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Fundamentals No Longer Matter

February 24, 2014/in Public /by Bob Loukas

Last week’s close gave the S&P its first 3 week winning streak in 3 months, in the process putting the recent Investor Cycle Low firmly in the rear view mirror. It looks as if we now have a continuation of the dominant trend on our hands. I’ve noted on numerous occasions just how stretched the current Yearly and cyclical bull market Cycles have become, but it’s impossible to ignore the strength of the current runaway move.

The current conditions appear to be mirroring past cyclical market tops, with valuations ceasing to be a consideration for buying. At the end of every bull market, the fear of missing out, of being left behind, becomes the dominant fear. This couldn’t be more evident than in Facebook’s purchase of messaging provider Whatsapp. I don’t know what they were smoking in the Facebook conference rooms, but they paid $19 billion for a business that has 60 employees and virtually no revenue. That is the very definition of business insanity, found always near the top of great bull markets.

Toward the end of every cyclical bull market, fundamentals no longer matter. Instead, a collective and self-reinforcing speculative rally grows in statue as a market climbs to its peak. That’s where the equities market finds itself today, caught in a 2 year runaway move that either continues to accelerate higher or stalls and reverses. At this point in the current bull market, a move like the current one will eventually end at a major market peak.

For this reason, it’s unlikely that the new Investor Cycle will top after the first 15 trading sessions. The double top on the Daily chart looks more like a consolidation point below a key pivot than something more ominous. The equity markets have recovered the entire previous ICL decline in just 2 weeks, so it is only natural for equities to pause and consolidate below the all-time highs.

I doubt that the current consolidation pause is finished – it is still early in the Daily Cycle and more back-filling is likely needed to prepare for another more sustained bull run. But if Cycles continue to follow recent patterns – and they should – it will be only a matter of time before equities launch into all-time high territory…and beyond.

The last two Investor Cycles ran for 32 weeks and did not top until just 5 and 3 weeks before the Cycles ended. Both ICs were near records in both length and performance. Including the last 5 Cycles in aggregate, we now have stretched (runaway) Yearly and 4 Year Cyclical Cycles.

Ordinarily, we would be on the lookout for a shorter and Left Translated Investor Cycle. A Left Translated Cycle would provide the necessary room for the IC to fall into a deep, Yearly Cycle Low in the late spring. But two important facts should be kept in mind. First, this is just week 3 of the Investor Cycle, and even the bearish case supports another 5 weeks higher. Second and above all else, this is a runaway bull market move, where price and trend should trump all normal analysis. As we know, irrational and speculative bull markets can, and do, extend for much longer and further than imaginable.

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences.

LIMITED TIME PROMOTION. You're just 1 minute away from profitable trades! please visit https://thefinancialtap.com/landing/try# AND ENTER PROMO CODE: 29off This will reduce ANY product by $29 (including the annual).

Gold Sector Shining in a New Cycle

January 23, 2014/in Public /by Bob Loukas

The charts below are from this past weekend. This post is an excerpt from the Sat 18^th member report and offered a roadmap for the coming 4-6 weeks. There is a limited time promotion code available at the end of this post.

Last week’s member report was titled “If it looks like a duck…” because the evidence was there to suggest gold was in a new Investor Cycle. We established long positions in advance because powerful new Investor Cycles make it difficult for latecomers to buy. And now I’ve seen the type of action, across the entire precious metals complex, which has me convinced this is a new Gold Investor Cycle. Obviously, this is exciting, because after a prolonged decline, we now see the potential ahead for a longer term trend change. It does not, at this stage, negate the primary downtrend or confirm an end to this 2+ year bear market. Only that the gold sector is in the process of rallying within a new Investor Cycle.

If the bear market lives on, then this new Investor Cycle will top out sooner, probably somewhere between weeks 7 and 10 (currently on week 3). The rally would come in the form of a “reversion to the mean” event only, which from experience they can be relentless and powerful moves. But as members know, I don’t think that’s what we have on our hands. It remains my opinion that gold has put in a major bear market low and the process of establishing a base under the $1,921 all-time highs is now playing out. I called the June Investor Cycle Low (ICL) as it occurred, in real-time, because I really felt it was the 4 Year Cycle and Bear Market low. Since then, I built my primary framework around the idea that the Investor Cycle was going to retrace and fall to test the June bear market lows.

I have been unwavering in this belief and it has remained my “primary” expectation throughout. Not once in the last 4 months have I expected otherwise. The action unfolding today has been depicted within chart after chart and numerous member reports. There comes a point where it just becomes exhausting for me, and repetitive for the reader, to state the same observations over and over again. So instead of the usual commentary, I will instead present the following Cycle charts which clearly illustrate the explosive nature of the current gold Cycle setup.

Gold threatened to drop mid-week, but instead by Friday it sat right below the highs of the Cycle. Gold ended just shy of making new highs, which being Day 12, would have confirmed a Right Translated Cycle. Generally, gold’s 1^st Daily Cycle (going back 14 years) has averaged 29.4 days and topped on day 19.7. Also, this Cycle to date is far from overbought (especially for a 1st DC) so I expect gold will "pop" next week in what is likely to be a 3-7 day rally to a DC Top.

Followers of the gold sector must be encouraged by the early strength shown by the miners. Many of the junior names are breaking out on very high volumes; some are up 30-50% already! The seniors are being accumulated too; most of them are up over 10% off the lows. GDX has broken its IC trend-line and turned bullishly higher. There is no doubt, the miners are pricing in a new gold Investor Cycle.

Already up 4 straight weeks, the miners might be in need of some cooling off. But that should be brief, at which point the only upside hurdle they face is the intimidating bear market declining trend-line. The last IC rally in September was stopped there and I suspect it will provide resistance this time around too. That is the dividing line between the 3 year bear market and the promise of open air and a longer term rally.

I just cannot emphasize how much I like the silver chart, to me it looks ready to pop in what could be a 20% rally in as little as 4 weeks. We know silver is capable of such moves and I see the current coiling action being extremely similar to the move which occurred over the summer of 2012 (see chart below). We have a good pickup in speculative buying (COT) while the underlying technical strength of this Cycle looks great. The Cycle count is very favorable and we have what looks to be a massive double bottom triangle breakout coming!

Platinum is getting some love too; it’s breaking-out of its own bear market decline. Up $130 in just the first 4 weeks, it shows that the entire sector is attracting interest. It is overbought, but with a double bottom in place it appears to be in the early stages of a new trend.

To the naked eye, from a price perspective, gold has languished to some extent. But all around it, the sector is gaining momentum. Technically, gold has turned higher perfectly within the Cycle timing band, so there isn’t a reason to doubt this Investor Cycle. It has after-all just put in its first consecutive 4 week rally in 1.5 years. But we’re at the point now where I want to see some follow through and a break of the $1,255-$1,267 range.

As this Cycle begins to gain more followers (speculators) they will help to accelerate the gains in this Cycle. There is some strong resistance up to the $1,267 area and I don’t believe the weekly declining trend-line will be given up easily. What I would love to see is a rally next week to break that trend-line, followed by a DCL that comes back to tag the trend-line. Once gold finds that 1^st DCL it will have far less resistance ahead. The setup would be perfect for what could be a very powerful 2^nd Daily Cycle.

As this is the start of a new Investor Cycle, we have confirmation that the Investor Cycle did not fail. This might seem irrelevant, but I can assure you that in a downtrend it is a welcomed event. It’s not definitive evidence that the downtrend has ended, but it’s the first prerequisite for a change in trend.

With gold holding the June Lows, an end to the bear market could be at hand. Technically, the long term Cycle looks ripe for a trend change. Once this current Investor Cycle breaks the $1,267 trend-line, we need it to follow through with a break $1,350 and eventually $1,434. That level represents a higher IC high, a break of the bear market trend-line, and a monthly Swing Low. It would not guarantee gold is headed back to new all-time highs, but it would be enough to support and confirm my earlier calls for a June bear market end.

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences.

LIMITED TIME PROMOTION. You're just 1 minute away from profitable trades! please visit https://thefinancialtap.com/landing/try# AND ENTER PROMO CODE: 29off This will reduce ANY product by $29 (including the annual).

Crude Oil Headed “Higher”

December 23, 2013/in Public /by Bob Loukas

Cycle	Count	Observation	Outlook	Cycle Clarity
Daily	Day 19	Range 32-40 Days (1st Daily Cycle)	Bullish	Green
Investor	Week 4	Range 20-24 Weeks	Bullish	Green
4 Year	Month 58	Range 48-52	Bearish	Green

Crude is correlating very well with past bullish Right Translated Daily Cycles. This makes my job easier to perform, as I’m primarily laying out a framework that is based on past precedence. As an analyst and writer, it’s easy to overcomplicate what is a occurring within the Crude markets, all in the name of content generation. But the developments speak for themselves; this is simply a strong 1^st Daily Cycle which is bouncing back from a fairly significant sell-off.

This Daily Cycle has now rallied $8 and made new highs on Day 16. That’s impressive, but there should be room left in this Cycle for further gains. It’s not all upside though; at some point over the next week we should be prepared for a Half Cycle Top. Once that temporary top is in, expect 3-5 days of declines before the next move higher begins. These pullbacks can be fast and scary, but the dip should be bought because we expect Right Translated (Top between day 25-32) Cycles in these situations.

The last time Crude oil was headed back down towards a major Cycle Low, back in October, I published the post “Crude Oil Headed Lower”. With that post I presented the below chart, outlining the most likely path Crude would take based on historical Cycles.

We were right on the price target and off by just 4 days with regards to expectations for a major low. That was a Cycles prediction which included a $15 decline over 8 weeks. For members that took that trade, it was obviously significant.

But along with that Cycle Low, we were able to enter into long positions as Crude pivoted out of the Investor Cycle Low. Such lows only occur twice per year and they’re always significant events. They’re often amazing buying opportunities for the longer inclined investors, especially when the predominant trend is to the upside. Fast forward a couple of months and below is the same chart (with same red prediction trend-lines as above) with today’s pricing.

Notice the 4 week rally out of the Cycle Low; this is the benefit that Cycle’s analysis has provided us. We're seeing some evenly flowing weekly Cycles and this makes them easier to predict. On the weekly chart, we have a continuation of a trend we outlined months ago. The Investor Cycle has turned and is now in the process of moving higher to its next major Cycle pivot.

Any outcome is possible in the trading/investing sphere, but I'm much more confident with my expectation that Crude will eventually make it back to at least the $103-105 area within this Investor Cycle. As we shouldn’t expect a Cycle top before week 10, we’re looking at a rally into February. Sentiment remains fairly subdued and the Cycle count is far too early for us to be playing this cautiously.

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences.

You're just 1 minute away from profitable trades! If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#

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Steps From a Correction

November 11, 2013/in Public /by Bob Loukas

There is no doubt that last Thursday's 20 point drop in the S&P marked the Half Cycle Low. The midweek (members) report detailed that the current Daily Cycle was consolidating via time and not price, a bullish development which points to further short term gains ahead. The report also suggested that a quick drop to the 20dma would mark the Half Cycle Low. The drop came on Thursday, with price subsequently springboarding off the 20dma in a classic buy-the-dip move. I expect speculators will again chase the market higher, but this time to a top across multiple Cycle time-frames.

It is difficult to analyze an asset that is behaving as irrationally as are the current equity markets. The theme is the same week in and out, and searching for justifications for the market’s extremes becomes pointless. The facts are simple – equities are in a late stage cyclical bull market which is being speculatively driven. The idea that the FED is supporting and feeding the market is only marginally correct, but the idea has nonetheless taken root and become a rallying cry for equity bulls.

Speculative markets are always a reflection of market participants’ collective greed. To support speculative behavior, participants formulate justifications which are often delusional. The “madness of crowds” is a well-known phenomenon that is all-too-common in the investing world. Each time – whether the late-90’s internet bubble, the mid-00s real estate bubble, or the current equities bubble – participants find a way to convince themselves that this time is truly different.

The speculative frenzy always reaches the point where those prudent investors who have remained on the sideline can no longer tolerate feeling foolish while everyone else is making so much money. So they dive in too, and each passing week brings more conversions to the bullish case. Eventually, everyone is a bull…and there are very investors left with the courage to stay out of the market. At present, this phenomenon likely explains why Investors Intelligence sentiment data is hitting extremely low numbers of bears. The spread between Bulls & Bears is now at its highest since April 2011, which was precisely where the market last topped. A 20% correction followed shortly after.

Sentiment readings from multiple sources are universal in their alignment – equity markets sentiment is at levels which accompanies significant Cycle tops. One example, Sentimentrader’s Smart/Dumb money indicator, currently reflects a “dumb money” level last seen at the 2011 top. And the spread between the two – Smart and Dumb money – is now at its widest levels since 2011. Both metrics are reliable indicators of an impending Investor Cycle top.

Courtesy Sentimentrader.com – The Smart Money Confidence and Dumb Money Confidence indices are a unique innovation that allows subscribers to see, in one quick glance, what the “good” market timers are doing with their money compared to what the “bad” market timers are doing.

Newsletter writers are also fully behind the current bullish move, as shown in Newsletter Sentiment readings. In the past, similar levels of bullishness have occurred at market peaks, leaving newsletter writers and their subscribers on the wrong side of subsequent moves. Although sentiment readings are not a perfect timing tool, they are directionally reliable. Current sentiment indicators reflect levels that are found only at major Cycle tops.

In equities, Investor Cycles typically average 20-22 weeks in duration. The average duration to the Cycle peak is 16 weeks, and the average duration from the peak to the Cycle Low is 6 weeks. The current Investor Cycle is stretched – it’s on week 20, yet is still making new highs. This is very unusual, especially with a preceding Investor Cycle that both rallied for 27 weeks before topping, and then experienced only a mild consolidation.

The current Investor Cycle is both stretched and extremely overbought technically. The move during the past year has been so relentless that the trade is now extremely and dangerously one-sided. Such stacked trades, after prolonged and impressive moves, almost always give way to rapid, wrenching reversals. And when Cycles align – in this case the Investor Cycle aligning with the longer Yearly Cycle – the reversal generally surpasses a typical reversion-to-the-mean event.

It’s clear that the Investor Cycle is well past due for a Cycle Top. A typical, mild retracement into an Investor Cycle Low (ICL) is 5-8%, but since the coming ICL will also mark a Yearly Cycle Low (YCL), we can expect the decline to be extra-deep. A YCL typically occurs every 12-14 months, and normally includes a 50% minimum retracement of the entire yearly advance. On occasion, the severity of YCL declines marks them more as “Corrections” than mild profit-taking events. A more severe Yearly Cycle Low can easily yield a greater than 10% correction of the top of the market.

During the past 100 years, these “corrective” Yearly Cycle Lows have occurred, on average, every 26 months. This generally equates to a more severe correction every 2^nd YCL. The most recent YCL in Oct 2012 was extremely mild. The summer of 2011, 25 months ago, was the last instance of a YCL that was also a true market correction.

Although I believe that a YCL – and a market correction – is clearly overdue, I do not believe we are at the end of the bull market. Although sentiment is stretched, and the current move is clearly speculative, over-bought, and over-extended, the divergences that typically accompany major 4 Year Cycle Tops are not present. So I don’t believe the current cyclical bull market will end with the coming Yearly Cycle correction. In fact, most breadth indicators support a further rally in early 2014, one where a final 4 Year Cycle high is made. This is the point where I believe the next bear market decline will begin.

That said, make no mistake – I believe a market correction (10% or more) is literally just days from beginning. The move should be rapid and punishing, taking just 4-6 weeks to complete. Every attempt to buy the dip will fail, and weak support levels built during the past year will offer little resistance. Recent market entrants will be slaughtered, and perma-bears will awake from their 24 month slumber. As profits mount on the Short side, new bears will gain confidence and their numbers will swell. Continued selling and the conversion of recent bulls will cause the decline to deepen, ensuring that the Yearly Cycle decline turns into a rout.

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences.

You're just 1 minute away from profitable trades! If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#

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Crude Oil – Headed Lower

October 21, 2013/in Public /by Bob Loukas

An excerpt from this past weekend member report.

Ordinarily, Crude should currently be screaming higher. The Dollar is down sharply, and equities have been on a tear. Yet, Crude has struggled to hold recent gains while risk markets have exploded upward. This is not a positive development for Crude’s upside.

I believe the weakness in this Daily Cycle foreshadows what lies directly ahead. As Crude continues to knock on the lower resistance area around the $100-$102 level, it is threatening a fall through that floor. Because the current Daily Cycle has already failed, a continued decline into a Daily Cycle Low is a fairly sure thing. The Investor Cycle is 27 weeks deep, well into its final decline into an Investor Cycle Low. As both the Daily and Investor Cycles are in decline, I firmly expect a break-down below $100 to begin next week.

Crude is the most important of all raw materials, so whenever the economy is doing well, higher demand generally drives higher Crude prices. But the world economy is not growing, at least not at a meaningful rate. So demand should remain slack at a time when supply is concurrently increasing. Demand and supply do not impact day-to-day price swings significantly, but they do impact the longer term Cycles.

At 27 weeks, the current Investor Cycle is running long. It’s also approaching oversold levels, so the current Daily Cycle is almost certainly going to be the last of the current Investor Cycle. Crude has another 20+ days to find its next major low, more than enough time for a volatile asset to fall significantly. A move of $10-$15 in just 4 weeks may sound implausible, but prior Investor Cycle’s highlight just how capable Crude is of large moves.

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences.

You're just 1 minute away from profitable trades! If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#

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Daily Cycle Trader

October 16, 2013/in Public /by Bob Loukas

The Daily Cycle Trader portfolio went live 3 months ago and we’ve now closed out the first quarter. It’s been a hugely successful launch to this portfolio and I wanted to share some of the specific results of the portfolio with you:

Total Portfolio Return (3 months): 15.56%

Total Trades: 26

Winning Trades: 16

Winning Trade %: 61.5%

Avg Winning Trade Profit: 6.4%

Avg Losing Trade Loss: -3.1%

The Daily Cycle Trader portfolio is a consolidation of our shortest duration trades. With the Daily Cycle Trader, we expect to trade at Daily Cycle highs and lows. These Cycles generally occur every 18-25 days, so there will be relatively frequent trading. Daily Cycle trades will generally utilize ETFs and leveraged ETFs.

SPECIAL OFFER: If you would like to take advantage of this new Portfolio, please consider a membership; we now have Monthly, Quarterly, and Yearly options. To celebrate the launch of this new portfolio, we’re offering a $28.95 off coupon which could be used against any of the membership options. Apply it to a monthly membership, making the first month just $1. Or use it against our already discounted Quarterly and Yearly memberships.

To sign up, go to:

Membership Page

Use COUPON CODE: Trader (code is case sensitive). This will drop the price by $28.95.

A Market Peak

October 3, 2013/in Public /by Bob Loukas

When we look at the current bull market in the context of prior bull markets, we’re immediately struck by the sheer size and strength of this move. Part of the strength comes from the deep generational selling event of 2008; just getting back to a reasonable valuation from such oversold levels represents a significant portion of the current bull market. The other driving force has been the FED, as its accommodative support has provided liquidity to the markets, and its Zero Interest Rate Policy has pushed yield-seeking money into equities from savings accounts and bonds.

At present, there are significant questions about the effectiveness of a continuation of the FED’s policies…at a time when the current bull market is “long in the tooth”. Although the lower and middle classes are generally much worse off than they were prior to the financial crisis, U.S corporations have rebounded and are now much leaner, with balance sheets that are in better shape than they were prior to the crisis.

But significant questions about future growth have emerged at a time when equity markets are pricing in a substantial macroeconomic recovery, including a return to blistering, double-digit growth. Although markets have climbed higher, mainstream consumers have been unable to participate in the “recovery”, so corporate earnings have languished at low single digit growth rates. In the face of tepid growth, already-rich market valuations have continued to rise. It’s these types of overbought, overextended, and overvalued conditions that have presaged the end of the great bull markets of the past.

Below are the top 5 performing bull markets in history. Interestingly, and surprisingly, the current bull market is number 4 on the list. Upon closer examination, we see that the top 3 bull markets occurred as part of a general secular bull market. Meaning they were part of a period of true economic expansion, a period of real income growth and wealth creation. The current cyclical bull market, however, appears within a greater secular bear market, which makes this the best performing bull market (in terms of performance, not time) of any secular bear period in history. From a timing perspective, the 1970’s bull market (within a Bear Market) ran for 70+ months, while the 2002-2007 bull market (again within a Bear Market) was 55 months in duration.

The point is, simply, that the current cyclical bull market, or 4 Year Cycle, is now extremely over-extended from both a performance and time standpoint. With an economy that continues to languish and a Yearly Cycle that is overdue for a significant decline, it’s difficult to expect that the current bull market will continue higher for another Yearly Cycle.

Courtesy of a very accommodative FED, we have two back-to-back extended 4 Year Cycles. Both cyclical bull markets were in the top 4 of the longest and best performing in history, but 13 years since the 2000 peak, the S&P is still only barely positive. From a real (inflation-adjusted) perspective, the markets are down over this 13 year period, and that’s at the end of the current bull with a peaking 4 Year Cycle.

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences.

You're just 1 minute away from profitable trades! If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#

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The Final Run

September 26, 2013/in Public /by Bob Loukas

Back on August 29^th, with the S&P on 1,644 and oversold, the bears were confident that it was finally going to be their time. But Cycle followers knew better, as the S&P was moving out of a deeply oversold Cycle Low and the trend was firmly still to the upside. That day I published this "Buy on Cannons" and called for an immediate rally back up to 1,710.

Of course since then, the equity markets went on to make new all-time highs, on the back of the FOMC announcement. That surge placed the S&P into deeply overbought territory, and the Cycle had quickly stretched far ahead of itself. So it has been no surprise to see weakness in the equity markets, I called for a Half Cycle drop last week (within the member reports) and now it’s progressing lower as we expected. It’s taken a nice little fall, yesterday being the first 5 consecutive day decline of 2013. But the reversal is likely in its closing stages now; it is after-all just a Half Cycle decline. Up to the close yesterday, the S&P had marked a 38.2% retracement of the Daily Cycle. Looking further below, the 50% retracement and 20dma level are down at the 1,680 mark, and that should provide a floor to this Half Cycle Low decline. Up until that 50% retracement level, this would remain a normal retracement of a very powerful Daily Cycle.

The coming bounce is going to reveal so much about this Investor and Yearly Cycle. This bounce should also be the final opportunity to make further all-time highs, for both this Daily and Investor Cycle. I believe any new high will mark the top of both Cycles, and from there it will be primarily down for another 1.5 Daily Cycles (60 trading days). As equities are well overdue to begin the decent into what promises to be a deep, corrective (at least -10%) Yearly Cycle Low, I have a suspicion that the coming bounce will fail to make new highs.

We’re headed for a showdown in Washington over government funding and raising the debt ceiling. Both parties are playing a dangerous game of cat and mouse with world markets, and they’ve now both boxed themselves into a corner. At this point, the rhetoric has been so heavy and passionate, that it will be hard for both parties to find any common ground which avoids looking as a defeat in the eyes of their constitutes.

I have little doubt it will end with some form of compromise, a last minute aversion of a crisis. But the anxiety and panic this will cause should be too much for the equity markets, as I believe this will be the ultimate catalyst for a significant fall into the Investor and Yearly Cycle Lows. Don’t get me wrong, this will not be the reason, rather simply a catalyst to accelerate the turning of a Cycle. A move towards a Yearly Cycle Low is inevitable.

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences.

You're just 1 minute away from profitable trades! If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#

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A New Cycle Approaches – Gold

September 10, 2013/in Public /by Bob Loukas

Gold is down another $25 this morning, while Silver is taking the heaviest losses of the Cycle. As Silver led the Cycle and has for the most part avoided any significant decline, this must now be the final decline into the 2^nd DCL. Traders should focus on the opportunity at hand and ignore the severity of the decline. The Financial Tap members know that this remains a normal and expected decline; they’ve been following the last few Cycles play out to expectations. In the past weekend premium member report I wrote:

“Until the current Daily Cycle completes, the immediate trend remains to the downside. We are 3-5 sessions from a low in the current 2^nd Daily Cycle. This event is within our framework of expectations; Daily Cycles have ended every 24-28 days for many decades. When the next Daily Cycle (the 3^rd) gets underway, I believe that the bear case for Gold will diminish considerably, and we’ll see a rush into the metals that will drive price significantly higher. “

Today is the 3^rd Day (since that report) and now within the expectations for a Cycle Low. Gold touched $1,357 (within my expected $1,350-60 range) this morning and within the timing band for a Cycle Low. Technically too this Cycle is not necessarily at oversold (Cycle Low) levels, but again deep enough for a bullish Cycle to qualify. So there is a decent chance that today will mark the DCL, but I still advocate that traders be patient getting overly long; DCL’s can get nasty and overshoot the mark to the downside.

Traders/investor should not lose sight of the bigger picture here; gold is still likely to exceed the $1,500 in the coming month. That's would mean a 3rd straight bullish Cycle with well over $100 gains, and that's where the opportunity lies! This report (Gold is Finally Ready to Launch) published over a month ago, outlines what unfolded in the prior Cycle along with the expectation for another big Cycle to come.

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, and $USD Cycles. Along with these reports, members enjoy access to three different portfolios and trade alerts. As these portfolios trade on varying timeframes (from days, weeks, to months), there is a portfolio to suit all member preferences.

You're just 1 minute away from profitable trades! If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#

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Don’t Fight the Trend

September 5, 2013/in Public /by Bob Loukas

When it comes to the Daily Cycle, especially 1^st Daily Cycles from a series of up trending Investor Cycles, there is only so much downside one should expect. That’s essentially what we have in the equity markets, a long history (4 years) of 1^st Daily Cycles finding the necessary bid to power out of Cycle Lows.

In this particular case, there is now little doubt that a new Cycle is underway. The Cycle extended out to 46 trading days (4 more than normal) and was technically a much deeper correction than one would expect. The oscillators have turned higher, the MACD should cross within 3-5 sessions, and the S&P is back above its 10dma. A little more strength and the trend-line will be broken too.

So with a new Daily Cycle we should see relative strength in early September. Although I believe one should now treat the equity markets with caution, the fact remains that the overall trend (Investor Cycles) is up and every single 1^st Daily Cycle Low of this past 4 Year Cycle has gone on to make comfortable new Investor Cycle highs.

Those are some formidable odds for the bears, and I see no reason why one should go out on a limb by trading against those odds. This is why I expect a move to 1,690 should be easily achieved in the coming weeks. Beyond that a test of the all-time highs and a surge into the 1,700’s simply cannot be ruled out.

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