“The Great Game: The Story of Wall Street…An original two-hour documentary event that spans the 200-year history of American capitalism.” (New York Times; 5/28/00, p13; regarding a CNBC television program)


Many times over the past century, significantly increasing United States interest rates have preceded a major peak, or at least a noteworthy top, in key stock marketplace benchmarks such as the Dow Jones Industrial Average and S+P 500. The yield climb sometimes has occurred over a rather extended time span. The arithmetical (basis point) change has not always been large. Sometimes the yield advance has extended past the time of the stock pinnacle. See “Long Run Historical Entanglement: US Interest Rate and Stock Trends” (7/6/23). 

Of course, since marketplace history indicates that ongoing relationships can shift or transform, the current patterns between the US Treasury 10 year note yield and the S+P 500 (and the US dollar) can change. 


In any case, will the long run pattern of rising UST 10 year note yields resume in the near term, thus leading to eventual S+P 500 declines? The Fed Chairman’s 12/13/23 comments do not explicitly rule out future Fed Funds increases. Or, even if the UST 10 year note yield does not exceed its 10/23/23 pinnacle at 5.02 percent in the near term, suppose its yield climbs toward that height. 

Alternatively, suppose the UST 10 year note yield does not in the near term make a new high around or above 10/23/23’s 5.02 percent, or climb fairly close to 10/23/23’s yield top. Does the recent slump in UST yields portend not only future Fed easing, but also a recession (rather than a soft landing)? Monitor commodity price weakness in that regard. Therefore, from this perspective, the rise in the UST 10 year yield up to 5.02 percent on 10/23/23 has been leading to a later high in the S+P 500 than the July 2023 one. In this scenario, the S+P 500 price rivals or surpasses its January 2022 peak. 

Thus will a new bear marketplace trend for the S+P 500 involving multiple tops emerge? In addition to those of January 2022 and July 2023, will another one be created near those heights? The S+P 500’s record peak is 1/4/22’s 4819. The S+P 500’s 12/28/23 high at 4793 almost matches this. The 7/27/23 elevation is only 4.4 percent distant from the major price resistance imposed by 1/4/22’s summit (4607/4819 is 95.6pc). A five percent decline from January 2022’s pinnacle equals 4578, close to 7/27/23’s 4607 height. The 4578 level stands midway between important prior S+P 500 interim tops at 4639 (3/29/22) and 4513 (4/21/22) attained amidst the bear move which began in January 2022. A 33 percent rally from 10/13/22’s trough equals 4655. The S+P 500 probably will not exceed its January 2022 peak by much if at all. A five percent venture over 1/4/22’s 4819 equals 5060. 

The Dow Jones Industrial Average’s record high is 1/2/24’s 37790, about 2.3 percent over 1/5/22’s 36953 pinnacle. 

Looking forward over the horizon, arguably “around” end-year 2023/during first quarter 2024 is a time when a key top in the S+P 500 will appear. Incremental year-end stock buying “to put stuff on the books” (or to discard losing short positions) by definition finished a few days ago. Will the US have a federal government shutdown during first quarter 2024 due to a legislative logjam? What if the inflation rate does not  keep falling toward the Fed’s two percent target? Will the Fed in any case keep its policy rates lofty for many more months? 

History shows that the S+P 500 has achieved several important peaks and bottoms during first quarter. As for major highs, the record S+P 500 price to date of 4819 occurred 1/4/22. Recall 2/19/20’s 3394 pinnacle. The S+P 500’s established a major high over two decades ago on 3/24/00 at 1553. Going back 50 years, the S+P 500 peaked around 121.7 on 1/11/73 (the Dow Jones Industrial Average crown occurred on 1/11/73 at 1067.2). What about major bottoms? A peak around first quarter 2024 would be a four year diagonal bull move from the coronavirus disaster major low of first quarter 2020, 3/23/20’s 2192. The 12/26/18 key bottom at 2347 neighbors the first quarter. The 2/11/16 trough at 1810 (1/20/16 at 1812) was very important. Also in regard to the calendar first quarter window, remember the aftermath of the Goldilocks Era; the worldwide economic disaster bottom for the S+P 500 was 3/6/09’s 667. The final low following 3/24/00’s summit was 3/12/03’s 788 (10/10/02 bottom at 769).

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Financial Playgrounds- the Money Games (1-2-24)