By taking out the effects of inflation from the S&P 500 it is clearly seen that the overall market is in a downward trend from the 2000 peak. This provides further confirmation that we are currently in a short-term (cyclical) bull market within a long-term (secular) bear market.
Source: Bloomberg, PFS Group
The above graph was calculated by dividing the S&P 500 by the Consumer Price Index (CPI-U). Also, there is a negligible difference between using the CPI and the trade-weighted US dollar index showing that foreign investors would generally face the same performance history and overall market outlook when adjusting for the effects of a depreciating dollar in terms of other currencies.
In the above graph, I calculated direct overhead resistance using the red trend line at around 1480 given the current market price and CPI numbers.
As you can see below, no real long-term trend is apparent when looking at the market with the effects of inflation included.
Source: Stockcharts.com
