If the secular commodities finale is to play out as I predict, then this should be about the point that commodities, led by gold, start to outperform. Supporting this is Gann methodology, which suggests commodities should take off in a large up-move into 2013 as of around 21 November. Here is my suggested historical mirror, with the previous square showing how things might progress:
What could give commodities such a thrust? Strengthening in China for one, and we see this in the latest data. Industrial production rose 9.6% year on year, retail sales beat expectations at 14.5% year on year, and auto sales rebounded strongly from September’s weak number. Commodity technicals could also assist, with gold having bounced at the 200MA again which has largely supported the secular gold bull to date, soybeans having retraced sufficient of their mid year gains to reach just 8% bullish daily sentiment, and coffee having reached an all time record speculator short position.
Tame geomagnetism could also help, and it can be seen from the chart below that the geomagnetic model is finally showing an upturn into year end, as negligible geomagnetism is forecast (all models have been updated this morning):
Such tame geomagnetism should also be positive for equities, with Presidential seasonality too:
Potentially we could see pro-risk wash out a little more in sentiment before take-off next week, but I predict the next move will be a rally in both stocks and commodities whereby equities (globally speaking) re-reach for their Q3 highs, but make negative divergences in internals (if they are to be topping out), whilst commodities outperform upwards. I am watching leading indicators to judge whether there is ‘sufficient’ growthflation ahead to enable this scenario. The rest should be fulfilled by the influence of solar maximum activity on humans collectively. 2013 is the big test for my solar theories.
I leave Kuala Lumpur tomorrow for 6 nights in Penang, continuing to explore Malaysia.