Back to our Regular Programming

On the other hand, Investor Cycle timing is an issue. Every market is a series of gyrations on multiple timeframes, and equities are facing the reality of late timing in the current Investor Cycle. It’s indisputable that the last ICL occurred back in October. At 32 weeks, it marked the longest IC in the last 10 years. The current Investor Cycle is already at week 28, making it the 3rd longest IC (before a top) of the last 10 years. So, even though the market has just broken out of a wide consolidation, the timing for a substantial and sustained move higher is just not there.

Of course, this could be the final blow-off move that we’ve been expecting – certainly the setup is ripe enough. But overall, the market does not have the time necessary to support a move beyond the end of May. I’ve said for some weeks that bulls should hope for a typical ICL decline out of the long consolidation, and not a continuation of rising prices. What happens over the next month will really be anyone’s guess, but I believe that another old adage, “sell in May and go away”, is likely to be proven true this year. Continue reading

Midweek Market Update – April 22nd

So then is it bearish that bonds broke in the other direction? The answer I believe is no, this is not so unusual. This is not a time to be panicking on positions because the worst case scenario in any trade is that our disciplined risk management will get us out before any potential trouble could unfold.

And because the Daily Cycle count is clearly late and ready for a 1st DCL, I can only expect that what we’re seeing is a move that will be faded quickly (maybe tomorrow or Friday) and a new Cycle higher will begin. Of course, I don’t have a crystal ball, but let me add that even with today’s big bond decline, I still find this Cycle setup to be bullish. Continue reading

The Oil Will Flow

I believe that energy analysts are absolutely delusional to think Crude production will slow significantly, especially with Oil back near the $60 mark. During the recent, lengthy bull market, tens of billions of Dollars were invested in Crude infrastructure, so there is too much at stake to simply shut down operations and walk away. Investors and participants in any industry that has experienced a 15 year bull market won’t change their beliefs overnight – it takes time for sentiment to shift. Most are far too emotionally and financially vested in the industry, so it’s unreasonable to think that a 9 month decline is going to drive an immediate adjustment to the imbalance in supply and demand. Continue reading

Midweek Market Update – April 15th

Crude oil broke out today by exceeding the high set during the last Daily Cycle. This makes it fresh, 4 month highs, and also likely to end up marking this Daily Cycle as the first Right Translated Cycle in over a year! This move more that confirms that the last Yearly Cycle ended back in early January and there is now the potential for crude to move somewhat higher over the next month.

Now that crude is showing some relative strength, my upper target, which has always remained the $60 level for this Investor Cycle, is now potentially within reach from within this Daily Cycle. The bulls have ‘the floor’ and we could see a surge over the next 5 to 10 days, to test or exceed that $60 level. This would definitely set the scene for a top of this Daily Cycle, at least, but also possibly for this Investor Cycle too. Continue reading

For Gold, It’s Nothing But Time

When measured against all currencies except the US Dollar, Gold has performed exceptionally well for almost a year. And even against the Dollar – with the backdrop being a parabolic rally in the world’s reserve currency – Gold has performed far better than would have been expected. In Dollar terms, Gold has managed to hold above the bear market low set during the last ICL, and this speaks volumes about Gold’s hidden (and under-appreciated) relative strength.

But, just as bull markets can move higher for what seems an eternity, bear markets can meander along a wide bottoming channel for years. As traders, we work hard to determine trends, and can too easily assume that the end of a trend will be quickly followed by a huge move in the other direction. Demanding that a market be in either a bull or a bear market is a fool’s errand, and a market can be range-bound for an extended period and will not necessarily flip between significant uptrends and downtrends. So once Gold shakes off its apathy and begins to break out of its current wide range, there is no guarantee that it will launch into a huge upside move. The evidence that the bear market has ended is very encouraging, but caution is needed when assessing Gold’s upside potential and timing. Continue reading

Midweek Market Update – April 8th

That broadening can be seen within the equity market Cycles, especially as the character of the Cycle patterns appear to have changed when compared to the past 3 years. Although we still see 3 consecutive Daily Cycle tops that were higher than the previous Cycle, the last 2 peaks were only marginally higher, while the Cycle Lows both came close to failing. This feels like a topping pattern to me and as equities entered the 4th DC, the danger is that this Investor Cycle is now ready to turn lower. Bulls need a strong push to new all-times. Continue reading

Don’t Believe the Hype on Interest Rates

As regards to the possibility of rate hikes, the market has predicted rising rates – and getting it wrong – for years now. The expectation that we’re somehow going to see a return to “normalcy” is so ingrained in traders’ minds that they continue to look for green shoots and an economic recovery a full 6 years from the bottom of the last recession. What they have failed to accept, or perhaps even to understand, is that the current environment is structurally weak, and that the economy is locked in the grip of a debt-driven deflationary spiral. Continue reading

Midweek Market Update – April 1st

We’re seeing fairly significant day to day volatility now and it’s whipping short term traders out of positions. It’s a difficult environment to be trading, but for the Daily Cycle, it is still range bound and has yet to show us definitively in which direction the market wishes to move towards. For now, 2,044 is the lower line to be cautious on, while the bulls want to see a big push to all-time highs soon. Continue reading

Some Telling Choices Ahead

This is why if the S&P were to lose the prior DCL level of 2,039, it would also mean the market has again fallen below the rising 26 week moving average and a new pattern of lower lows on a shorter timeframe has been established. This bull market has managed to recover from such predicaments before, but the odds this Investor Cycle topped in this case would be significantly higher than 50%. Continue reading

Midweek Market Update – March 25th

With gold (briefly) exceeding $1,200 today, we’ve had a little more strength from this “counter-trend” bounce than I originally expected ($1,180-$1,200 range for a top). But that should not distract us from where gold’s Cycle is projecting itself, unless of course the bulls surprise us here and push gold over the $1,224 line. The trend-line I drew over a week ago has hit and the current Cycle timing and position is absolutely perfect for the bears to attack gold one more time. This is at least what I’ve been waiting for and expecting. Continue reading