Stock Market Crashed While The Yield Curve Inverted. What’s Next For Stocks

The stock market tanked -3% today as the yield curve started to invert.

(Click on image to enlarge)

Let’s determine the stock market’s most probable direction by objectively quantifying technical analysis. For reference, here’s the random probability of the U.S. stock market going up on any given day, week, or month.

(Click on image to enlarge)

*Probability ≠ certainty. Past performance ≠ future performance. But if you don’t use the past as a guide, you are walking into the future blindly.

Yield curve inversion

I have talked about the yield curve inversion several times over the past 2 weeks. And as expected, financial media is screaming “YIELD CURVE INVERSION!!!! RUN FOR THE HILLS!!!”

Let’s look at the data.

The 5-year – 3-year yield curve is the first yield curve to invert.

(Click on image to enlarge)

Here’s what the S&P 500 did next after the first inversion in each economic expansion.

(Click on image to enlarge)

The next yield curve to invert will be the 5-year – 2-year yield curve. This will probably invert within the next few weeks.

(Click on image to enlarge)

Here’s what the S&P 500 did next after the first inversion in each economic expansion.

(Click on image to enlarge)

After that, the 10-year – 2-year yield curve will probably invert.

(Click on image to enlarge)

Here’s what the S&P 500 did next after the first inversion in each economic expansion.

(Click on image to enlarge)

After that, the 10-year – 3-year yield curve will probably invert.

(Click on image to enlarge)

Here’s what the S&P 500 did next after the first inversion in each economic expansion.

(Click on image to enlarge)

The last yield curve to invert will be the 10-year – 3-month yield curve. This is not likely to happen over the next few months.

1 2 3 4
View single page >> |

Disclaimer: Read my full disclaimer here

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.