Dec 31, 2015

Long term update

Happy New Year!!!!

I hope you had pleasant holidays and I wish you a very successful year 2016!!!

Six months later is time for the next long term update:)
Nothing really new, which is not a surprise because the trend changes are expected in 2016 based on my analysis of cycles and EW patterns.

The news is FED is raising rates.... the question is if a new rate hiking cycle has begun and how long will it last.
I doubt that we will see more than a few hikes. They can not afford it. All this mountains of debt can not be served. My analysis tells me the market will call the FED's bluff.

The trade for the last year and longer was Europe is engaged in QE and lowering yields(which are negative) FED will raise rates and there is no QE -> the consequence yields climbing higher/bonds lower, USD higher JPY and EUR lower, commodities lower, stocks... no QE sideway move for a year.
Most of this is already priced in. For example as I wrote early 2015 expect EUR/USD bottom and since March 2015 the pair is in a range. This trade is extremely crowded and despite more QE from ECB and FED raising rates EUR/USD is a few cents higher.

It will take time 3-6 Months the bias to change, but I think this will happen despite looking crazy at the moment. The charts(cycles and EW patterns) are telling me at the moment that this trends will change next year - the stocks should make an important top soon and we should see the down part of the 7 year cycle with bottom October/November 2016, EUR/USD should make a major low(DXY high) June/July 2016 and commodities should make major bottom March/April 2016 (or even earlier).

I do not know what will cause this major trend changes..... my explanation is plunging stock market will scare the CBs, FED will start again QE and probably stop raising rates(or even lower them) which will eventually cause inflation after years of pumping liquidity in the markets. The big boys know such things in advance and a few months earlier we should see the USD making major top and we should see an accumulation in the commodities sector which is very depressed at the moment making major bottom.

The forecast stays the same - bottom of the 7 year cycle late 2016 and another move higher. So far I do not see signs that something different is happening.

If I am right about the USD and commodities the EM should outperform the major indexes. At the moment they are depressed because of the plunging commodities.

No change - I think yields will move higher for a while, but than we should see one more low before this mega bond bull dies.

TLT - it looks to me like a giant diagonal with 3-3,5 cycle.

The move lower is corrective and the move higher looks like part of a bigger correction. All this was expected - so no changes so far.
Choppy action the last 4 Months. It is either some kind of a triangle or diagonal which should finish soon followed by move higher. Than I expect final move lower.

Choppy moves since March 2015... I do not see an impulse in the opposite direction so far and there is no proof for a major top. It will be a surprise if it behind us.

I think there is one more higher high left. Either we are still in wave 4 or wave 5 is running as a diagonal.

EUR/USD - here is how a diagonal should look like with cycles. This should be a major low 4/8/16 year cycle low. The alternate scenario is a triangle if we are still in wave 4...

The trend line is respected. Everybody still talking about parity. Even if wee see it do not fall into the trap and take a contrarian position.

Moving sideways for seven months. One final thrust higher to finish the cycle will look great.

Intermediate term low in Summer as expected, but the rally was disappointing... I was expecting something stronger.
If my cycle count is right we are in the last 20 week cycle and I expect one more low. The EW count is not very clear, there is a lot of room for interpretation, but based on Silver and cycles it should be a corrective pattern. It is time to watch closely because a low can come in a few weeks....

Silver has similar cycle count but the EW pattern looks more like a correction.

GDXJ looks like a huge double zig-zag and final wave C from Y running. One final move lower to finish a diagonal wave c/5/C/Y is missing. Intermediate term we have 6 weeks sideway move it looks like bearish flag so one more move lower will fit perfect.

Move lower as expected, but I think we have a different pattern. Cycles are not very clear, but I suspect we should see an important low like most of the commodities. May be not an explosive move higher for a while because of over supply.

It looks like a diagonal.... one more 20 week cycle and waves 4/5 of a diagonal will look perfect for a major low.

I wrote a month ago about NATGAS... it looks and feels like we had the expected major bottom a few weeks earlier.
The alternate scenario - the plunge is wave 3 and this is wave 4 with one more low to come. The next low no matter higher or lower is a buy.


  1. Thank you very much Krasi. Really appreciate you sharing your thought. Happy New Year o you!

  2. Happy New Year Buddy... all the best and Thanks for your wonderful Blog