S&P 500 divergence hints at historic crash or lost decade

S&P 500: MACD and volume divergence signals potential depression

A divergence between the S&P 500's MACD and annual volume supports a prediction repeated since 2023: the index faces either a lost decade or a severe drop accompanied by recession. The technical detail is simple to state but hard to digest: price impulses hit historical highs while capital inflow clearly declines. For proponents of this view, no other indicators are needed. One only needs to observe the rising indicator line against bleeding volume.

These two lines suggest two scenarios. The first is a long ten-year interval, similar to the period separating the dot-com burst from the subprime mortgage crash. The second is a deep recessionary plunge affecting half the world. And a date repeats like a mantra: it is always October, even if misery arrives gradually and some only notice when supermarket prices rise.

The argument is reinforced by a precedent: according to its author, reading the monthly chart would have anticipated the 2022 crisis one year in advance. For method defenders, this accuracy proves the tool works. For skeptics, it demonstrates that any indicator succeeds when read hindsight bias applies and the starting point is chosen arbitrarily.

Michael Burry’s $1.6 billion bet against Wall Street

In mid-August 2023, media reinforcement arrived: Michael Burry, the manager famous for betting against mortgages, placed a bearish position of $1.6 billion against the market. The news was read as external validation of the thesis. The associated advice was obvious but sensible: do not sell everything, certainly, but also avoid being 100% invested in equities heading into autumn.

The other side of the coin has fifteen years of track record. Every time the end of the cycle is announced, large companies continue reporting results and indices remain at highs. Those who bought during each panic emerged stronger. This is the most uncomfortable argument for the apocalyptic narrative: it has worked since 2009 and has not yet failed.

Parsley prices and noticeable inflation

There is a crisis thermometer absent from reports: the fishmonger. According to one participant's account, parsley used to be given free with fish; now it is not provided, and a 20-gram blister costs €1.60; 100 grams cost €8, and the kilo spikes to €80. The shelf was empty when he calculated it. Even the counter staff had not noticed.

This part of the analysis requires no charts: shelves stared at in astonishment, fish counters visited quickly, new cars postponed, and outings cut back. The primary sector has long warned about basic food trends, and the bill is appearing in shopping baskets. It affects mood too: rumors circulate about reinstating mandatory military service, and talk grows about the cost of maintaining a normal social life.

Can an asset manager like BlackRock be a pyramid scheme?

Part of the analysis argues that any fund promising fixed growth eventually becomes a pyramid scheme because it does not hold everyone's money but releases it to pay promised returns until it collapses. Suspicion extends to major asset managers and reaches Larry Fink. There is no proof of this: it is an opinion, not a founded accusation, and should be treated as such.

The counterargument is more boring and solid. A fund is merely a portfolio of stocks and bonds; assets are real. What failed in the Madoff case was not the vehicle but oversight: it promised high continuous returns, and no one demanded accountability until it was too late. Gescartera and Lehman Brothers add to the list of supervised entities that ended badly. From there to concluding the entire system is fraud is a stretch.

Map of decline: US, Europe, China, and who escapes

The geographic review sketches a scenario without many anesthetics. The US with sinking cities and population migrating south; Europe which, according to this reading, stopped its industry amid the pandemic hangover and now drags its brakes; China weighed down by the duration of health restrictions; and Latin America which, per this approach, has shifted toward economic models very different from recent decades. Candidates for survival are the usual ones: Japan, Australia, and India.

The comparison with Japan is not casual. The country has endured three decades of stagnation, once representing 70% of US GDP and doubling Germany's thirty years ago, yet never collapsed. Trinc of this line argue the crash will arrive but may be a slow drip rather than a sharp blow. They add a paradox: Europe will feel the US impact more softly because its per capita income is already half as much.

Where the forecast stalls

With warnings on the table, the crash still hasn't arrived, and good companies remain at highs. The prediction has such a wide horizon—ten years—that it remains unfalsifiable until it happens, making it useless for deciding what to do on Monday. That is where it stands, stuck in its own calendar: those waiting for the crash have waited fifteen years, and those who bought at the top haven't yet had to prove they were wrong.