Markets reverting to the mean?

I try to keep an eye on Klein Charts of the BMW Method.

Here are 25 year histories for the NAZ, SP500, SOXX, DJIA.
In general, they’ve bounced off resistance at 2 std from their respective means, and are headed back toward the mean.
All were last run on 27 Feb 2022.


SOXX (PHLX Semiconductors)





and are headed back toward the mean.

Mike’s charts are great for getting a bird’s eye view of the market.

Reverting to the mean is a bit of a mathematical misnomer. In math the mean is constant while in Klein charts the red best-fit line or CARG is rising. Over the long run this growth reflects the growth of the economy but without taking into account inflation

Value of $1 from 1996 to 2022

$1 in 1996 is equivalent in purchasing power to about $1.79 today, an increase of $0.79 over 26 years. The dollar had an average inflation rate of 2.27% per year between 1996 and today, producing a cumulative price increase of 79.19%.

**Index   CAGR   Real CAGR**
NAZ      9.8      7.5
SOXX     5.6      3.3
SP500    5.2      2.9
DJIA     5.1      2.8

Looks pretty bleak but it sure says to invest in technology excluding high CAPEX semiconductors!

Denny Schlesinger
markets can be pretty mean :frowning:


I also watch the MI board’s market trend indicators that are posted weekly. AFAIK, these are LAGGING indicators.
There are 3 or 4 posts each week, that are based on purely mechanical TA type information.

Over all, for the last 3 years those indicators have all been 99% Bullish.
Over the last 3 months (4 or 5?), they been shifting to Bearish.
They have still been majority Bullish, but today seem to have hit the 50% point, tipping over into >50% Bearish.

I just watch. For me, it’s an indicator of which way the market sentiment is headed.
Similar to the Fear and Greed Index:
Which BTW is at 16 = “extreme fear”.

There’s an old joke:
Some people make things happen.
Some people watch things happen.
Some people wonder what happened.

Mostly, I’m a “watcher”. Then a “wonderer”. Rarely a “maker”.


Another ‘indicator’ that the market has ‘rolled over’ and is heading for a Bear trend?

Saul noted that Schwab is sending Morningstar analyst recommendations about his hyper growth stocks, that have CHANGED…
Previously, the reports ‘analyzed’ the stock as They always say “The Company (whichever it is) is doing great. The earnings report is great. We love it. But the stock is overvalued (or “greatly overvalued”) so we can’t recommend it.



FWIW … 3 unrelated instances all pointing to a ‘change’ in direction?
CAGR for SP500, NAZ, SOXX, and DJIA indices
MI board mechanical screens
Saul’s Morningstar Analyses