate republicans is in large part due to them being more scared of primary challenges from Trump’s base than the electorate in terms of retaining their seats. As Trump’s popularity wanes, that math changes.

On the economy Jamie Dimon has been saying that a mild recession is now the best-case outcome of the ongoing trade war, and I agree. We’ll see some numbers on Wednesday that should shed some light on whether that recession has already started. Regardless of those at least a mild recession now looks very likely and, depending at least in part on policy going forward, that recession may not be a mild one.

On taxes, Trump has always said that foreign trade partners would pay most or all of his tariffs, and that was never likely to be true. As US consumers start to pay those tariffs in the form of higher prices the truth will become clear to all, and that truth is that these tariffs are the largest increase in taxes in modern US history, and that most of these new taxes will be paid by ordinary americans as they shop.

On tariffs these were never anything but nominally reciprocal and, as I noted before ‘Liberation Day’, this gameshow format used to effectively declare economic war on the world was not likely to be a successful one, for the reason that the size of US trade to all other trade partners other than Canada and Mexico is 5% or less of their economies, but the importance of the rest of the world’s trade to the US is about 24% of the US economy. Any negotiations should have been entered into on a case by case basis to avoid this potentially becoming an economic disaster for the US.

Trump was stating in his April 22 interview with TIME that:

‘We are a department store, and we set the price. I meet with the companies, and then I set a fair price, what I consider to be a fair price, and they can pay it, or they don't have to pay it. They don't have to do business with the United States, but I set a tariff on countries.’ ……….

‘We're a department store, a giant department store, the biggest department store in history. Everybody wants to come in and take from us. They're going to come in and they're going to pay a price for taking our treasure, for taking our jobs, for doing all of these things.’

In effect it seems that Trump is using tariffs to sell access to US markets to foreign trade partners. He feels very optimistic about this working, but it seems more likely that these policies, if sustained, will result in a large reduction in coming years with the amount of trade that the US does with the rest of the world, a big shock to the US economy as it is forced to reorganize to cope with that reduction, and a lot of angry US voters being forced to pay much higher taxes.

Are these tariffs likely to be sustained? Maybe, Trump is a big believer in tariffs and has been since the 1980s and may be very reluctant to abandon them, particularly the minimum 10% tariffs that he believes should be paid by all trade partners. I suspect most of the rest of the ‘reciprocal’ tariffs will likely be abandoned, and the trade war with China will likely be scaled down hard within weeks, but there are now a lot of huge question marks over the economy and trade over the next year or two and we’ll have to see how that develops.

I’ve been much more interested in the news than I usually am since Trump was elected, and that will likely continue to be the case in coming months, but mainly I’ll still be following the charts and am avoiding any strong preconceptions about where markets go from here.

In terms of how markets went the last time the US economy was given a tariff shock comparable to this, I found this very interesting chart showing the Smoot-Hawley Tariff Act that was passed by the House on May 28 1929 and signed into law on June 17 1930. I’m not expecting to see the same here, not least because I’m expecting most the delayed ‘Liberation Day’ tariffs to be cancelled while Trump fights over the next few months to avoid becoming a lame duck president in 2025.

Smoot Hawley Tariff Act Impact Chart (from corporatefinanceinstitute.com) -

I’m doing a series of (currently four) posts at the moment on my The Bigger Picture substack on the US Dollar, US Treasuries, and the reasons to be very concerned about the possible further sharp declines on both that may be coming this year. The first of these posts is looking at the potentially bearish setup on the US Dollar, the second is looking at the potentially very bearish setup on US Treasuries, the third is looking at the reasons that we may see a bond market crisis this year, and will be published this week and the fourth will be looking at why the US Dollar may lose its status as the main reserve currency for the world, what that would likely look at and what other currencies and instruments might partly replace it. Everyone trading equities in this wild year should read these.

As I have been since the start of 2025 I’m still leaning on the bigger picture towards a weak first half of 2025 and new all time highs later in the year, very possibly as a topping process for a much more significant high. One way or another I think we’ll be seeing lower soon and I’m not expecting this to be a good year for US equities, not least because both of the last two years have been banner years for US equities. A third straight year of these kinds of gains looks like a big stretch. I could of course however be mistaken. UPDATE 11th March 2025 - I am wondering if this may be a bear market that dominates the whole of 2025.

If you like my analysis and would like to see more, please take a free subscription at my chartingthemarkets substack, where I publish these posts first. I also do a premarket video every day on equity indices, bonds, currencies, energies, precious commodities and other commodities at 8.45am EST. If you’d like to see those I post the links every morning on my twitter, and the videos are posted shortly afterwards on my Youtube channel.

Bitcoin & Solana Break Up

In my last post on Friday 11th April I was looking at likely rallies coming on both Crypto and equities, and posted some charts looking at the options for that rally on Bitcoin (BTCUSD), Solana (SOLUSD) and Ethereum (ETHUSD).

I posted the contemporaneous chart below back in December and I noted on the chart then that any sharp decline on equity indices historically took Bitcoin down with it, as we have seen, and noted on 11th April that any significant rally on equities would likely take Bitcoin up with it. We’ve been seeing that since.

One thing I would note is that I’ve been talking about the possibility in the premarket webinars that Crypto may start to become a flight to safety destination, & looking at the chart this morning I was saying that did not appear to be becoming the case so far, with Bitcoin still strongly correlated with equities. That may change over coming weeks.

BTCUSD weekly (LOG) vs NDX chart:

There is still an open double top target on Bitcoin in the 69k to 70k area and that is still potentially on the table for later, but the weekly buy signal that was brewing on the chart below on 11th April has since fixed and, if Bitcoin can hold the current levels into the weekly close, should reach at least the possible near miss target then.

The other thing to mention on the chart below is that Bitcoin is trying to break back over a very important level here at the weekly middle band, currently in the 92146 area. If Bitcoin can close the week above that then that is a decent technical break up, albeit a break needing confirmation with another close above that next week.

BTCUSD weekly chart:

On the Bitcoin hourly chart the decent quality falling wedge that I was looking at on 11th April has since broken up hard, and the possible double bottom that I was looking at has also broken up with alternate targets at 101.5k & 103.8k.

There is a fixed hourly RSI 14 sell signal on the chart below that I was looking at this morning and which is delivering some consolidation so far.

Is this a move to new bull market highs on Bitcoin? Perhaps, but that may only be possible if Bitcoin can become a flight to safety destination, and the evidence for that is thin so far.

BTCUSD 60min chart:

On Solana I sketched out a possible IHS sceario on 11th April and that is still potentially on the table, but so far Solana is breaking up directly over what would alternately be asymmetric double bottom resistance at the late March rally high at 147.53. That break has alternate targets at 183.8 and 198.8. In terms of obvious other targets and possible resistance levels the 200dma is currently at 181 and the 50% retracement of the move down from the all time high is at 195.

SOLUSD 60min chart:

Ethereum is still the poor relation and the rally from 11th April so far is muted, and may stay muted. The IHS scenario I drew on 11th April is still possible, but by the time ETHUSD manages to crawl up there both Bitcoin and Solana would likely have already made their double bottom targets.

The serious relative underperformance on Ethereum so far in this bull market may be telling us that investors are increasingly aware that Ethereum doesn’t do anything that Solana doesn’t do better, faster and cheaper. It’s still a significant player in Crypto, but that may not be the case in the next bull market cycle.

ETHUSD 60min chart:

I’m not seeing much reason here to think that Bitcoin and Solana won’t make at least their lower targets on their double bottoms that have broken up. After that, if we see a hard fail on equities it currently seems likely that would take Crypto down with it.

I am still thinking though that Bitcoin has held up decently against equities in the last few weeks and wondering whether this could be the start of Bitcoin becoming a flight to safety destination as an alternative to US treasuries. If you’re interested I’ll be looking at that more in a post in the next few days on my The Bigger Picture substack.

So far this year I have been and am still leaning towards seeing weakness in the first half of the year and renewed strength in the second half of 2025, with a very possible bull market high on Crypto pencilled in close to the end of the year. That scenario would be a good match with past Crypto bull markets. Is it possible that I am mistaken? Always, but we can only ever try to identify the higher probability paths in the future. Only time can show us the path that is actually taken. Still, I’m with Confucious who said ‘study the past, if you would divine the future’.

If you’d like to see more of these posts and the other Crypto videos and information I post, please subscribe for free to my Crypto substack. I also do a premarket video every day on Crypto at 9.05am EST. If you’d like to see those I post the links every morning on my twitter, and the videos are posted shortly afterwards on my Youtube channel.

I'm also to be found at Arion Partners, though as a student rather than as a teacher. I've been charting Crypto for some years now, but am learning to trade and invest in them directly, and Arion Partners are my guide around a space that might reasonably be compared to the Wild West in one of their rougher years.

Flagging Markets

In my last post on Thursday I was projecting a possible path for US indices if we are going to see decent quality bear flags form on this rally, and initially they were going to need to go down, which they have. They overshot my target trendline options at the lows yesterday, but that’s fine, as long as they turn back up in this area or not too far below into new highs for this rally.

On the SPX chart the current low could make a very decent support trendline and, if we see a next leg up start towards a new rally high, the ideal target would be the resistance trendline currently in the 5590 area. Possible resistance on the way at declining resistance from the high, currently in the 5500 area. A 15min RSI 14 buy signal has fixed.

SPX 15min chart:

On the QQQ chart the current low could make a very decent support trendline and, if we see a next leg up start towards a new rally high, the ideal target would be the resistance trendline currently in the 485 area. Possible resistance on the way at declining resistance from the high, currently in the 460 area. A 15min RSI 14 buy signal has fixed.

QQQ 15min chart:

On the DIA chart the current low could make a very decent support trendline and, if we see a next leg up start towards a new rally high, the ideal target would be the resistance trendline currently in the 411 area. Possible resistance slightly above at declining resistance from the high, currently in the 416 area. A 15min RSI 14 buy signal has fixed.

DIA 15min chart:

On the IWM chart the current low could make a very decent support trendline and, if we see a next leg up start towards a new rally high, the ideal target would be the resistance trendline currently in the 197 area. Possible resistance on the way at declining resistance from the high, currently in the 196 area. A 15min RSI 14 buy signal has fixed.

IWM 15min chart:

On the bigger picture the possible H&S right shoulders I was projecting two weeks ago might form on this rally have managed to deliver an acceptably long rally for those right shoulders. Another month or two would be better, but the H&S patterns are already decent if we see a break down directly from here.

Is this very bearish projection in the chart below really possible? If we see a big crisis on bonds this year, and these trade wars continue and deepen then yes, I think it is very possible. We shall see.

SPX weekly chart - bear market projection:

Could we see US indices fail directly from here? Yes, and that would be a shame, as clear bear flag setups here would give us some clear short entries for what could well be the equity index short of the decade. I’m liking another leg up here first though, subject to newsbombs as usual this year.

I’m doing a series of (currently four) posts at the moment on my The Bigger Picture substack on the US Dollar, US Treasuries, and the reasons to be very concerned about the possible further sharp declines on both that may be coming this year. The first of these posts is looking at the potentially bearish setup on the US Dollar, the second is looking at the potentially very bearish setup on US Treasuries, the third is looking at the reasons that we may see a bond market crisis this year, and will be published this week and the fourth will be looking at why the US Dollar may lose its status as the main reserve currency for the world, what that would likely look at and what other currencies and instruments might partly replace it. Everyone trading equities in this wild year should read these.

As I have been since the start of 2025 I’m still leaning on the bigger picture towards a weak first half of 2025 and new all time highs later in the year, very possibly as a topping process for a much more significant high. One way or another I think we’ll be seeing lower soon and I’m not expecting this to be a good year for US equities, not least because both of the last two years have been banner years for US equities. A third straight year of these kinds of gains looks like a big stretch. I could of course however be mistaken. UPDATE 11th March 2025 - I am wondering if this may be a bear market that dominates the whole of 2025.

If you like my analysis and would like to see more, please take a free subscription at my chartingthemarkets substack, where I publish these posts first. I also do a premarket video every day on equity indices, bonds, currencies, energies, precious commodities and other commodities at 8.45am EST. If you’d like to see those I post the links every morning on my twitter, and the videos are posted shortly afterwards on my Youtube channel.

The Bigger Picture on US Treasuries Pt1 - The Setup

On 10th November last year I wrote a post entitled Strange Days on US Treasuries. In that post I was looking at a very important inflection point that looked likely to be coming up on US Treasuries over the next few months to a year. I would suggest you read that post for the detailed analysis there of the outlook for US debt levels and interest payments as I’ll be looking at those in less detail this week.

This is currently a series of (likely) four posts reviewing the US Dollar, US Treasuries, and why the US Dollar may lose its status as the world’s main reserve currency. I published the first post in this series on the US Dollar on Monday last week and you can see that here.

After writing a lot of this review on bonds it has become clear that I can’t fit it into one post so I am dividing it into two. This post will look at historical bull and bear markets on bonds, the setup for a major increase in bond yields over coming months and years, and why that might play out rapidly rather than slowly.

The second post, entitled ‘The Bigger Picture on US Treasuries Pt2 - Absent Friends’ which I aim to publish later this week will look at the reasons why we might well see a serious crisis in US Treasuries this year to deliver that increase, and how that crisis may already have started in the week before last.

I was saying in videos last year after Trump won the election that I thought the odds of a crisis on US treasuries this year were high based on my expectations of Trump’s policies on tax cuts and tariffs particularly and since then in my view the odds of that have risen considerably. Let’s have a look at the setup for that.

The first thing to say here is that bonds move in long secular bull and bear markets that last decades, and that these markets on bond prices and bond yields are inverted, so as bond prices go up, bond yields go down. Since 1900 there have been just four completed bull and bear markets (based on 10 year treasury yields) and these have gone as follows:

1. Jan 1900 - Jun 1920 - bear market- Yields rose from 3.7% to 6.4%

2. Jul 1920 - Aug 1946 bull market - Yields fell from 6.4% to 2.5%

3. Sep 1946 - Sep 1981 bear market - Yields rose from 2.5% to 15.8%

4. Oct 1981 - Mar 2020 bull market - Yields fell from 15.8% to 0.4%

5. Apr 2020 - (2040-50?) bear market - Yields rise from 0.4% to (5% high so far)

In 1900 of course the US dollar was on the gold standard, having adopted that in 1879, and US dollars were fully convertible into gold until 1933, and then partially convertible into gold until that peg was entirely severed by Nixon in 1971. The end of the gold standard expanded the interest rate range for bonds considerably on both the upside and downside.

What are the takeaways from this past secular bull and bear markets on bonds? The first is that the current bear market on bonds will likely last until at least 2040 and probably end before 2050, so the current bear market is likely just getting started. The data is limited by the length and therefore limited number of these cycles but the yield high on this current bear market could exceed the Sep 1981 high at 15.8%. I’m just putting this cycle in context as ten year yields have been under 6% since 2000, and under 5% since 2007. It has been a quarter of a century since interest rates were regularly over 5% but between 1967 and 2000 5% was a floor rather than a ceiling for interest rates and it would not be historically surprising if that became the case for the next quarter century as well.

In my 10th November post I was looking at the bullish setup on TNX that was likely setting up a retest of the late 2023 high at 49.97. That bull flag I was looking at broke up but didn’t retest the high, instead expanding into what looked like it might become a larger bear flag, but what now looks like a triangle. Either way the ultimate target would likely be a retest of 49.97.

TNX daily chart:

It did look as though TNX would be heading down further first, with an H&S breaking down on the hourly chart looking for a target at a retest of the Sep 2024 low at 36.03, but then in the spike higher on bond yields, just before Trump delayed some of the tariffs, that H&S failed on the strong move over the H&S right shoulder. That invalidated the downside target and triggered a failure target at a retest of the Jan 2025 high at 48.09. Once that target is reached I would expect some follow through to retest the current decade high at 49.97.

TNX 60min chart:

I mentioned in my Strange Days on US Treasuries post that the retest of 49.97 would put TNX into a big inflection point from where it could break down from a large double top with a target in the 15 area, returning to the interest rate lows of the 2011-6 period, or break much higher.

What would a break higher look like? On the TNX monthly chart below you can see that a possible very large IHS has been forming on TNX since 2001, and a retest of 49.97 would complete that IHS and break up from it slightly towards an IHS target in the 96 area. On this chart that would retrace a little under 61.8% of the decline in rates during the 1982-2020 bull market on bonds, a reasonable enough retracement target after a big trend breaks.

TNX monthly chart:

There is another, even nicer possible IHS that has been forming on TYX (30yr treasury rates) since 2006 and a break up from that would also look for a target in the 96 area, in this case retracing slightly over 61.8% of the decline in 30 year yields in that same bull market in bonds.

TYX monthly chart:

What could cause such a huge (by recent historical standards) increase in bond yields in the US in coming months and years? A major loss of confidence in US treasuries as a reliable and necessary store of value.

In effect the US has long been treated as a bank, with trading partners parking funds in US debt for long periods for convenience and in the confidence of getting their funds back quickly if desired. Like a bank though, if there is a sudden and general loss of confidence then there may be a rush for the exit, and that initial rush for the exit might snowball into a general selling of US treasuries and assets. Like a bank run too, the early sellers would recover all or most of their money, while later sellers would be selling after there had already most likely have been a sharp decline in both the US Dollar, and the price of those US treasuries.

These are the circumstances under which US interest rates could double because, as I noted in November, it is a polite fiction that interest rates are set by central banks, they are really set by bond markets, and if US treasuries were to sell off hard, then there is little that the Fed could do about it, though they could, and likely would, blunt the impact of this by buying up some of the US treasuries being sold. They already hold over $4tn in US treasuries though, and a large further expansion of those holding would be a bold financial experiment that might end very badly.

FRED Federal Reserve Holdings of US Treasuries:

Look out for the next in this series to be published later this week. That will be published here and will be entitled The Bigger Picture on Treasuries Pt2 - Absent Friends. I will be examining there in detail why there could be a major loss of confidence in US Treasuries coming this year.

If you like my analysis and would like to see more, please take a free subscription at my thebiggerpicture substack, where I publish these posts first and do bi-weekly videos looking at equity indices, bonds, currencies and commodities. If you’d like to see those I post the links on Wednesday and Sunday evenings on my twitter, and the videos are posted on my Youtube channel.

Possible Rally Projection & TSLA Update

In my last post on Tuesday I was looking at the prospects for this rally on US equity indices and the first thing to say is that the tariff reprieve that triggered this rally still looks partial, temporary and fragile and that the new tariffs currently being trailed by the administration as coming soon on electronics, semiconductors and pharmaceuticals may well kill this rally when they start being implemented and that may well start soon.

The other thing I’d mention here is that while there are a lot of negotiations going on with US trading partners, it does appear that the bottom line for this administration seems to be a baseline tariff level at 10% across the board, with an additional 15% across the board on steel, aluminium, cars and perhaps soon tariffs other goods such as pharmaceuticals and semiconductors that may also not be negotiable.

This being the case then it would appear that the best case scenario for tariffs going forward this year may well be a lot worse than the worst case scenarios for tariffs that I and many others were thinking about late last year. I would also note that if the trade war with China is resolved soon, which currently seems doubtful, then there is good reason to believe that this administration may be planning to start another shortly afterwards against the EU, which likely wouldn’t be resolved anytime soon either. This is a very news rich and scary environment for equity investors and there is no current reason to think that will be ending anytime soon. Just sayin’ & this is where I am coming from with my analysis.

That said, we are currently seeing a rally here and, subject to newsbombs, this rally can and may well go higher.

I was saying in my last post that ideally there would be more downside next and we have seen that. In my premarket video yesterday morning I was looking for a further decline that would reach the targets on the 15min RSI 14 sell signals on SPX, QQQ and DIA and would ideally reach the weekly pivot on ES at 5250 and we saw that deliver yesterday as well, with some help from Jerome Powell at the Fed yesterday afternoon. So what now?

At this point I have a projection that is what I would expect/like to see at this point in any likely counter-trend rally like this, and that is for price to set up some decent bear flag patterns. I was talking about that in my premarket video this morning and I have drawn what I would ideally like to see in terms of support for that further decline and then ideal resistance trendlines for a (currently theoretical) next rally leg up to form those decent bear flag patterns to signal either the retest of the 2025 low or a new leg down from there.

On SPX that ideal pattern would be a bear flag wedge. That would likely keep price under the 61.8% retracement level and last another couple of weeks. There are other resistance trendline options that might develop on a move higher but I have drawn the most obvious option on the chart below.

SPX 15min chart:

On QQQ that ideal pattern would also be a bear flag wedge. That would likely keep price under the 61.8% retracement level and last another couple of weeks. There are other resistance trendline options that might develop on a move higher but I have drawn the most obvious option on the chart below.

QQQ 15min chart:

On DIA that ideal pattern would also be a bear flag wedge. That would likely keep price under the 61.8% retracement level and last another couple of weeks. There are other resistance trendline options that might develop on a move higher but I have drawn the most obvious option on the chart below.

DIA 15min chart:

How would this look on the SPX bear market projection I drew last week? I’ve drawn that below. The right shoulder for the H&S would be a little higher than ideal but overall this would still be a high quality H&S pattern.

SPX weekly chart - bear market projection:

Back on 12th March I did a post looking at the prospects for NVDA and TSLA and I want to post a follow-up chart on TSLA today. I was saying then that I have a good quality H&S pattern that has broken down with a target in the 150 area and, if that target was reached, then there would then be an obvious follow through target at a retest of the January 2023 low at 101.81.

I was also saying in that post that TSLA car sales outside the US were collapsing, and weren’t looking great in the US either with 6 out of seven US Teslas apparently owned by climate-conscious democrats, and that remains true. I further suggested that a P/E ratio for TSLA still over 100 was looking rather high for a company likely to see fast declining sales over the next couple of years & that remains true as well. Personally I think TSLA would be an interesting though risky potential long here at a price level at 25, but there are many that strongly disagree, and perhaps they are right. I’m a numbers and history guy & don’t use faith much in my analysis, though I do recognise that faith and expectation underpin all prices on all markets everywhere, so I respect them accordingly.

To me though TSLA in 2025 looks strongly reminiscent of Hitler’s Thousand Year (forecast) Reich in 1944, being pushed back on all fronts and with the Fuhrer trying to cheer his doomed armies by trailing the development of secret weapons that would scatter the Allies and decisively win the war. Maybe Musk can deliver that for TSLA, and I will say that his robot prototypes do look very interesting, but this approach didn’t work out for the Twelve Year (actual) Reich in 1945, and I remain skeptical about the prospects for TSLA here.

That being the case, I have an update and a possible case for at least a decent rally on the TSLA chart here, and I want to run through that.

A decent quality falling megaphone has formed on TSLA from the late 2024 high at 488.54, and a high quality possible double bottom setup has formed at the 2025 lows. On a sustained break over double bottom resistance at 291.85, currently being crossed by that falling megaphone resistance, the double bottom target would be in the 366-70 area, between the 50% retracement level at 353 and the 61.8% retracement level at 385. From a pure TA perspective this is a good quality setup and might well have a shot. We’ll see.

TSLA daily chart:

I’m doing a series of (currently four) posts at the moment on my The Bigger Picture substack on the US Dollar, US Treasuries, and the reasons to be very concerned about the possible further sharp declines on both that may be coming this year. These complement the overall picture that we are looking at equities and, even if I have to stay up all night to finish it, the second in that series looking at the very scary setup here on US treasuries will be published today (EST). The third will likely be published on Saturday and everyone trading equities in this wild year should read these.

Everyone have a great holiday weekend! :-)

As I have been since the start of 2025 I’m still leaning on the bigger picture towards a weak first half of 2025 and new all time highs later in the year, very possibly as a topping process for a much more significant high. One way or another I think we’ll be seeing lower soon and I’m not expecting this to be a good year for US equities, not least because both of the last two years have been banner years for US equities. A third straight year of these kinds of gains looks like a big stretch. I could of course however be mistaken. UPDATE 11th March 2025 - I am wondering if this may be a bear market that dominates the whole of 2025.

If you like my analysis and would like to see more, please take a free subscription at my chartingthemarkets substack, where I publish these posts first. I also do a premarket video every day on equity indices, bonds, currencies, energies, precious commodities and other commodities at 8.45am EST. If you’d like to see those I post the links every morning on my twitter, and the videos are posted shortly afterwards on my Youtube channel.

Uncertain Smile

In my posts last week on Wednesday and Friday I was looking at possible rally options from the current 2025 lows, and was looking for a rally lasting at minimum a week or two to make right shoulders on the possible H&S patterns that may be forming on SPX, QQQ and DIA here. That is proceeding slowly but I was thinking then that at minimum this rally would ideally last a week or two, and I think the odds of that look decent. The rally will be a week old tomorrow lunchtime, this is a holiday week and while there has been much talk of further tariffs coming soon, these have not yet been implemented.

I did say as well last week though that this tariff reprieve was partial, temporary and fragile, and that remains the case. If the new tariffs being trailed by the administration on electronics, semiconductors and pharmaceuticals start hitting next week then this rally may be over and a new leg down may begin.

So where does that leave the possible bear market projection I was looking at last week? Not bad though a rally lasting a few more weeks would be better. If the rally can last into the end of Thursday without making a lower low then there would be a two green weekly candle right shoulder which would be acceptable.

SPX weekly chart - bear market projections:

Looking at the shorter term charts there is not much to work with in terms of short term patterns. If the rally is going to fail soon then I’d expect to see the rally make higher highs over Thursday’s high, which DIA has managed but still well short on SPX and QQQ.

I would note though that if a decent bull flag support trendline was to form then ideally all three of these indices would first need to either retest the lows or just retrace more of the initial move up on Wednesday last week. We might not see that, but 15min RSI 14 sell signals fixed all on three indices on Thursday and none of those has yet made target.

In terms of patterns from the highs I have decent quality though unsustainably steep falling megaphones from the high in February, and on SPX I am watching the 50% retracement level at 5491 and declining resistance from the high currently in the 5575 area. If this is just going to be a short rally then a test and fail at declining resistance would be an obvious level to turn back down.

SPX 15min chart:

On QQQ I am watching declining resistance from the high currently in the 466 area and the 50% retracement level at 471.20. If this is just going to be a short rally then a test and fail at either would be an obvious level to turn back down.

QQQ 15min chart:

On DIA the 50% retracement level at 407.38 has been tested three time since the low and is holding so far. If DIA goes significantly higher then declining resistance is currently in the 419 area. If this is just going to be a short rally then a test and fail at either would be an obvious level to turn back down.

DIA 15min chart:

A lot of people seem to feel that the tariff delay on Wednesday was the end of the economic troubles this year. I think those troubles are just getting started and that the trade wars of various sizes being waged by the Trump administration are likely only part of that developing story. I’m doing a series of three posts this week on my The Bigger Picture substack on the US Dollars, US Treasuries, and the reasons to be concerned about the possible sharp declines on both this year. Look out for those as they complement the overall picture that we are looking at equities.

Thought for the day. The American revolution got started in protest against a tariff of 10% on tea imposed by the British, and the French revolution got started when the French Government defaulted on their government bonds.

As I have been since the start of 2025 I’m still leaning on the bigger picture towards a weak first half of 2025 and new all time highs later in the year, very possibly as a topping process for a much more significant high. One way or another I think we’ll be seeing lower soon and I’m not expecting this to be a good year for US equities, not least because both of the last two years have been banner years for US equities. A third straight year of these kinds of gains looks like a big stretch. I could of course however be mistaken. UPDATE 11th March 2025 - I am wondering if this may be a bear market that dominates the whole of 2025.

If you like my analysis and would like to see more, please take a free subscription at my chartingthemarkets substack, where I publish these posts first. I also do a premarket video every day on equity indices, bonds, currencies, energies, precious commodities and other commodities at 8.45am EST. If you’d like to see those I post the links every morning on my twitter, and the videos are posted shortly afterwards on my Youtube channel.

The Bigger Picture on the US Dollar

I’ve been mulling over the best way to do my review of the US dollar, US treasuries, and why the US dollar may lose its status as the world’s main reserve currency, and how that might look, and I’m splitting this into three posts this week.

The first post is this one and will look at the US dollar and where it may go from here.

The second post will look at US treasuries and where they may head from here.

The third post will be looking at the US dollar’s status as the main reserve currency, US treasuries as the main reserve asset for US dollars, why that may already be changing, and what other options might replace it over the next few years.

I’m going to try to get all three posts out over the first three days this week, but the third one, as the most complex, may slip until Thursday or Friday this week.

On the USD monthly chart below the main pattern is a good quality rising megaphone from the low in 2011. The last hit of megaphone resistance was at 114.78 in late 2022 and since then USD has been declining towards the obvious target at rising megaphone support, currently in the 96 area. Here is an old Chart Chat video where I was looking at this on 2nd November 2022 starting at 11.45 into the video.

The obvious overall pattern here from the 2022 high at 114.78 is that a bull flag is forming but I would note that about 30% of these break down, so this may be a topping pattern. If this was to break down the target would be in the 77 area, back into the 70-90 range that USD has spent about half the time since 1987 trading in.

Why am I referencing old videos? Two reasons. The first reason is that I haven’t done a post on the US dollar for a decade or so, so I want to demonstrate to my newer readers that I have been doing videos on the US dollar very regularly for a long time, and that I’ve called it pretty well historically so my forecasts have significant weight. You can see on the chart below my note from 2012 looking at the double bottom setup on USD and my note from 2014 of the double bottom target at 105. If you have any doubts I still have the original charts and posts that I published at the time. :-)

The second reason is to show that everything we are seeing on the US dollar at the moment is within target ranges I’ve been calling for years now so none of this, so far at least, necessarily has much to do with the actions of the Trump administration. Correlation is not causation.

USD monthly chart:

On the daily chart you can see what has happened on USD since that high at 114.78 in 2022. There was a sharp falling wedge decline into a low in July 2023 which I called, then a smaller rising megaphone forming into a big inflection point in January this year. I was talking about that in my The Bigger Picture video on 5th January (starting at 24.22 in this video) as an inflection point where USD should either break up into a retest of 114.78 or fail lower towards the bigger picture trendline target now in the 96 area.

This pattern was in effect a larger bear flag which made target in the 99.2 area last week and I was talking about this move down being part of a likely C wave which would fit the overall bull flag setup I was looking at on the chart above.

USD daily chart:

This brings us to where USD is now and this is the point where the Trump administration may start to have a more obvious impact on USD direction. The obvious next target is an inflection point in the 96-7 area which would lean 70% towards a break up into at least a retest of the 114.78 area, but the other 30% option would be a hard break down towards a target in the 77 area.

So how does this inflection point look on the other currency charts?

On EURUSD the pattern from the high in 2008 was a falling wedge which has already broken up. I would note that the obvious current pattern forming would be a bear flag which would be almost a mirror image of the bull flag forming on the USD chart. That’s to be expected as the Euro has a 57.6% weighting in the USD index.

On the bigger picture there is a possible double bottom or part formed H&S here and a sustained break over 1.2555 for either would have a target not far below the 2008 high at 1.6038. That would be a strong match with the USD target in the 77 area that I was talking about in the chart above.

EURUSD monthly chart:

The Japanese Yen has a 13.6% weight in the USD index but as with the Canadian Dollar, is most commonly looked at inverted on USDJPY, which means that a decline on USDJPY is the Yen getting stronger rather than weaker.

USDJPY made a significant looking high last year at 162 and the next obvious target within the rising megaphone from the 2011 low would be megaphone support, currently in the 115 area. That would be an 18% or so decline from the current level and would support a sharp decline on USD.

From there I have both bull and bear options. On the bull option an IHS right shoulder could be forming here that on a subsequent sustained break over 162 would look for a target in the 250 area, back into a range not seen since the early 1980s. That would fit with a huge rise on USD which seems very unlikely at the moment but is worth bearing in mind as a possibility.

The bear option is a break of megaphone support and a reversal back towards the 2011 low at 75.54. That would effectively be the US dollar almost halving against the Yen from current levels.

USDJPY monthly chart:

The Canadian Dollar has a 9.1% weight in the USD index but as with the Japanese Yen, is most commonly looked at inverted on USDCAD, which means that a decline on USDCAD is the Canadian Dollar getting stronger rather than weaker.

USDCAD made three significant looking highs in the same 1.465 to 1.48 area in 2015, 2020 and early 2025 and the obvious pattern read is a double top (there is no such thing as a triple top) that on a sustained break below 1.2005 would look for a target in the 0.92 to 0.935 area. In effect that would look for a retest of the 2007 low at 0.9056. That would effectively be the US dollar dropping about a third against the Canadian Dollar from current levels.

USDCAD monthly chart:

The setup on GBPUSD looks supportive as well though I won’t show that and between those four currency pairs with the US they are 92.2% of the US Dollar Index.

Is the US Dollar overvalued by historical standards? No, though I’d note that for the entirety of the period shown below from 1967 the US Dollar was the main reserve currency, which would tend to overvalue it. That said, USD is already near the bottom of this range and the kind of decline on the US Dollar that I am looking at here would be in effect a retest of the lows, perhaps to make a bigger picture double bottom.

USD 1967-2015 chart from Stooq.com:

I’ve been watching the US Dollar every day for over 15 years now, and I’ve been expecting for the last few years that this chart was likely heading towards a retest of the lows made in 1992, 1995, 2008 and 2011 in the 70-80 range. That said, given the flags forming on the USD and EURUSD charts I was leaning more towards that happening in the next three to ten years as it takes a while for these moves to play out. Under the right circumstances though that could happen a lot faster.

Look out for the next two posts in this series which will be published over the next couple of days.

If you like my analysis and would like to see more, please take a free subscription at my thebiggerpicture substack, where I publish these posts first and do bi-weekly videos looking at equity indices, bonds, currencies and commodities. If you’d like to see those I post the links on Wednesday and Sunday evenings on my twitter, and the videos are posted on my Youtube channel.