Feb 22, 2015

What about the other markets?

The first great opportunity for this year will be buying stocks after a correction. I have already written about that.
The second one which should be even more profitable is precious metals and gold miners. I know I know they are very hated, the direction is only down:) I have spent a lot of time watching the charts and I will wrote more about this market.
Than I have decided to look at the charts of the other asset classes and the astonishing is that I see everywhere major trend changes. I have not the time for a comprehensive analysis of all the markets, probably my cycle count/EW is not perfect, but I see the same literally everywhere !!!????!!!! it could not be a coincidence.

I think it is important if you are trading. I will share the charts and some thoughts and you can make your conclusion.
My personal opinion - 2015 will be an important year and we will see a lot of trend changes... the year has started crazy, volatile, CBs are nervous definitely something is going on.

To summarize - for the indexes I expect 18 month cycle low and the low for the year in the next several months, USD major top, Bonds long term top or even the top of the bond bull, commodities long term or major bottom.
Overall it looks like the trend changes will happen between May and October.... but the bonds are in a hurry, I think we saw the top already:))

If the dollar start moving lower for years the logical conclusion is the commodities(depressed for years) should surge and if the money starts moving out of bonds the stocks should rise. I am not a fundamental guy just thoughts... it looks like an inflationary environment is coming. As I have already wrote the CBs will continue to do what they do until they lose control and everything implodes, but before that we will see crazy stuff to the upside.

I think we will see a long term bottom in precious metals. Even if it is only a corrective move I expect 50% retracement or something like gold at 1500 USD. There is many ways to play the move:
- the classical is ETF GLD - many do not like it saying paper gold they do not have the physical metal. For trading is ok, for investing in gold I do not think so.
I have found an interesting alternative buying shares CEF (Central Fund of Canada). There are since 1961 on the market and store physical gold and silver in vaults in Canada. They DO NOT sell their gold ans silver. It is an alternative of paper gold or storing physical gold on your own... it is something in middle if you want to invest in gold. Make your research I do not want to give you wrong information.
- the more profitable and more risky approach is buying gold miners shares - usually they move 3x-4x times the move in gold. If we see 50% move in gold it is easily 200% in gold miners. I will not be surprised to see many of them to tripling.

To the charts - gold has very consistent cycle 22-24 weeks and an yearly cycle 45-48 weeks. The only exception was the steep decline in 2013. This is normal when the move is very sharp the cycle is usually shorter. The move is compressed in time, it is exhausting itself faster.
If my cycle count is right we should see a 4 and 8 year cycle low in September. The current cycle is at week 16 and the top for the current cycle should be behind us than we have one more 22-24 cycle before a major bottom.
EW - there is room for an interpretation, but the move lower looks like an impulse. The best fit with cycles is that we are in wave iii of 5 to finish the current cycle and iv and v of 5 will be the last cycle before 4 year and 8 year bottom.
There is support around 1000 and MACD on weekly chart is expected to make a long term divergence. In several months we will check the charts to see if they confirm the plan.

I have looked at the charts of many gold miners and they confirm my view to expect long term bottom in precious metals
Of course not all shares have the same pattern, but I think can I summarize them in the two charts below. I saw two main patterns - huge correction since 2008 which is in its final stages 5 of C or huge choppy corrective move which needs one more push lower.(A few shares look like have already hit a bottom and have 5 wave up).

Barrick gold - it looks like an expanded flat

Silver wheaton - it looks like a W-X-Y mess the last move up was a-b-c so one final impulse lower to finish the zigzag will look great.

TLT - everything was pointing to a correction and one more move higher,the move higher was looking like an impulse, no divergences, above MA50... pullback was expected but the move lower has surprised me it is something more. I was expecting to see a major top later in sync with the other assets, but I think that we saw the top at least for this year... or a bold call the bond bull is over:)

The move lower is impulse(TLT), huge monthly bar, it moved below many support levels, add to this the cycles below.... and I do not think that we will see another higher high in bonds for this year.
Here is chart of TLT - I think the move since January 2014 is A-B-C. I do not know what happened whit 4 and 5 of C. The only bullish pattern left with the overlapping waves is expanding ending diagonal(green) but I do not think it appears as wave C... correct me if I am wrong.
The upper trend line connects the three peeks visible on the weekly chart - perfect hit and reversal. Short term cycles and the internal structure point to a corrective rally(red). The technical damages and long term cycles support rather the red scenario.

Below is a chart of 30-years treasure yield - I think we have important cycle low and I expect at least move higher for a year or even it is the low for the whole move since 1981.
HERE is a post about bonds from a guy which is trading professionally using Husrt cycles. You can read more if you want.

I know USD is very strong, parity with EUR bla bla... When I look at the two major crosses I think the next major move is lower for the USD.... at least for two years. This is in sync with what I see for the commodities strong move higher for a 1-2 years and I do not see this happening if the USD continue strengthening further.

From the top around 1,60 I see only overlapping corrective waves probably zigzags, major 15 year cycles and internal 5 year cycles which are scheduled to bottom this year. Different measurements point to a bottom around 1,05 this will be also perfect hit of the trend line. Even if I am wrong I think we will see 15 year cycle low and a move in the opposite direction for a 1 to 2 years.

Currently we are near to a an eight year top and close to finishing 5 waves. So I expect an important top, but the next move lower should be corrective and make higher low.

When I look at the charts below I think the next major bottom is coming this year. You do not need ATH or something crazy, just mean reversion - crude oil something like 80 and natgas at 5 and that means already the prise doubling or 100% rise.

Crude oil makes every 2 to 3 years an important bottom. The cycles are not consistent, but the EW pattern looks very clear.

The opposite with natgas - very consistent cycle every three years and if you shift it one year to the right you have again bottoms every year. EW is not so clear I think it is A-B-C lower. I am not sure if it has already bottomed out or this will happen later.

Even coal show huge corrective pattern which should bottom this year.

I hope you have enjoyed the post. There is a lot of food for thoughts and enough time to prepare if you think the charts are telling us something. The main conclusion for me - we should see trend changes in many markets which will have huge implications if you are trading.


  1. Great analysis Krasi! Regarding TLT, it almost retrace 50% the move up from Sept. You don't think that was a wave 2 down with 3 up to come of some EW-degree?

    1. No the whole move since January 2014 is A-B-C and I think it is over....
      The only think which I can find bullish as a pattern is expanding ending diagonal and this is 4 and 5 to come... I do not think it appears as wave C.... it will be very rare an unusual to see such pattern. At the moment I will not bet on it.

    2. I have added TLT chart so it is more clear what I am writing about....

  2. Carnap
    Great Outlook krasi.
    I agree that we will see breaks of the mega trends this year or next year.
    I have posted a Weekly Intermarket Outlook w9 on my blog.

  3. 2nd attempt at replying.
    You stated USD topping, while all other central bankers pumping up QE?
    Hows that possible?

    1. I do not know, I am just watching the charts. I am sure there will be some "excuse"....
      You can see it this way - the USD has risen because the other central bankers re pumping up QE. This is already priced in, it is an old news.
      The FED has now the next move in the currency wars. Strong USD and rising yields is the opposite to what they want. We are waiting now a few months and we will see what "the excuse" will be.