Submitted by Charles Hugh-Smith of OfTwoMinds blog, [5]
This time is always different just before a bone-crushing decline.
This may well be the most important chart you've never seen. Courtesy of longtime analyst-correspondent B.C., this chart reveals that real per capita tax receipts have reliably top-ticked the stock market since 1973.
Note that this is specifically real (i.e. adjusted for inflation) state and local income tax and sales tax receipts--not federal tax receipts--and that the chart show annualized changes smoothed over three different time frames: seven quarters, 6 years and 9 years.
Anyone who sold stocks once the 6-year annualized change in real local/state tax receipts started declining would have been spared the horrendous, bone-crushing losses of the Bear markets that subsequently shredded stocks.
This indicator even worked reliably to identify Bear market rallies that briefly boosted tax receipts before rolling over: the stock market rally of 1975 to 1977 reversed the annualized decline in tax receipts but when tax receipts rolled over in 1977, that was a reliable top-tick of a market that subsequently fell 25%.
The annualized 6-year change nailed the top of the market in 1989, 2000, 2008--and now, in 2015. This leaves current bulls with the task of explaining why an indicator that has reliably top-ticked every previous market top for over 40 years is suddenly and magically wrong in 2015.
This time is always different just before a bone-crushing decline.
