MARKETS: DebtCeiling 2013& What Follows

2023年1月27日

Hi Traders, Investors and Speculators of the Charts 📈📉

I am passionate about economics and history. Together, these two can tell a compelling story of ow interlinked everything is, and give a glimpse into the future should certain events repeat itself.
That is the core of my argument today as we look at the previous time he US Government hit a debt ceiling, and what happened after.

It would be great if you could watch the video, but if you can't spare 10min here's the summary:

📈 VTI : Vanguard Total Stock Market ETF

I love using the VTI as a general overview of the trend on stocks. You could also use the S&P, it's just a personal preference considering they have interest and hold 50% plus shares of nearly EVERYTHING.
The VTI mostly consolidates and sees some downward price action for three years after USA announces debt crisis. VTI recovers in Jan 2016, three years later.
In other words, in the stock market you may see some down, some up. A near equal amount of buyers and sellers to balance out the total environment. China50 seems to be a precursor of what is about to happen on VTI.
📉 Look for buy opportunities during this time, prepare to hold long term.


📈 GOLD

Gold starts declining before the debt crisis is officially announced. A multiyear bear market follows, one of the worst. Continues up until 2016.
📉 Seems like a good idea to take note of the above and get out of gold, enter again during new lows


📈 BTCUSD / Crypto

We didn't have an overwhelming amount of alts during that time, so only the Bitcoin USD chart can give an idea of what may happen to crypto after a debt ceiling is announced. Interesting to note that BTC rallies almost parabolically and reaches it's first ATH. Then, at the same time the debt crisis is announced. Bitcoin continues into a multi year bear market, only to recover in Jan 2016.
📉 Do I really need to share my unpopular opinion here... It all depends on how much you believe in history repeating itself.


📈 USOIL / OIL Industry

The oil industry sees the second worst bear market yet, only recovers in Jan 2016 but does not make a higher high until 2020.
📉 Oil saw a sharp v Shape recovery after the announcement of Covid. Oil is still in higher demand than usual considering scarcities so I believe there is another push upwards towards the 3.618 Fibonacci Extension, also the next immediate resistance zone around 200.


📈 EURUSD / strength of the Euro

The announcement of the 2013 debt ceiling sends the Euro into a bear trend against the dollar, bottoming out at 0.76 three years later, again only in 2016.
📉 Euro recently saw a strong V Shaped recovery, but considering the next point you may want to rethink holding Euros:


📈 DXY / Dollar Strength Index

In comparison by percentage, the DXY surpasses every other market. The DXY increases nearly parabolically over this period of time all the way until November 2016. Which naturally ames sense because when there is talks of an economic crises, people tend to sell their assets for CASH which would explain why markets dropped but DXY increases due to higher demand.
📉 Dollars gain against all in Forex markets.


Here's more info on the debt ceiling and what happens if a country defaults:

What are your thoughts on this?


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