SPX, COMPQ, TRAN, BKX: We NEED to Understand the Difference Between "Cause" and "Catalyst"

So, we all know the stock market was in a historic bubble -- in fact, that was the point of the chart I posted in August of last year, showing that SPX had roughly tripled in a parabolic move that began in 2020.

Then again, maybe I shouldn’t say “we all know,” because apparently a lot of people don’t — because you hear it echoed everywhere now: “Tariffs caused the crash!”  This is one of those statements that sounds right, but is fundamentally wrong.  

Let me offer a better frame:

Imagine someone driving blindfolded, at high speed, through a winding canyon road. You're a passenger. You sneeze. Startled, they jerk the wheel -- and plunge off a cliff.

Now imagine them blaming your sneeze for the crash.

That’s how people are treating the market’s latest collapse.

It wasn’t the sneeze -- or tariffs -- that caused the crash.  It was the fact that the system had already eliminated any tolerance for external disturbance. When you're recklessly overextended, any catalyst will do.

If the sneeze hadn’t triggered the crash, the next curve would have.

Or the next gust of wind. Or a rock in the road. The setup was already fatal.

In market terms: tariffs were the catalyst, not the cause.

The root cause was structural:

• A market propped up by unprecedented liquidity.
• Speculation unmoored from fundamentals.
• A collective hallucination that risk had been eliminated.

We’ve seen this before. 2000. 2008. 2020. And now again.

Each time, the script is the same:

• The Fed floods the system with cheap money.
• Asset prices detach from value.
• When reality reasserts itself, we search for scapegoats.

And every time, we “learn nothing” — because we never blame the right thing.

Now, in the case of both my sneeze and Trump's tariffs, you could correctly say they were each the catalyst for the crash.  But they were not the root cause -- and I can back that up with today's charts.

Starting with this one:

For exhibit 2 (or exhibit 3, if we count the very first chart), we have BKX.  Which showed an impulsive decline from its 2022 peak, which I labeled as wave 1/A — meaning further downside (3/C) was still pending. This wasn’t guesswork. It was visible -- the charts already knew.  In fact, in April of last year -- long before tariffs -- I reminded everyone of the lingering 35+/- target for red 3/C down.

Long time readers know I'm allergic to BS from any side of the political aisle.  I try to align, first and foremost, with truth -- even, and especially, when it's uncomfortable.  This isn’t about tribal politics.  It’s about one thing:

We need to learn these lessons once and for all.  

Because every time we blame the wrong thing -- and we always do -- we learn nothing.  Just like we learned nothing in 2020.  And in 2008.  And in 2000.  And basically every year since the Fed took it upon itself to act as a market participant.

The lesson here isn’t about politics. It’s about pattern recognition:

• The Fed can't suspend gravity forever.
• Markets distorted by constant intervention cease to be markets.
• Debt cannot scale indefinitely.

If we refuse to learn these truths, then we guarantee our ignorance will recycle, again and again.

That’s not just a policy failure; it’s civilizational.  Markets aren’t random.  They're mirrors -- reflecting our collective delusions, until they break.

Let’s stop blaming the sneeze, because then we learn nothing.

And learning nothing would mean we'll repeat the same mistakes yet again (as we always have).  Let's instead internalize the fundamental lessons:

• The Fed cannot perpetually create liquidity from thin air.
• Free markets should remain free.  
• Endless debt (and/or money printing) is unsustainable.

So it is to the benefit of all of us -- and to all future generations -- if we resist the urge to behave tribally and instead behave rationally and ethically.

Even if your instinct is to blame Trump, as many do, I urge you to please resist joining the chorus of uninformed pundits.  Instead, argue for the truth as often as you can.  

Blaming "the other tribe" is easy. Telling the truth is hard, especially when it's unpopular. 

But only one of those prevents us from repeating these errors forever.

Now let’s get to the remaining charts.  COMPQ has just about reached its first target/inflection zone (this zone is plus/minus a bit, as they all usually are).  The question is whether the first "?" generates a bounce, or if the market falls right through this.  

Keep in mind that if this is (in TRAN and BKX) WAVE 3 of a SUPERCYCLE DECLINE -- then it could very well turn into a historic crash.  So whether these support zones will do anything at all is an open question, and bulls are running out of chances to stick save this thing.

Let's look at an even longer term chart of COMPQ.  This is one of the charts that kept me bullish during the 2020 Covid crash (the annotations from that time are still on the chart, in fact):

Finally, let's end this with SPX:

In conclusion, if bulls can't get anything going soon and this is indeed the start of a Supercycle decline (Primary/Cycle wave 3/c down in TRAN and BKX and Primary 1 down in SPX, INDU, etc.), then this is only the beginning and we're years away from the bottom.  This is a very dangerous market right now.  I keep looking for "long term bull options" and there are still some stragglers -- for now -- but bulls do need to get something going to keep any hope alive whatsoever.  The lower the market goes, the deeper the technical damage.  Trade safe.