Despite the fact that the SPX is up near 80% since 2020, the past 5 years of trading constitutes a stealthy consolidation period for both the SPX and NDX.
Beneath the surface of what has been an annualized return of roughly 11.5% over the past 5 years, the SPX and especially the NDX have been in what can be considered a compression or coiling phase, prior to breaking out.
The events of April 2025, with the Tariff Tantrum causing what can accurately be labeled as a crash in the markets, only serve to further the potential energy and force with which the markets will pursue gains for the remainder of 2025.
There are three factors contributing to an increase in velocity over the intermediate-term (into year end) and long-term (into the end of the decade).
– Time: A 5 year compression period for the major market averages.
– Price: Price has been in a defined consolidation period according to numerous trajectories that have been suffocating the markets in a defined volatility range.
– Compression: The suffocating nature of the volatility range acts as a highly compressed coil, that when unwound, will create one of the greatest rallies in market history.
There are also elements of psychology, macro and geopolitical factors that contribute to increased upside velocity over the intermediate and long term.
Everything else that you see and hear is noise.
Inflation.
Recession.
Trump.
Putin.
China.
Taiwan.
Global Debt.
Global Warming.
Pandemics.
Sheer distraction designed to mislead those unaware of the true situation into making poor decisions.
There are very few who will see the opportunity ahead through.
With the aide of understanding, being one of the few becomes much more possible.
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