As Things Stand

The latest CB leading indicator summary looks unequivocally strong:

28mar20131Source: Conference Board

US economic surprises are also positive and in an uptrend:

28mar20132Source: Ed Yardeni

However Eurozone economic surprises are conversely in a downtrend, and the relationship shown below suggests this disparity is the dominant factor in the declining Euro v USD FX.

28mar20133Source: Beleggenopdegolven

If we look at Eur-USD together with other specific pro-risk proxies, namely the MSCI World Stock Index, the CCI Commodities index and 30 Year Treasury Yields, this is the picture:

28mar20134Source: Bloomberg

The collective trend was up from November to the end of January. Since then it would appear that we have been in consolidation/correction mode – and this is a fit with the 5-models-in-alignment (see my Tools For 2013 post).

Currently, cheap and unloved assets are Euro, coffee, sugar and gold miners, whilst those reaching into overbought and overbullish zones include the US Dollar, Dow Transports and SP500. If we look at the bullish percent over call/put ratio for the SP500 we can see that we have been recently oscillating in the frothy zone which led to a swing top twice in 2012. However, 2010 and 2011 show things could potentially get frothier, with spikes up to 150.

28mar20136

The CCI Commodities Index and crude oil are both into the noses of large triangles, suggesting an imminent break out one way or the other. Here is crude:

28mar20135Crude has accelerated this last week with good momentum, but now encounters resistance. It does not have fundamental support from stockpiles, as they continue to be above seasonal average, but I suggest it is the global growth story that is the main reason for the advance.

Meanwhile, coffee, sugar and some other agricultural commodities are at secular bull rising support, which also puts them at a key decision point – either a break down or the start of a new upleg. I still believe the greatest likelihood is of commodities taking off and becoming the outperforming class going forward (based on sunspots, secular history, late cyclicals), and I am positioned accordingly. However, I continue to wait for specific supporting evidence to confirm this, namely a new high in sunspots, a technical break out in the CCI, and for any pullback in stocks to be counter-accompanied by an advance in commodities.

This Saturday is the start of the lunar positive period. Is there a ‘highest probability’ stock index trade on offer? Well, there is now a clear change in the geomagnetism trend, as shown here:

28mar20137

A lower low and a lower high means the geomagnetic trend can no longer be classed as up. In addition, there is some frothiness in stocks as identified above. Therefore, as per the make up of my highest probability trading analysis, I am not going to take this one.

I am now back in England.

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33 thoughts on “As Things Stand

  1. John,

    How do you render “Cummulative trend geomagnetism plus lunar lines” on a chart. Do you have any indicator for Metatrader for this ?

    Regards
    AJV

    1. Hi Robert
      There are components in the solar wind that has a real-time correlation with stock markets. Sometimes it works wonderful, other times poorly. More useful are the cycles in solar wind of a bit less than1 month and 6 months
      JAN 🙂

      1. Thanks Jan, will look more into it. Still new to all this. Just starting to get it into my head. Fascination is a mild understatement =). If you ever come to Stockholm let me know. We can have some cold bear and discuss the sun ;).

  2. I’m not sure if you guys have covered this, but there’s a short video here explaining how the current solar cycle could have a double top, which thereby explains the current lack of solar activity:

  3. John,

    Copper seems to be in a huge downtrend. Agriculture crashes today. Silver and gold seem very close to a big fall. Has the secular bull in equities started?

  4. Hi John. Havent checked my SC24 prognosis for a while, but this cycle is behaving somewhat strange. The top so far is/should be too early for a solar maximum, however time is also running out for this cycle.
    I have a strong tidal cycle this summer that could be solar maximum, and the other alternative is the tidal peak early winter 2014, which is in fact a bit too late for maximum.
    So the problem is
    -the top so far is too early
    -the low activity now makes a summer 2013 top less probable
    -the winter 2014 top is a bit too late according to my cycle/planetary work

    Now, any of these alternatives could be right and not be in conflict with my work (within my interval), but I would have “preferred” to see the maximum this summer. So just have to wait and see. I am beginning to wonder if the maximum in fact has been, but we should anyway get some kind of double/lower top in 2013-14.

  5. the 2011-spike in solar activity is what looks anomalous, and the 2012-top was a possible SC-maximum (around the Venus transit).
    So when ignoring the 2011-top, the 2012-top could have been the real maximum. When looking at the planetray cycles, they all loose “momentum” from around September 2013 to January 2014. After that there is nothing that “feeds” solar activity.
    So the three probable solar maximum from my work would be summer 2012, summer 2013 or early winter 2014. But could be that some anomalous effect actually made 2011 the maximum.
    See my page http://www.sibet.org/solar/index.html

  6. John, is there a place or can you connect Bradley siderograph from all previous years available and connect the ends of them side by side. I found this interesting to do. Might even go as far as to say it shows evidence of a double peaked solar cycle. Overlay it with lunar and or solar cycle. You mentioned in past you pay less attention to the Bradley siderograph, but all this talk about a desirable peak soon. A big change in the siderograph occurs in the full moon phase in June (22nd). May also be something to write about in a future post. Comparing alternative scenarios to Bradley and lunar phase overlays? I am reading more about the algorithm to make sense of what number are foretold in the picture. The informatics is interesting.

  7. “The second reason for being cautious about the US stock market is that the Bradley Model, which is based on planetary alignments, will shortly turn down. The Bradley model correctly called the current rally by bottoming out in December 2005, and will turn down again in November 2006. And while I would certainly not bet my farm on the basis of the Bradley model, its record compares rather favorably with the forecasts of Wall Street strategists and analysts.”, Marc Faber

    Source: http://www.ameinfo.com/81263.html

  8. Read somewhere that Bradley gave really bad performance over the long term since the 80s but have not tested it myself (negative 7% so still buy and lose would have won). Any ideas on it (one of those things to do)?

  9. Also for anyone interested in Natural Gas. I found this which gave a lot flavor to the discussion Danny and John had about commodities. http://tinyurl.com/bl8h6ea
    It has a lot of “funny-mentals” but as both of you discussed both excitability and weather drives commodities which I think ultimately are driven by the planetary cycles. The key of exact prediction will always be difficult and probably need an understand on a quantum physics level to get it perfect but we can come close. Sunspots increase warm weather but also increase the probability of hurricanes – what ultimately drives a commodity such as natural gas is a set of dynamic forces that may more or less be affected by the cycle. The interrelationship between commodities is important too. Say for example nat gas explodes over 4 into 6 and beyond, I would bet a lot that other commodities will follow as the inflation mantra starts going etc.

    1. I mean that hurricanes increase with low sunspot count according to research but it is also for sure very dynamic. Looking at that dynamic a reversal in natgas price will surely come at some stage but could come both through excitability or sunspots going down given the effect of hurricanes.

      1. “The relationship between US hurricanes and solar activity is investigated empirically. First, a relationship between the probability of a US hurricane and the solar cycle is shown conditional on sea surface temperatures (SST). For years of above normal SST, the probability of three or more US hurricanes decreases from 40 to 20% as sunspot numbers (SSN) increase from lower to upper quartile amounts. Second, since SST is in phase with the 11-year total solar irradiance cycle but upper-air temperature is in phase with ultraviolet radiation changes on the monthly time scale, an anomaly index of SSN is constructed. The index is significantly correlated with US hurricanes and major US hurricanes over the period 1866-2008. The chances of at least one hurricane affecting the United States in the lowest and highest SSN anomaly seasons are 68 and 91%, respectively. A similar relationship is noted using hurricane records spanning the period 1749-1850, providing independent corroborating evidence linking solar variability to the probability of a US hurricane.”

        What may be interesting to research is the volatility of sunspots i.e. the changes between months and see how it affects commodities as it has a positive probability affect on natural gas. We are now in a solar cycle which is somewhat choppy it seems.

        “Evidence linking solar variability with US hurricanes”
        Robert E. Hodges* and James B. Elsner

    1. Nice been to that site before but had missed that image. PDO, NAO, and ENSO all interoperate and meteorologists are researching more about the sun’s influence on upper atmosphere. Just does not seem to be any one connecting the seemingly unrelated. I have spoke to John by email about these because it can in theory help firm up data. I went to your site Robert, so figure this is of interest to you as well.

      1. Thanks Danny. I have heard of him before. I do believe John and company will have to adjust their sunspot count numbers for what constitutes highs in coming solar cycles. That is my gut take on several years of reading various papers and sources. No scientific research myself. Good point on investing in energy and agriculture commodities, agriculture technologies (get more out what exists), less supplies in colder weather. I don’t think a mini ice age it will last until 2055 as Abdussamatov states, but 2039. I have no direct expertise there though. As a amateur meteorologist and computer scientist, I have always wanted to get more into modeling runs of hypotheticals.

      2. Hi wxguru,
        If you are an amateur meteorologist, then you probably also know Piers Corbyn (http://www.weatheraction.com/). His accuracy on long range forecasts and extreme weather events is amazing. He uses things like sunspot cycle, geomagnetism and solar flares. He also calls for a MIA (mini ice age) coming up. Some people make good money using his weather forecasts to trade agricultural futures.

  10. Looks like we are very close to the resolution of the bull/bear status of commodities! Corn is looking extremely bearish. Copper could be in a 3 of C after a B to a new high – like the 1929 top. But it could be the final shake-out before the final rally, but looking less likely.

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