Midweek Market Update – May 20th

Crude is beginning to follow a more predictable Cycles script as clarity begins to return. We can now safely say that the crash of 2014/15 is over and that the bullish advance here is the handy work of not only a new Investor Cycle, but also that of a new Yearly Cycle. This means there is room for crude to move higher still. Even when under the influence of a bear market, a new Yearly Cycle is always capable of producing impressive counter-trending moves. Continue reading

A Period of Speed
Black stallion horse

Based on my feel for the tape and despite the Cycle count, I believe that, we’re not going to see a typical price decline ICL. Instead, the pattern is starting to feel like a rare, time-based sideways ICL. Time based Cycle Lows are discussed by Walter Bressert, and I have had the experience of identifying and capitalizing on a couple in real-time (Gold and Silver in 2011). They involve a market that does not sell-off into a typical price low, but instead consolidates via a sideways rotation. The challenge is in identifying whether it’s simply a normal IC with a delayed ICL, or an IC that is actually resetting/consolidating via time.

Triangle and pennant patterns are common on a Daily Cycle time-frame, and they typically lead to significant rallies (and declines). But whenever we’ve seen them in Investor Cycles, especially during a bull market, they have always led to a massive move higher. It’s impossible to know at this point if that’s what we’re seeing at present, but the way the market has formed an ever tighter trading range for the past 8 weeks reminds me of a time-based ICL. If I’m correct, a move of up to 200+ points is absolutely possible. Continue reading

Midweek Market Update – May 13th

Today’s surge across the entire precious metals sector was more in line with the bullish tape I’ve been reading of late. Sure, the dollar was down today, but it has been down for over a month, without any effect on the metals. Today was different, there was a surge on strong buying volume in the gold sector, while at the same time, I noticed that most of the other dollar denominated assets were trading flat or lower on the day. Continue reading

Turning Points
Railway track change of direction point.

In my view, it’s only a matter of time before Gold begins to move higher. It’s just not rational for large funds to continue paying negative “real” interest rates to hold debt issued by Switzerland, Germany and Japan for a 10 year period. Gold is the ultimate hedge that pays no interest, but which has absolutely zero debt claims against it. To have Gold actually yield higher real returns than paper assets issued by deeply indebted sovereigns can only be bullish for Gold going forward.

So the message for Gold holders one of hope and not gloom; the “despair” period is behind us now. At this point, smart money is accumulating Gold in preparation for the next phase of the market. It’s impossible to know whether Gold will be immune to future sudden price drops, but it’s not my intention to call the absolute price low for Gold. Although it’s not completely evident in the current price action, I remain convinced that the bear market is over and that the current environment is setting the stage for positive real returns for Gold in the coming years. Continue reading

Midweek Market Update – May 6th

I’ve been impressed with how well crude has held up (and advanced), while most asset classes have sold off. During some sessions this past week, I noticed that everything was down except for crude, showing us that traders have been buying crude regardless of any correlation or outside market forces.

But I also know that bear market rallies, especially ones so soon after a collapse, are the most powerful and deceiving of all kind. And as I maintain that crude has entered into a structural bear market, what we’re seeing here is a speculative rush to re-live the bull market days that will quickly sour on speculators. Continue reading

Dollar Round Two
Highest Trump Card.

The Dollar topped 7 weeks ago, and since then, has had a single failed, Left Translated DC. In theory, the requirements for an ICL are now in place, one that could accompany an impending DCL. So the question is whether the Dollar has one more DC lower, or starts another move higher. The answer will come in due course, but timing suggests an ICL should be imminent, as does the support provided by the massive bull market trendline shown below. Continue reading

Midweek Market Update – April 29th

All I know, and with a higher degree of confidence, is that the evidence to support a new Daily Cycle is there. Looking at the Silver too, it shows that relative strength is there. And a deeper look into the precious metals miners, especially some of the juniors, shows that there is a significant amount of accumulation that is occurring. We’ve seen this type action before, no doubt, but it at least tells me that an Investor Cycle Low likely occurred recently and that an unpopular move higher from is already in motion. Continue reading

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
Silver Pumpjack In Crude Oil Field Mine

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