Top and Crash of Our Lifetimes May Be Starting A Bit Early: Now!

I have been looking for the top or our lifetimes in stocks to finally potentially occur around September or a bit later this year. But I am seeing more signs that this major top may being occurring in early August.
 

But either way, this could well be the ‘top of our lifetime.’ This first chart says it best. It is the most important U.S. and global stock index, and more important, it is adjusted for inflation for better comparison to the past trends. And this chart back to 1960 is saying that we are currently seeing a major topping process that has only occurred twice in the last 60 years.
 

Chart: “Line of Death” in Real S&P 500 Thru 1968, 2000 and Now 2025 Highs - The first peak on this top trend line of this chart was in late 1965. Although the actual top back then was in late 1972, the momentum clearly peaked for the large cap stock leaders in late 1965 and went more sideways after that before a 65% crash in real terms into late 1982. Then the greatest bubble since late 1924 to late 1929 saw its rapid acceleration from late 1994 into early 2000 and hit this trend line for the rare second time. The tech-heavy Nasdaq led that crash down 78%, the worst in its history since February 8, 1971. The real S&P 500 shown here was down 65% again, another rare occurrence.
 

Now we have finally hit the top of this trend line recently with the highest point yet in the S&P 500 of 6,405 on August 11, the time of this writing. A continued decline would be an important sign here. Although this chart would suggest a 65%+ pullback from such a rare occurrence testing this long-term real top trend line, the real support would be where I have been pointing for a long time: the last major stock low in March 2009 of 667. That would be a 90% crash from the recent highs and in nominal terms, not inflation-adjusted.
 

That would be comparable to the last 90-year cycle lows in 1932 that completed an 89% crash in the Dow (more like the Nasdaq today with the leading large caps of its time back then), the worst since the stock markets began in 1789.
























 

One of the key differences in major long-term tops vs. more cyclical ones every 10 years or so, is that they tend to see a longer succession of tops as the dumb money piles in to narrower well-known stocks and indices, and hence, the best known large cap indices hold up the longest, and especially while smaller cap indices, where the smart money look more for better value peak ahead of the larger caps.
 

Two Charts: Successive Peaks Since March 2020 Points to Major Long-Term Top - The next two ‘Successive Peaks Since March 2020’ table charts show the succession of tops thus far in major financial indices, starting with TLT for the long-term US Treasury bonds on March 8, 2020. Bonds generally peak earlier than stocks before a major crash like this as they are the most sensitive to risk. TLT holds the lowest-risk bonds in the world because of the size and low-risk of the U.S. Only major governments can print money to pay off their bonds if necessary. For corporations around the world, they have to pay a higher price to issue bonds when they are in trouble and need money as they can’t print and defaults naturally rise when the economy falls.
 

When investors show declining interest in US Treasuries as occurred in early 2020 forward, they are getting less concerned with risk and that’s when stocks would do better and bubble more. What happened in March of 2020? COVID! And governments stepped in the most that they ever have in history to show they would indeed print unlimited money to protect the economy from a serious downturn.

























 

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Note that LQD for investment grade corporate bonds peaked 5th on this list much later on 9/17/24. HYG for U.S. high-risk corporate bonds peaked on the second table, number 12 on this list of 20. This may sound counter intuitive at first, but investors taking higher risk will take longer to worry about a downturn than the investors in lower-risk US and quality corporate bonds. That’s why HYG peaks last in the U.S. bond arena.
 

The KOSPI in South Korea was the first major global stock index to peak way back on 6/24/2021, followed by the CAC 40 in France and the Nikkei in Japan. The DAX in Germany and FTSE in the U.K. are considered higher quality. And the Nikkei first topped just below current levels way back at the end of 1989 as Japan’s demographic peak came in 1990-1996, much earlier than the rest of the developed world.
 

Number 6 in this sequence is Biotech (IBB). It is one of the newer, hotter sectors like Crypto, and the higher-growth and risk sectors will get more overvalued and be more sensitive to a downturn- and hence have more downside risk. INDA (Indian stocks) and the Shanghai Composite are next at #7 and #8, as they are the two large emerging countries. Emerging countries are like the small caps to the large caps on the world scene, and hence, peak earlier. The RUT (Russell 2000) small caps in the U.S. are next at #9 with a double top on November 8, 2021 and recently on 11/24/24 peaking about two weeks ahead of the large cap Nasdaq and S&P 500 that look like they may be peaking between 7/29 and 8/11 thus far and could still have a bit more upside.
























 

The one surprise at first in this chart would be that EEM (emerging market stocks) are peaking so late, just before the highest quality Nasdaq, FTSE and S&P 500. But a closer look is more clarifying. EEM has had a long double top, the first way back in early October 2007. So, the truth is that it has lagged one of the worst since the 2007 top.
 

EEM has recently gotten just 4% away from a triple top…and triple tops are the biggest sign of a longer-term exhaustion of demand by investors. This would be very bearish. The other minor surprise here is that the DAX. This is normally the strongest and least risky European index which peaked a few weeks back on July 9 ahead of the FTSE that is still making new highs but looking peaky.
 

This 4.5 year orderly progression of tops and the 90-year cycle top and crash from 1929-32 and 1836-42 that should have hit this time around 2019/20 into 2022/23, strongly suggests we are finally at or very near a top. This shows it will be a once in a century top, with the slowing of the entire developed world demographically suggesting we will not likely see new highs above here for most of our lifetimes in North America, Europe and East Asia.
 

This massive now $29T stimulus since 2008 has merely pushed back the top by about five years, made it more-bubbly and global than any time in history. That only should only make the crash ahead worse! This would be a good time to be safe in case this first crash sets in before year-end, as I increasingly expect. If it does, you may have to be out for a few years, as crashes of this magnitude generally take 2.5-3 years to bottom.   EG