Last Quarter Of 2014

September finished as a down month for all US stock indices, which means the peak in margin debt should remain as February. Cross-referencing: SOCL, RUT and Nasdaq breadth peaks are still signalling a likely Feb/Mar speculation top, whilst biotech remains tentatively supportive, at a double top with March. The smoothed solar maximum continues to look like it occurred around March, so the whole picture remains strong for a sun-driven speculation peak around March and a period of ‘borrowed time’ for equities since.

1oc9

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The SIDC chart shows that they are still running with an alternative in which the smoothed solar max double tops ahead at the end of the year, but the majority of other solar scientist models are aligned to their SC prediction (smoothed max behind us, circa March). By cross-referencing with measures of speculation above, the behind-us scenario gains further weight.

The Russell 2000 has now reached the key technical level around 1100 for triggering potential waterfall declines, and it arrives here at the most bearish point in the year, the seasonal geomagnetic low of October supplemented by downward pressure into the full moon of next Wednesday 8th.

1oc1Conversely, if the RUT and other US stock indices can hold up through the full moon and the rest of October, then a year end peak in large caps would gain weight, with the seasonal upward pressure out of November. As things stand though, the recent collapses in junk bonds and inflation expectations, the September declines in all stock indices and the acuteness and maturity of many different stock market indicators (which I have detailed on this site) all support the October breakdown option.

Turning to other markets, the US dollar is in a parabolic ascent, the Euro a parabolic descent, and the slide in precious metals continues. All three show extremes in positioning and indicators that are suggestive of a reversal, and the parabolic trajectory of the FX pair suggest a snapback should be imminent, but when?

1oc8 1oc5I see it as linking in nicely with the situation in equities. If US equities break down through the key technical supports (to clearly kill the prospect of another v-bounce), then gold should at that point reverse course, and the dollar may then be sold off. Much of my recent work on stock market indicators shows that the case is strong for equities to break down without delay, suggesting these intercorrelated reversals ought to indeed occur here in this pertinent window at the beginning of October.

The rising Dollar negatively affects 45% of S&P companies. Earnings season for Q3 gets underway next Wednesday, and the predicted earnings growth rate is 4.7%. This stood at 8.9% on June 30th and 12.2% at the start of the year. For the YTD picture, US earnings growth forecasts at the start of 2014 were Q1 4.4%, Q2 9.2%, Q3 12.2%, Q4 13.5%, whilst actuals are Q1 2.2%, Q2 7.7%, Q3 4.7% (est). In other words, to justify valuations, average quarterly 10% earnings growth was required and projected, but the reality looks like less than half that. As earnings season typically have a ‘sell’ or ‘buy’ theme, I suggest odds are this one will be a sell (as reality dawns), and help pull down equities in October.

At the macro economic level, economic surprises in Europe and China continue to languish negative, whilst the US remains positive. The global real narrow money leading indicator predicts a slowdown once we hit 2015, whilst ECRI leading indicators for the US remain poised at a low level from which a fall in equities would likely tip then negative. This brings me back to what leads what. I recently covered that equities in fact tend to lead leading indicators by a month on average and that previous major tops reversals in leading indicators only occurred once equities had made initial hard falls, which in 2014 they have yet to.

This in turn leads me to the question of whether equities could yet have a second chance peak ahead, like in August 2000 (after the first March peak) or October 2007 (after the June top). In both those scenarios, large caps dropped around 15% before rallying to the second chance peak, whilst leading indicators diverged negative into the second chance peak. The possibility here would be for large cap stocks to break down in October, perhaps 15% again, but then rally back up towards the recent peaks by year end, perhaps for a 31 Dec second chance (lower) peak.

Well, the speculative targets of RUT, SOCL and IBB all show second chance peaks already. Developments in margin debt, HYG:TLT, NAAIM, Rydex and various mature divergences also suggest we should be at second not first chance peak. But the price patterns in large caps don’t really fit. UBS side with the year-end second chance prediction, shown below, yet beneath that their TNX divergence chart is another indicator conversely suggesting we should be at second chance peak already:

Screen Shot 2014-10-01 at 12.12.28 Screen Shot 2014-10-01 at 09.56.18I suggest that if we are post-second-chance but having ‘cheated’ a decent first chance correction (and this is the picture painted by most stock market indicators), then the falls from here should be twice as hard and echo action post-second-chance in 1929, 1987, or 1989 (Nikkei) whereby the falls become waterfall declines or panic selling. If the selling is more measured and back and forth then we should alternatively look to indicators to washout and align for a bottom at perhaps a 10% or 15% correction, before a potential rally into year end.

This last quarter was the best quarter so far for viewing stats on solarcycles.net. The best month was this last month (shown below), the best day just yesterday. So, thanks for reading my analysis and thanks to all those who contribute and make for a good discussion board.

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To sum up, I’d give 80% odds to equities falling in October through technical supports and cementing a new bear market. I’d give 20% odds to equities holding up into or making a second chance peak at year end (both around 31 Dec). I don’t have a case for a bull market extending into 2015, as this would invalidate a variety of historically reliable indicators with different angles on the market.

As this is the last quarter, it seems appropriate to stick this up: predictions from the professionals at the start of 2014 for year-end. We can see that all were bullish on equities, predicting an up-year (accepting that they largely play it safe and align with each other). As you know, I was bearish at the turn of 2014 and always expected us to end the year in a bear market, so it’s a black mark against me if we don’t. But I believe the weight of evidence still supports the markets swinging to me by year-end, so let’s see at 31 Dec.

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218 thoughts on “Last Quarter Of 2014

  1. From thefelderreport.com —

    Looking back through history, it’s interesting to note that each of the major peaks in the stock market over the past 40 years has been preceded by a peak in profit margins.

    In 2007, the stock market peaked about four quarters after profit margins did. In 2000, stocks peaked about ten quarters later. Stocks peaked about eight quarters after profit margins leading up to the 1987 crash. The only outlier I found (I admit it’s a small sample size) was the 1973-74 bear market where profit margins and stocks peaked simultaneously.

    How is this relevant to today’s market? Well, profit margins peaked this cycle way back during Q3 of 2011 (eleven quarters ago) but they never really dropped much until Q1 of this year.

    I have argued that a reversion in profit margins poses the “dominant risk” to stocks. Now that they seem to be reverting, we will soon find out if that’s true.

  2. i believe that a collapse is ” fait accompli”.
    The R2K yesterday took out the August low, thus making a lower low after making a lower than July’s high In early September and also recently making a “golden cross” to the down side.

    The market is still in the denial stage amd can’t digest what is happenning before it’s very eyes but when the other indices catch up to the R2K technically and begin breaking previous lows the down side panic begins, the evidence is literally EVERYWHERR.

    http://stockcharts.com/h-sc/ui?s=$RUT&p=D&b=5&g=0&id=p05002114996

      1. Duncan, I knew someone would say speak up. The death cross is a confirming indicator not a leading indicator. In this case it came with a change in trend and as such is confirming the NEW trend.

  3. Yes indeed it feels like Crunch time. Regarding the viewing stats, I don’t mean to steal your thunder John, but a fair chunk of that was me …
    Sincere thanks!

        1. major cause of WW II was the French. Their terms in the armistice that ended WW I broke the German economy which prepared a fertile soil for extremist groups to come to power.

  4. Get Ready

    A Puetz Crash Window opens tomorrow.

    Several years back, a cycle watcher named Steve Puetz attempted to see if eclipses and market crashes were somehow related. He studied eight of the greatest crashes in financial history, from the Holland Tulip Mania of 1637 to the Nikkei of 1990. He found that market crashes tend to occur near full moons, and that the greatest number of crashes start after the first full moon after a solar eclipse, when that full moon is also a lunar eclipse. Puetz found that all eight crashes occurred six days before to three days after a full moon that occurred within six weeks of a solar eclipse. The odds of that being a coincidence, Puetz calculated, are less than 1 in 127,000.

    Puetz was not saying that so-called “Puetz windows” always lead to crashes, but that if a crash is going to occur, a Puetz window would be the likely time frame in which it would happen. Puetz windows tend to occur every year or two, while crashes are rare events.

    Next Wednesday, October 8th is a full moon. It is within 6 weeks of a solar eclipse, which is October 23rd. Sixs days prior to the 8th till 3 days after.

    So the window is October 2nd – October 11th.

    In my view, it’s just in time.

    1. Hi Specie,

      You wrote:

      ” He found that market crashes tend to occur near full moons, and that the greatest number of crashes start after the first full moon AFTER a solar eclipse, when that full moon is also a lunar eclipse.”

      The solar eclipse is on 23rd Oct but the lunar eclipse is on the 8th Oct which is before! So it isn’t a crash window (although I have seen various definitions on the internet). As you say though, many crash windows pass with nothing happening but it is worth bearing in mind.

      Regards,

      Kerry

      1. Thats not quite right. What you have identified is the general pattern. The crash window is either the lunar eclipse full moon itself or one full moon cycle away from the lunar eclipse, that is within 6 weeks of the soalr eclipse. That is the crash window.

      2. Hi Kerry,

        Glad you spotted that. Puetz wasn’t concerned about the order of the eclipse. He said that the greatest number of crashes happen when full moon was after the eclipse. I think it was six crashes in that order and two crashes in the other order. I should also note that the eclipse on the 23rd is a partial. He made no distinction between full and partial eclipses.

        i still put the crash window 10/2 – 10/11

    2. Thanks for that very timely reminder Specie! – “…if a crash is going to occur, a Puetz window would be the likely time frame…”

      In the previous crashes between 1637 and 1990 nobody knew to expect a crash window. Today we now know to expect one, and with all these indicators etc pointing to waterfall declines, I suspect that the markets have already priced-in the possibility of a crash…

    3. Does this timing refer to the high before the crash or a big crash day itself? Other timing indicators lead me to Nov 6-11 window for the final HIGH; that is the first full moon after the Solar Eclipse but is not itself an eclipse

  5. To anyone: What sectors, companies, commodities will bottom first mid-crash and thus be individual buying opportunities? I see solar as an inevitable disruptive technology. Predictions?

  6. Looks like Steve T’s ‘ugly Tuesday’ arrived a day late. He had a target of 1954 on the S&P. Great call Steve T, we are nearly there!!

    For those interested Steve T believes this is a temporary bottom and hence a bounce will develop.

    Any further projections on size/time scale if you are around Steve T?

    Thanks.

    1. be very care in your assumption that GDX wont fall with the market or that metals wont get hammered

      what is coming is a deflationary liquidation

      all assets will be up for grabs eventually

  7. I’ve been saying KISS for a couple of weeks now – saying that using the 3 bar net line elder triggers with elder bull/bear and the 13 ema

    along with something like this will keep you out of short term trouble…

    http://stockcharts.com/h-sc/ui?s=$NAHL:$NATOT&p=D&st=2014-03-14&en=2014-09-30&id=p15082276503&a=369189956&r=1412181756870&cmd=print

    there were never any buy signals anywhere except some improvement in Absol Breadth and CPCE

    what is really interesting is that this is going to get pretty ugly with the put/call ratio in a bullish stance!

    1. Ben, not if the broader markets go much lower gold won’t. This action is just a prelude to what is coming.
      The USD is going crash under the weight of foreign investors selling US stocks. Any move to US treasuries will be overwhelmed by USD stock liquidations and foreign fund repatriation.

      I have come to realise that I am really only one of the very FEW true contrarians that posts on here. It is currently almost impossible to find any analyst or anyone on this site that is not not seeing gold hit $1k in the forseeable future, which all but guarantees it won’t.

      I am actually grateful to the shorters of gold and gold stocks in recent weeks that have allowed me to add at lower prices.

      Cheers

      1. You and I agree on gold and gold stocks at this point in time, Allan. There are way too many gold bears now, just like there were in June and December of last year, and far too many stock market and U.S. dollar bulls. These extremes will (as always) be corrected, most likely in the near future.

        Being a true contrarian is a lonely road, and should be. If everyone agreed with me, I’d know I was wrong (since the masses are ALWAYS wrong). I remember well how people reacted when I told them that housing was extremely overvalued in 2005 and that they should sell all their common stocks when the Dow first hit 14,000 in 2007. Basically, everyone thought I was nuts. Now I’m telling them to load up on gold, silver, and gold and silver stocks, and guess what they’re telling me? Yeah, you guessed it.

  8. Fractal update: I initially pegged Sep 30 as a temporary bottom and it “should” have been a big ugly down day. Instead it was a decent rally day and did not even close approach the target downside prices. It appears it was off by one day and today is the big ugly down day and price targets have hit the anticipated range now (SPX 1950 – 1954). So far the fractal analogy to spring 2014 is on track and at most it coincides within one TD. Example being the assumption that the peak occurs Mon Sep 22 and instead it occurred Fri Sep 19 and this is acceptable.

    The only concern I have is the action after Sep 26. Monday Sep 29 opened very weak with a big gap down and rallied strongly and it coincided with a top the next trading day and then a downdraft on Wed. This action is actually opposite to what occurred in the past fractal and my concern is a possible inversion, because the expectation was for a rally in early Oct to about Oct 3/6. The next two or three TD’s will be telling because if it continues to decline for the rest of this week without a decent rally then that would imply it hits a low instead of a high and thus we can no longer rely on the fractal analogy moving forward.

    1. Steve T. Noooooooooo!! Lol!!

      Thanks very much for your update and honest evaluation!! The markets are what they are. I certainly don’t hold you accountable and I hope neither does anyone else.

    2. Steve,

      A few updates a go I made a comparision bradley 1998/2014 and the market movements…. it’s still valid at that time the Hongkong market was also in trouble just like now…so if we play this over again we could have a drop arround 20%…

      Look at the fractals in a smaller time frame..
      I also discovered that yesterday there was a little hiccup in the bradley graphic so we had a little bounce from now on it’s straight down till Oktober 8..

      https://www.google.nl/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=lphsakUvLKiSdM&tbnid=EK1xR_xBQ5rfMM:&ved=0CAcQjRw&url=http%3A%2F%2Fseekingalpha.com%2Farticle%2F314660-if-youre-bullish-or-bearish-heres-how-to-work-this-market&ei=G0csVNr8GMXDOqDWgdAF&bvm=bv.76477589,d.ZWU&psig=AFQjCNGpXOBq4UZ5CWkhQLGNAAP2JQLTkg&ust=1412274330755449

      1. Carpediem, the October correction will not be anything even remotely close to 20% and I would wager that it does not even get close to 10%. And you are expecting five consecutive down days on top of the 30+ SPX point decline of Wed for six down days total?

        I would be willing to take that bet against both of your assumptions.

    3. Thanks Steve – I havent looked into fractals before but you more or less nailed this decline. My view is we move further down.

  9. dont just assume that GDX wont fall with the market or that metals wont get hammered

    what is coming is a deflationary liquidation

    all assets will be up for grabs eventually

    1. It mkt flops, metals will soar this time around since the big boys will have to sell out of their short metal operations.

    1. bbe please will you explain how you get to 16165? Your own chart show a 16700 something as a barrier. Have I misunderstood stuff here?

  10. I have come to observe that most investors keep looking to 2007/08 and the GFC and what happened to gold stocks to justify a sell of in gold stocks again if the broader markets collapse.

    There was a very big difference between 2007/08 and now however. Back then, gold stocks were at the top of an 8 year bull run and were way overbought and sentiment was nearing extremes never seen before. Same too gold.

    This time around we are 3 years into at a brutal slugging to death of gold stocks and gold and sentiment is near all-time lows.

    Huge HUGE difference this time.

    1. Very few people see accurately the countercyclical setup the precious metals are currently in vis-à-vis the major U.S. stock market indices, but you do my friend.

    1. Ben gold does NOT respondto inflation OR deflation, that is pure fallacy. It responds to a “lack loss of confidence”.

      Mate not trying o be a smart ass but I’ve given you the facts, go back and study history, there are lot of misconceptions out there.

  11. if we get a collapse like john predicts then all stocks will capitulate, gold stocks will fall less simply cos they have been brutalised already, but fall they will.

  12. This is just a short term correction. It’s already over. We should see new highs soon. If the market drops any further, the FED will buy stocks. If the market goes up or down, gold will go down as usual. Same thing with GDX. Il should be down everyday. Who’s stupid enough to buy a gold stock ?

    1. Nicolas, there are other boards for you; please go find them. Here, everyone’s opinion is respected even if you disagree with it.

      No snark, no immature name-calling. It degrades the quality of the site and reflects poorly on the poster.

      1. P, Gary are we complaining about Nicolas’ use of the word ‘stupid’?…coz I can’t find anything else offensive in the post.

        Surely we are able to ‘handle’ that! Aren’t we?

        1. Actually no Purves – this is not the first time Nicolas has made a rude comment and attacked an individual on this forum. If can’t express himself in a rational manner he needs to be banned from this site.

  13. Completely agreed. It is deflationary problem now, not inflationary. If the crash is going to happen, I think precious metals / miners will be washed out along with other assets. Hate to say that because I am a long-term gold investor.

    Short term wise, gold might be temporarily bottomed this week, preferably on Friday when the job reports will be published. However, the bounce should be short term and modest, before the real capitulation phase in gold later this year or early 2015.

  14. Hecla (HL) is cheaper now than it was in 1980’s, yet was selling for 1/3 its current price a few years ago, and 6 times its present value at the peak. Gold mining stocks are IMO for speculation not long term investment as they are as much a statement against fiat as they are profit makers. Plus, they can and do dilute the shares which means the company cashes in on high share prices at the expense of investors. Yet, there do seem to be patterns that can be traded, the most persistent is strong upward bias during Venus retrogrades:
    Stock: HL
    Venus Rx Dates(+/- few weeks) and HL Increases:
    Jan 01 to May 01: 100%
    Aug 02 to Dec 02: 100%
    Apr 04 to Oct 04: 40%
    Nov 05 to Mar 06: 100%
    July 07 to Nov 07: 60%
    Jan 09 to May 09: 300%
    July 10 to Dec 10: 260%
    Mar 12 to Sep 12: 50%
    Sep 13 to Jan 14: 20%
    Total gain by only investing during Venus Rx: 930%
    Total gain all other periods: way, way negative.

    Next Venus Rx May 2015, I suggest you look at GDXJ etc., next May.

    1. Venus is retrograde for approx 40 days about every 20 months. 40 days is about 1 1/2 months. Most of the increases you’ve shown here occur over a span of 5 or 6 months. Looks like you’re centering the Venus retro period in the middle of a 5 month span of time, right? You’re suggesting HL may take off in May even though Venus doesn’t go retro until 25 July 2015 and ends its retro cycle on 6 September 2015.

  15. Let’s all keep our heads

    i think we are very close (day or week) to something a lot of us have been expecting and perhaps looking forward to.

    some are here to share ideas and perhaps others to disrupt

    let’s just try to keep it together till we can talk about picking up the pieces

  16. Interesting action today. Is this the start of a crash or a much needed correction? This week is critical to both camps. US Dollars still rising across the board as I suspected it would. I’m expecting the stock correction to end this week.

    As for metals, I would imagine they will steady up a little into the end of the year and test overhead resistance. But down they will go in January. Headline figures from the Eurozone state that inflation has been below 1.0% every month for the past 12 months! That is DEFLATION if ever I heard it. Japan was never that bad!

    Big, big trouble ahead.

    1. The big trouble will start when/if Germany refuses to go along with Draghi’s plan. Forget for a moment about your political persuasion; no from Germany means more austerity, more deflation, and lower markets.

        1. Yep, an untenable situation — from an American pov, I don’t understand why there hasn’t been revolution over there. I assume the social net provides enough sustenance to prevent (delay) that from happening. But 20%+ unemployment rates over a period of years? How long can that continue?

        2. It’s a shambolic situation Gary and actually quite shameful to say the least. And you’re right in suggesting that the worst off countries especially Spain, Portugal and Greece have cast huge social nets to camouflage what has been happening, whilst, in turn, making the problem worse. In Spain, people jump at the chance of redundancy if offered as they receive 80% of their pay for 11 months while they look for a new job. The ‘paro’ they call it. We call it the dole in the UK. In the US, you’d call it a parasite. The European Union has always had weak leaders, clueless at that, only ever wanting to line their own pockets.

          Over 55% youth unemployment in Spain (18-34 years old) but the demonstrations are getting nastier and and more and more fatal. The Spanish media does a wonderful censorship job, owing to its decades of experience under the rule of Franco. So we see very little of what’s going on there. But the Youth are rising up there, as they are in France, Portugal and Greece too. The Irish just emigrate as they are now only too used to this carry on.

          Watch the big/smart money flee Europe over the coming 12 months. Europe is like quicksand. It’s gobbling people and finance up slowly but gradually.

          http://www.businessweek.com/news/2014-09-30/europe-ticking-all-the-wrong-boxes-starts-mirroring-japan#p2

    2. deflation is negative inflation, right? So inflation under 1 percent is still inflation. Only when it goes negative can we call it deflation. Falling inflation has been referred to as “disinflation”. Only in retrospect can we know whether the current trend of disinflation in Europe will have been a problem because we don’t know yet whether that disinflation will actually turn into deflation.

    1. I’ve said before Ben as I’m sure many will agree. Metals are going down into 2016. Silver to $10. Gold to approx $800. Two more years till we see a real bottom. These are changing times indeed. Nobody yet quite understands the horrendous situation unfolding in Europe. Not even Draghi I would suspect! Deflation is here and it’s terminal. The Euro is finished and the Pound Sterling will be dragged down with it. Commodities are going to get hammered including oil.

      1. Jonathan, I read the Bloomberg article and again, the emphasis seems to be on pushing rates down further. That is hardly going to help the cause – it is recapitalizing banks / restructuring social policy that is needed. At least the ECB can help now with the former, the latter will take years it seems. Yes, it means the ECB will take on a balance sheet full of [expletive deleted] but unfortunately that’s what’s needed right now.

        And recapitalizing banks is critical in Europe, as banks are by far the means by which the ECB’s monetary policy (ABS buybacks) is transmitted to the real economy (loans).

      2. At least we agree on something… Gold silver ratio i think will complete a run to 80:1 before the bull resumes. That cam happen very fast imo. I think it happens within a year.

    1. I think traders are well trained to short volatility whenever there is a spike in VIX. They did it at the close today. However, this strategy might backfire big time if the markets are collapsing. Volatility short squeeze would be quite epic if the crash scenario is playing out, say TVIX over 30 as a target.

      1. VIX does not fall or rise depending on who’s long or short the VIX. VIX is calculated from the option premiums at CBOE. VIX futures might respond to VIX futures trades being long or short, but the underlying VIX index does not.

  17. rusty had a helluva bounce off of support

    just perfect to suck in the BTFD crowd

    really, you couldn’t write a better script

    Might really have a crash on monday the 6th and/or 13th

  18. My goodness the board has decended into name calling. Quick elvis more whipped cream, red bulls, hand cuffs and dont forget the pills!

  19. This one’s for Allan; from Ben Hunt of Epsilon Theory –

    As for my third point – the implications of monetary policy divergence on gold – I’m always reticent to write about gold because it incites such passion (and I don’t just mean the gold bug camp … poke pretty much any academically-trained economist and you will unleash a furious anti-gold tirade).

    To be clear, I believe that the meaning of gold today is NOT as a store of value but as an insurance policy against central banks losing control. With market faith in the Narrative of Central Bank Omnipotence at an asymptotic top, the price of that insurance policy – call it $1,200/oz – is as low as it’s going to go. And now with a schism in the High Church of Bernanke, monetary policy divergence, and growing pressures on the tectonic plates of exchange rates we have catalysts for both a generic and geographically specific central bank loss of control.

    Now I understand that gold means different things to different people, and to the degree that gold trades as a commodity or a dollar-denominated store of value it can trade cheaper as the dollar advances. I get that. But I don’t think that’s been the principal meaning of gold for the past 5+ years, and if you think as I do that this is the beginning of the end for the Golden Age of the Central Banker (or at least the end of the beginning), gold is pretty interesting here.

    1. Thanks Gary interesting read.

      I would just like to state now that I am not,contrary to what some may believe, a perma gold bull. Just as John has stated regularly that he is no stock market perma bear.

      The following may come across as arrogant and condescending but it is not intended to be. We all know that despite the aim to buy low and sell high, the fact is that most investors do the opposite.
      The reason?………It is one of the hardest things if not the hardest thing to do in regard to investing.

      It takes disciplne, conviction and pure guts to be able to overcome the fear to buy when everyone else is selling and to overcome the greed to enable yourself to sell when everyone else is buying.

      Over 30 years of investing in stock markets and real estate has enabled me to develop the dsicipline to do exactly that. Back in 1991 I was buying investment property in Sydney when estate agents were literally going to the wall because of a lack of buyers. So many people questioned why I was buying at that time. Home loan rates were 18.5%, that is not a typo. Rates had skyrocketed and nobody was borrowing. I knew rates wouldn’t remain that high forever but I also knew that eventually buyers would flood the market when rates dropped.
      I wet to my bank and borrowed all that I could. One of the properties I bought was a run down three bdrm detached on a qtr acre block south of Sydneys CBD 10 mins from the beach. I secured it for $147.5k.
      After a little work and of course time, recently that property was valued at $897k. I know because I sold it recently.
      Everyman and his dog now wants real estate in Sydney. Rates are at their lowest ever as they are in the rst of the world, however in my opinion property in Sydney is the most overvalued in the world.

      For the same reasons that I bought as much real estate as I could afford in 1991, in 1999/00 I began buying gold stocks. Nobody wanted ANYTHING to do with them at that time. My brother went to a investment advisor and the advisor told him “buy anything but gold and gold stocks”.
      I ended up having to sack my broker because he was arguing with me over the phone,(very little online broking then), about the sanity of buying gold stocks. I can remember his words exactly, ” Allan gold is dead”. Thank God I ignored him.

      Fast forward to a decade later………

      I joined a extremely popular share trading/investment website in Australia in 2010 called Hotcopper.
      Hotcopper is a great website if you know what posters to listen to and where to go to find the info you want. 99% of the posts are a waste, however the other 1% more than makes up for what the 99% lacks.
      Anyway in 2011 seeing that every man and his dog were buying gold stocks I got concerned. I sold every gold stock I had. I began to post about the danger of holding gold and gold stocks.
      I ended up getting abused and ridiculed to the point where I had to leave the website. I know many would say simply ignore the detractors, but unfortuntely it gets to a point where it becomes so bad that it is impossible to ignore.

      So I now have a zero tolerance to any type of disrespect toward other posters. I will not tolerate it to any degree no matter how harmless it may appear I and expect the same of others.
      I stumbled onto John’s site late last year and began initially just reading his fine articles. The more I read the more impressed I became, not only of John, but also with the quality of all the posters.

      I really hope that it cancontinue because this is truly one of the few sites that is of this calibre.
      I want others to know that I respect other points of view and I hope nobody ever takes anything that I say as an insult.
      I am more than happy to always explain my view point and why I have adopted a particular stance. I definitely don’t need to be told that I am “stupid” or “daft”, because it always begins with a couple of off the cuff remarks but before you know it the insults become more frequent and more harsh if allowed to continue and it would be a shame if this site ever declined into insult trading amongst posters.

      As far as I am concerned that is the last I will say on the matter other than…… I am NOT a perma gold bull. i am buying because it is THE MOST HATED sector bar none and nobody and I mean nbody wants to buy gold stocks.

      I am a contrarian.

      Cheers all

      1. Excellent post Allan and good luck with your gold trade. FWIW I agree 100% on Australian property, but someone I follow on Twitter has consistently talked about gold being roughly 10 years up and 20 years down.

        I won’t touch gold anymore but I may just be part of the wash out bottom. However I do think that not enough time has passed since 2011 top and there must be a lot of gold bulls who have yet to sell, clinging onto the hope of one more bull run.

        It could go either way IMHO hence I am standing aside.

        FWIW this was my take on gold last year, but price was acting right after the June 2013 bottom so I sold all of my holdings in Jan 2014

        http://www.17yearstockmarketcycle.com/2013/07/the-gold-cycle-has-bottomed_11.html

        Kerry

  20. PART I: MAXWELL’S WEATHER-ENERGY CYCLE THEORY AND THE MARKETS

    Maxwell theories were based on the movement of the Earth, Moon, and Sun—but chiefly on the interaction of the Moon and the Earth. Maxwell developed his formula of weather prediction by being able to chart the movement of the jet stream by the motion and declination of the Moon. The proper determination of TIME rather than position of Earth, Moon, Sun and upper air masses, led to Maxwell’s perfecting the formula for accurate weather forecasts. There is also mention of apogee/perigee/the speed of the moon, but only in general terms; nothing specific. For example, the book states that using Maxwell’s research we can predict the movement of air currents as accurately as science can predict the height of tides.

    The book details the work of Shelby Maxwell, an astronomer, and his associate Gerald Stapleton. Originally, Maxwell came up with his own theory of a system for weather forecasting but later learned that ‘the wheat king’ Arthur Cutten had hired a private astronomer who was also a professor at Northwestern University.

    So they set out to try and duplicate his success and at the same time attempted to discover what it was that Maxwell’s old professor was providing Cutten. Now the two men went through the Nautical Almanac page by page, trying not to carry any preconceived ideas of their own into the search. What the men were seeking was the time to make a trade—a thing not immediately associated with ascension and declination but more of celestial position.* After taking a ride on an elevator they experienced an epiphany of sorts. From the book:

    “Stap, I think we have found what we have boon looking for! It is the acceleration, plus or minus, that counts and not at all where we are, either at the start or at the finish! No longer was The Almanac column after column of figures of position in right ascension and declination. Now we saw that it was how something went from Alpha to Alpha Prime that counted. It was the going from one position to another position that counted, and not the being in either the first or the second position.”

    Maxwell theorized that when we go from one astronomical position to another position, we get a surge of market energy—better called Weather Energy. As soon as there is no more astronomical motion, there is no more Weather Energy, or motive power for market action.

    With one man reading the Almanac figures and the other man operating a desk calculator, they computed the accelerated motions of every item in the Ephemeris.

    • The Nautical Almanac is one vast collection of astronomical POSITIONS. See sample pages here.

    https://en.wikipedia.org/wiki/Nautical_almanac

    To Be Continued….

    1. Excellent eclectic – this movement of the planets and moon does seem to have a widespread influence:-

      – Bradley turns

      – solar grand minima (planets pulling the sun around the solar system barycentre)

      – war cycles: http://time-price-research-astrofin.blogspot.ca/2014/09/andre-barbaults-cyclic-index-of-global.html

      – tides, weather and earthquakes (Piers Corbyn and Ken Ring): http://www.predictweather.co.nz/ArticleShow.aspx?ID=319&type=home

      Looking forward to your Part II…

    2. Second that. Very interesting – thanks for sharing.

      This also chimes with the mention that Piers Corbyn of http://www.weatheraction.com got the other day. He also uses the sun and moon to predict the jet stream. So far as I know, he doesn’t trade the markets, but makes his living from subscriptions to his forecasting service (I am one such =) and also from betting that his forecasts come to pass with bookmakers.

  21. Pima, the times include farthest east to farthest west elongation which accounts for the greater duration.

    Eclectic, really interesting info on weather prediction and possible correlation to markets. The change of positions within measured aspects is the key to movements in stock prices. This may account for what appears to be persistent weakness amount most asset classes around perigee plus or minus a few days and the seeming effect on the time around high and low tides.

    Specie, thank you for the reference to the metrics website.

  22. If this develops as John has outlined,
    then it looks a strongly deflationary scenario to me.

    What that means for precious metals is difficult to say,
    a potentially strongly deflationary outlook in which
    all assets are sold down, possibly a safety trade
    running counter to the main trend, it’s impossible to call.

    And please let’s not get personal about differing views
    and detract from John’s great work which he freely shares.

    1. I agree re deflation. If we do get deflation, that would not bode well for gold/silver. However, there is the “safety play”, so they could go either way. Prolly safer for a trader to short other commodities and/or stocks though

  23. Eclectic,
    In your post on Maxwell theories, there is the comment: ” The proper determination of TIME rather than position of Earth, Moon, Sun and upper air masses, led to Maxwell’s perfecting the formula for accurate weather forecasts. “. I am not sure what this means -“The proper determination of TIME… ” Is referring to exactly. What follows that statement seems to be saying that the changing of speed of various celestial bodies is important, but that part of statement seems to be addressing something a little different. Perhaps it it saying that for the speed differentials to have relevance, it is important to establish a TIME window and therefor a TIME anchor. But based on what if not the Sun, Moon, Earth. Clearly I am lost, so if you or anyone can get me back on the path, I would appreciate.
    SC

  24. John,
    As usual, a great post. Your observation:
    “This last quarter was the best quarter so far for viewing stats on solarcycles.net. The best month was this last month (shown below), the best day just yesterday. So, thanks for reading my analysis and thanks to all those who contribute and make for a good discussion board.”
    Is a one reflection on the fine work you do, and the fact that this site is both interesting and fun. Thanks to you John, and to all for their inputs to that most precious of all – knowledge.

  25. Not a good start to Quarter 4 so far with very poor strength in commodities across the board. Oil drops under $90 to new 27 month low as supply glut grows and demands wanes further. It looks like Saudi oil price cuts may signal the start of a battle for market share. We have very weak demand in China and worse still in Europe. Now Russia are envisioning oil prices dropping to $60.

    Bring on Draghi’s pantomime in a couple of hours. Does he actually recognise deflation?! 😉

    1. Jonathan, I think Draghi does. The question is whether others, principally the hawks in Germany, do. I understand why Germany feels the way it does, they made some very tough choices to get their house in order after reuniting with East Germany and felt the pain. Now they feel others should do the same. Hard to argue with that logic. Still, the house is on fire – do they wish to see it burn to the ground?

    1. I don’t care what the VIX is saying you don’t need an indicator to tell you there is no fear in this market. The morning after the SPX has one of its worst days this year and technical damage inflicted across the board and ES futures are trading up.
      Not until we get indices gapping down are we anywhere near a long term bottom.

  26. Steve, that’s a great question I have also been pondering; and as you say, and have also been confused about myself. I’ll address this issue in the final Part III; if not directly; perhaps begging this mystery question. (:-)

    Thank you above posters for your compliments. Iv’e been sitting on the pages from that book for a long time and only recently obtained copies of pages from the NA.

  27. Allan just my take, I think you need at least
    one more day like yesterday and then bears begin to bite.

    Oil being killed, BP. trading well under £4.50 a share atm.

  28. Allan, Iv’e been reading the lively discussion between yourself and Jonathan with a great deal of interest.

    Do you think you might be a tad early this time around? Your post about real estate is a classic. I’d be interested in your take on the series of articles by ‘plunger’. Cheers.

    http://goldtadise.com/

    1. Eclectic – what a fabulous collection of charts and ideas. Thank you for the link.

      The federal reserve note masquerading as a dollar has been the greatest fraud ever foisted on mankind. The dollar was always meant to be specie and shall be again – someday.

    2. eclectic, there is every chance I am early, but I am prepared to go on what I am seeing now and what I have seen occur in the past.
      Whilst sentiment can always get worse and as the saying goes…..”markets can stay irrational………………”.
      I think that this time will parallel 00/01 and not 07, as gold stocks are totally distrusted, hated and oversold to extreme, just like they were in Oct 00.

      I’ll checkout that link

      Cheers

      1. Allan, you seem to a man of convictions and probably don’t need any reassurance. That being said, i feel the same way. Too many people are looking at ’08 for guidance. The coming crash will feel exactly the same – only it will be totally different.

        1. Specie,

          Many on the board keep referring to ’87, ’00/01, ’07 etc as you mentioned. But what I think we all need to be doing is looking back to the late 1920s / early 1930’s. What is unfolding today is akin to that time period. In my opinion, we are 6 or 7 years into a depression with deflation ramping up in Europe and South America.

          Every past event has come about through different circumstances but it is always possible to identify cross variables. What I think is most compelling about right now is the way the global economy has struggled to make up the ground lost since 2007. The U.S. has had its slowest postwar recovery. Britain has had its slowest one, period. But six and a half years later, Europe holds the trump card by not having much of a recovery at all. This is on par with the Great Depression and nothing we’ve witnessed in the last 20 years of relative prosperity. The EuroZone is one of the biggest catastrophes in economic history.

          To put some perspective on this, Eurozone GDP still hasn’t gotten back to its 2007 level, and doesn’t look like it will anytime soon. Let’s be honest! It wasn’t clear if its last recession was even over before we found out the eurozone had stopped growing again in Q2. Not even Germany has been immune as its GDP just fell 0.2 percent from the previous quarter this year. Too much fiscal austerity and too little monetary stimulus have crippled growth like never before. Europe is doing worse than Japan during its lost decade, and worse than the Pound sterling regime during the Great Depression. Europe is quite simply not dealing with this situation and has not learned anything from what happened 80 years ago. This is the game changer. We are in for an interesting 2015 to say the least.

      2. ecelectic, just to add RE being too early. Far better to be too early with real estate than too late given its illiquidity. I have seen people trying to sell property into crashes before and it is a nightmare.

      3. Much appreciated your insights Allan. You are one of the best contributors on this board. Learn a lot from you, and truly enjoy reading your posts.

  29. Central banks/governments are losing control. Population realizing that only non-working citizens are being rewarded with wealth.

    1. WT – i’m not sure about the non working citizens but i totally agree about central banks and governments losing control. There are far too many young men with nothing to do and have become marginalized by government education, the mainstream media, and have become empty shells surviving on sports/technology/alcohol/drugs/porn. Governments have failed to capture them in military service without a draft. The result will be war or revolution and probably both.

      1. The median income is decreasing since demographic peak, while profit rises. The general flow of money is from current/future workers to shareholders/executive salaries. If we are at the point where labor has refused to work for less, than it is going to change everything and the “borrowing from the future for asset holder profits now” ponzi scheme will collapse.

      2. I’m presenting a theoretical black swan event that would justify an unprecedented drop in all asset classes, and seems to be gaining steam as an underlying theme. It explains the global revolutions popping up and is in step with demographic peak and solar cycle peak.

  30. I think FTSE in quite oversold now. I really expected the dow to be the one to fall the most but its held up quite well compared to the ftse and dax disaster. Unfortunately I’m caught heavily long ftse and small short on dow in a badly timed trade. Funny how i’ve been nursing losses on my dow short most of the year and now its suddenly gone the other way and I’m still on the wrong side but now losing big!

    1. Yes at least worst case is ftse goes to zero so I can determine my maximum losses. Being short you have unlimited losses so can be more worrying. I think the ftse correction may be close to an end. And to think people were expecting ftse to hit 7000 by end of october lol! I had a feeling the ftse could outperform the dow but how wrong was I

  31. Look, this correction is almost over. I added to my QQQ this morning and I’m tempted to short more GDX even though i already have a pretty big short position. What do you think ?

      1. That would be the intensive care unit, amigo…

        In other news, RUT cash has now broken Feb and May lows, which was our host’s trigger for waterfall declines, I believe? We shall see. RUT has yet to touch the daily median line: http://scharts.co/1vdfApF

        1. Oh, add to that, RUT now has a triple bottom; and as someone once said to me, when have you ever seen one of those hold?

  32. pretty funny how bullish all only 6 short days ago…now it is all doom! I like it!

    whip cream can gas as the world burns! Kill the video game reality! UNPLUG

  33. John Hampson,

    where do you go for a long contrarian play or stay short. Are you waiting for 1900 to go long for short while.

    Anybody know what CBI reading is after this decline.

    Bill

  34. John, it would be great if you are prepared to
    share your thoughts on Bill’s question at some
    point, I was going to ask a similar question.
    TIA.

  35. I’ve covered this in previous posts. I’m looking for a min 18% declines from the peak over a 2-8 week period, but the analogs average 30% declines. 1900 is just the technical break level that should trigger the steeper declines. I am watching indicators for clues of course, not just blindly holding. But going long won’t interest me for some time.

        1. sounds like you’re planning to ride out the shorter term wiggles, right? Today looked like it could have been a very short term bottom, but I don’t think the drop is over by any means. I think we’ll have 2 to 3 months of a down-trending market, punctuated by fierce short-covering rallies.

          Does your evidence of selling exhaustion include looking for climactic volume in the indexes and related etf’s and looking for a spike in fear as measured by the VIX?

          Many thanks for sharing your work and for providing this forum for us all!

  36. Elvis, I think in many cases it was frustrated bearishness
    rather than bullishness.

    Every time markets looked about to sell off,
    bulls turned it around, it has seemed like countless times.
    Bears unable to gain traction.

    And this may yet be another case, however it is beginning
    to look more promising at long, long last.

  37. Are we watching an intraday reversal comparable to the third trading day of August 2011 just before the real crash ?

    Like then the DAX-Future is not reversing as strong as the US-indices and after today 7 days are left in the lunar negative period, that some are quoting here as favorable for waterfall declines. Probably that’s only wishfull thinking.

    1. This weekend mercurius retograde will kick in in 2011 it was the first of august and the bears were in controll…. so next week will see?

  38. ok boys, as i said earlier today, the correction is over. Time to add to QQQ and IBB, and I’ve just shorted more GDX on the uptick.That’s the good think with the gold stocks, no matter what the rest of the market does, they go down.

    1. I’m long from 1,931 on S&P500 and 16,750 on the Dow. Let’s see where this goes but I’m expecting a bullish end to the week. Being early October, the bears need to turn this around tomorrow and going into next week.

  39. It’s very well possible that bradley is right on track this time…

    Bottom Oktober 8…. Bull trap for six days and capitulaion till full moon november 6…

  40. the move September 17 till now is bulls eye…

    The move august 8 till sept 4 was inverted…

    But the relationship with the 1998 model is very close….

    1. Yep…and the tides are in synchronicity with Oktober 16 and November 6

      I have got 2 scenarios

      Double bottom like 1998 or waterfall decline…

    2. that’s in sync with the lunar cycle: generally bullish for stocks from 3 days after full moon until 3 days after new. bearish from 3 days after new moon till 3 days after full.

  41. Indicators for next few days: – bear, + bull

    – moon phases (not full plus four to new plus four)
    – calendar seasonality not bullish till 7 t.d.

    + mercury retro (last few years data)
    + solunar cycle up tomorrow, – down Mon – Wed
    + moon out of the leo to scorpio monthly down move

    I am short market in 3x Russ Bear “TZA” until at least next Tuesday.

    Am looking for temporary strength in gold silver miners until full moon next wed
    as most months have risen into full moon, perigee next monday has been good as well, as well as mercury retro during last few cycles has been positive. October seasonality not good though so may avoid miners till they cross the 20 day sma.

  42. Peggy, could you explain the tide indicator, what tides to look at, what aspect of tides has the effect, what the market response is either pos or neg to the status of the tides, and whether you think that a similar prediction could be made using apogee and perigee.

  43. Steve S – that’s a lot… and it’s a work in progress. a good place to start is with the tides link I already posted – I look at 4 tidal stations – 2 local and 2 at 42N. Brooklyn Bridge (east river), Battery Park, Provincetown and George’s Shoal. If you go back and look at the tides (high tide seems the best indicator to me) – you can see how the market turns track (or do not track) the tides. I think it’s possible to extract cycles from the apogee/perigee data – other posters here are working on that too. IMHO, it’s best to go back at least 10 years to match apogee/perigee max min km and max/min time to NM or FM, etc… to get some idea of what works.

  44. a bottom isnt confirmed by any of the %MA or % channels or any of the breadth or volume oscillators…

    not being short now is maybe wise – going long before one of these or BPSPX or other signals triggers is silly.

    http://stockcharts.com/h-sc/ui?s=$NYUD&p=D&yr=0&mn=4&dy=0&id=p80073417791&a=367854604&r=1412286235252&cmd=print

    http://stockcharts.com/h-sc/ui?s=$NAHL:$NATOT&p=D&st=2014-03-14&en=today&id=t09765058292&a=369189956&r=1412273506822&cmd=print

  45. Whatever your view the next couple of weeks will
    be fascinating.

    Can bears finally gain traction and take control,
    or is this yet another shallow dip with a rapid rebound.

    Some great posts here recently, and good also to
    read views from those taking the bullish side.

  46. I agree Phil. John Hampson’s posts are incredible in terms of his depth of research and clarity of writing. But there are other posters here in the comments who are incredible in their own right. Peggy’s research looks promising, and Steve T’s accuracy is uncanny. And Jonathan’s broad knowledge of markets and money flows gives great counter-point to the bearish picture that many of us here subscribe to. And yes, the next few weeks will be fascinating indeed!

  47. Just completed a review from Time Cycles Research website on mercury out of bounds dates since 1995 and SPY. There were 21 events and the average time per event was 1.6 months. The total number months was 35. The average return was .35% per month, a somewhat meager return when the SPY has risen from the 500s to the 1900s. Also there wasn’t an event during the 2008 drawdown. My conclusions for further study is that mercury out of bounds are not a + factor for performance. Next one is Sep 28, 2014 until Nov 21, 2014.

  48. a bottom isnt confirmed by any of the %MA or % channels or any of the breadth or volume oscillators…

    not being short now is maybe wise – going long before one of these or BPSPX or other signals triggers is silly.

  49. Specie
    “you seem to a man of convictions and probably don’t need any reassurance”

    If it has worked in the pastnwhy change it? A lot of investors like to think they are contrarians but are not because they can’t bring themselves to jump when it is time to do so.

    And yes things will play out differently this time compared to ’07. There will be of course as always be a flight to safety, but what is important is what that perception of safety is.

    Cheers

  50. On the corporate news front Ford’s
    warning was a standout for me this week.

    The update indicates that conditions
    in many of their main markets have rapidly
    weakened over the past few weeks.

    Now there can always be company specific issues
    at play, however this does not appear to be the
    main factor here.

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