This post is a short excerpt from the weekend Financial Tap member report.
Gold spent 11 sessions moving lower from the top of the Cycle, giving back 6% of the gains. Judging by the blogosphere reaction during that decline I get the impression that very few people believed in this Cycle. From what I can tell a majority expected gold to once again rollover in a steep decline. That’s just the problem with bear markets; they scar us to the point where we can’t fully embrace potential when we see it.
As the longs started bailing out in fear and the bears gained confidence again, gold come out with a 2 session $40 pop. In its wake gold confirmed an end to the 1st Daily Cycle that in retrospect turned out to be a bullish Cycle. From the table below we see that 1st Daily Cycles (excludes bear market Cycles) top on average after gaining 10.6% in some 20 trading days. This daily cycle gained 14.3% to a top taking just 16 days. In the end it was a bullish 1st Daily Cycle which from a timing standpoint ran the expected 27 day average.
Perfomance of Gold 1st Daily Cycles (2000-2013)
The surge out of the Cycle low regained back half of the prior Cycle losses in just one session. By the close of Day 2 gold has regained the 10dma and closed above the declining Cycle trend-line, ending what has been a fairly textbook Cycle transition. In my opinion we’re still looking at a bullish Daily and Investor Cycle that have none of the characteristics matching the Cycles that haunted investors since last summer. What I expect now is for more follow through early next week with a quick move above $1,348 (current IC high). This next target will likely offer some resistance with a possible 2-5 session consolidation period.
Ultimately though I believe in this gold Investor Cycle which means I’m expecting a lot from the 2nd Daily Cycle. Looking back at the prior 2nd Daily Cycles of this 13 year bull market tells me we should expect another 10%+ gain here over the next 17 sessions. An average gain puts this new Daily Cycle topping out at around the $1,400-15 area by the end of August. However if we see a similar Daily Cycle to the last one it will be topping out around $1,450.
Perfomance of Gold 2nd Daily Cycles (2000-2013)
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. If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#
Switching to Auto Pilot
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Laying Out Bear Traps
/in Public /by Bob LoukasThe Bollinger Bands on the S&P are as tight as I’ve ever seen and there is no doubt now that the Daily Cycle has topped. This being Day 37 (of an expected 40 day Cycle) this action is certainly part of a decline down towards a Cycle Low. But the problem (for bears) is that the S&P isn’t dropping in price! I will grant you that the chart is looking a little “toppy” here, but at the same time the bears have unsuccessfully tried to roll this market over for 17 sessions now. You will notice that from a technical and detrended price standpoint this Cycle is well and truly approaching DCL levels.
A divergence between price and technicals here tells me that the S&P is consolidating its massive Cycle gains and is readying for the next leg higher. I don’t see a significant drop as a real possibility here simply because it’s too early in the Investor Cycle and also now fairly late in this Daily Cycle. What we’re more likely to see is a solid 1-3 day drop this week to paint a very convincing breakdown, but that would only serve to trap in the bears. The problem for the shorts is that the Daily Cycle is already deep in its count and it will not support the type of sustained move they’re expecting.
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. If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#
Midweek Market Update Report
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Gold is Following Through
/in Public /by Bob LoukasThis post is a short excerpt from the weekend Financial Tap member report.
Gold spent 11 sessions moving lower from the top of the Cycle, giving back 6% of the gains. Judging by the blogosphere reaction during that decline I get the impression that very few people believed in this Cycle. From what I can tell a majority expected gold to once again rollover in a steep decline. That’s just the problem with bear markets; they scar us to the point where we can’t fully embrace potential when we see it.
As the longs started bailing out in fear and the bears gained confidence again, gold come out with a 2 session $40 pop. In its wake gold confirmed an end to the 1st Daily Cycle that in retrospect turned out to be a bullish Cycle. From the table below we see that 1st Daily Cycles (excludes bear market Cycles) top on average after gaining 10.6% in some 20 trading days. This daily cycle gained 14.3% to a top taking just 16 days. In the end it was a bullish 1st Daily Cycle which from a timing standpoint ran the expected 27 day average.
Perfomance of Gold 1st Daily Cycles (2000-2013)
Perfomance of Gold 2nd Daily Cycles (2000-2013)
Building Blocks
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Midweek Market Update Report
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The Dollar Showing Signs of a 3 Year Cycle Top
/in Public /by Bob Loukas$US Dollar Cycles
This is only Day 3 of a new Daily Cycle, but the Dollar is struggling to lift off. Normally after a long decline and consolidation we would be looking at a much more powerful response here. Since the first Daily Cycle rallied 17 straight days to make new 3 Year Cycle highs, this 2nd Daily Cycle should be following through with more upside. It's a little early to tell, but so far I'm not impressed with the muted response.
Instead the initial 4 week surge in June to marginal new Investor Cycle highs now exhibits signs of a bull trap. Unless this Daily Cycle gets busy putting in a similar rally as it did in the 1st Daily Cycle, then I will remain skeptical. Because the 3 Year Dollar Cycle is now well past its midpoint, we must now entertain the thought that the recent highs were also the top of the 3 Year Cycle.
We don’t have any confirmation of a pending Cycle failure, but the recent weakness here is most likely confirming that the FED is not going to be tapering anytime soon. As long as we don’t experience a crisis like event that would spike the dollar, I believe that the coming equity bear market will force the dollar down towards its own 3 Year Cycle Low. True equity bear markets normally coincide with a drop in the dollar and the dovish stance the FED will maintain during a bear market ensures the dollar will fall too.
God Save the King
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The FED Keeps the Party Going
/in Public /by Bob LoukasYesterday’s GDP release of a 1.7% gain underscored just how lethargic the economic recovery remains. Now 4.5 years since the last recession, the fear for the FED is that the business Cycle is in the process of turning over. Forget the rhetoric that the economy is going to gain steam and start growing quicker; we’ve been hearing this same nonsense since 2010. The fact remains that the FED is keeping the economy artificially elevated and the best they can do is keep it right above stall speed.
So when we hear talk of tapering asset purchases, I really do not see how they could do this. The last time that thought gained any traction bonds sold off very quickly and this forced borrowing costs to spike. I seriously doubt the FED is going to allow the stock market to tank and interest rates to spike right when the economy looks the most vulnerable.
The FED’s message in the end was that as long as the economy remains near stall speed then asset purchases at $85 per month will continue. They say if the economy improves enough then they will begin tapering purchases, but I still see that as being years from reality. To me the new black swan event is the need for even larger asset purchases. The thought of a new round of QE is never discussed, but I believe there is a greater chance we see more QE before we see any tapering.
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. If you’re interested in learning more about The Financial Tap and the services offered, please visit https://thefinancialtap.com/landing/try#
Midweek Market Update Report
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