Here is a table showing just the last 3 secular commodities bulls and associated solar maximums. I have created a forecast along the top row for the current cycle, based on them.
I found it help clarify what could come to pass. Gold could potentially not peak until late 2013. But peak inflation should occur fairly close to the solar peak, suggesting oil/food, at least, should surge ahead of that, and gold should be performing well by association. Real equities valuations could potentially not bottom for another few years, if a recession begins later or a double recession occurs. It doesn’t alter my strategy or positions. It perhaps implies a little more patience is required in seeing it all play out.
The chart below shows the current Dow chart overlaid on the 1980-82 Dow chart. 1980 was the US election year like now, and it was also a parallel secular commodities and solar maximum. A similar unfolding would see equities track sideways to upwards into the elections later this year, before down into their final low in 2014. I would note though that the solar maximum takes place after the elections this time, not before like back then.
Source: Charles Githler (Hat tip Juan)
Turning to the current markets, Tiho did another great summary yesterday at his Shortsideoflong blog, and my thinking is very much aligned with that. I will just add that I continue to expect a bit more pro-risk upside into this weekend’s new moon, so that means today, but I expect to keep my bounce longs as the upside hasn’t been decisive. As my equities longs are fairly small, I would happily add lower if this turned out to be an extended B wave in an ABC down. Sunspots continue to increase. Economic Surprises continue to flounder. Asia continues to outperform currently.