Jun 30, 2015

Long term update

Something to read with a lot of charts if you have time and you are bored:) This is what I see for the long term.

Here it is what I think is going on - stocks deep correction to begin in autumn and accelerate in 2016, bonds will continue to sell off, FED will raise rates and liquidity will dry up. Like in 2008 all assets will start moving lower because the most wanted asset will be USD and everything else will be sold off. The CBs will freak out and make something crazy. They must safe the bond market the stock market is a side effect... the bank cartel will not give up so easy and it will try to safe the system at any cost.
This will cause inflation phase, real bubble in most asset classes - bonds final move higher(rates lower) should begin, stock final bubble phase, precious metals much higher wealth preservation... and the USD will be thrown under the bus multi year decline will begin. This will work for a while until all start falling apart and natural forces win.

I am paying more attention to gold, because commodities and miners stocks should outperform and I think this is were you have to jump when we see the final bubble. Stocks will make nice gains too, but I expect miners x5 to x10 times higher.

I think we are in the eye of the storm, it is calm for very long time especially the last 7 months, but it think this will change after the summer and crazy ride is upon us in the next several years.

Distribution is running for a long time, the EW patterns are finishing, the long term cycles look ready to roll over, market breadth long term divergences... the stock market looks ready for a correction after several years only up... up... up.
There is two scenarios - this is the top of the bull market or deep correction followed by another move higher. EW and indicators can not give us definitive answer, the long term 9 years cycle is right translated and another high will fir better. I think the central banks will try to save the system and we will see one final hurray...

Long term cycles SP500 - correction to finish the current 7 year cycle. I expect the breakout to be tested and bubbles, bubbles flying everywhere....

EW DAX is a little bit easier to read, the idea for the US indexes is the same. Both scenarios are shown. I do not believe that a new secular bull market has begun. There is no sound base for that only covering problems with paper.

Last time I wrote that I do not know if the bond bull is over or not. Most of the guys which I follow think it is over... honestly I do not think that the charts can give us clear answer. Personal opinion - I think we will see one more high in bonds/low in yields. The bond market is the one which banks and politicians care about. If the yields start rising it is game over. The world is drowning in debt it could not be repayed. So they will try to save it at any cost and then we will see the side effects.

The last time I wrote the yields have more to go higher and they are doing exactly that... I think they will continue moving higher at least until the end of the year.

Long term three waves lower and one final move higher.

Intermediate term EW and cycles are pointing to a move higher, but after that the move lower should continue.

I think the USD has one final move higher alternate the top is behind us. After that a multi year decline should begin
The charts have not changed since last time. EUR/USD hit the trend line and reversed, probably there is one more move lower for a long term cycle low.

The USD index one more move higher to around 102 to finish multi year counter trend move.

Intermediate term corrective wave 4 should be running.

Cycles are pointing to September this year for a bottom of wave 4. Long term waiting for the top of the 3 year cycle

EURUSD perfect hit of the trend line and reversal. I expect a lower low with divergence and sharp reversal.

USDJPY moving higher as I have shown last time... but we are close to an important top.

There is so many opinions... but I think I am right:)))) As I wrote I think since November 2014 a correction is running and I was surprised a few weeks later to see for the first time descent EW and cycle analyses from David Chapman which confirms my view. It is worth to read the article.
Now there is different options, but I compare the price action for gold in Euro and add cycle analysis. Taking in account this factors I think the most probable scenario is a rally higher in autumn and another move lower before major low.
For trading it does not matter even with the more bearish scenario there should be a rally so precious metals are a buy late July early August. Even if I am wrong you will make more money, so who cares:)

I think this chart is a very important clue - clear impulse followed by three waves higher, three waves lower with lower low and impulse higher.... what should I say clear corrective pattern expanded flat. After impulse and corrective pattern another impulse lower follows.

Long term cycles average 7,5-8 years... If we see a bottom now it will be too early. It is not impossible, but shorter cycles compensate with sharper moves lower in price. It is a simple psychology fear is very powerful and you can not have plunging prices for years, sellers are exhausted fast.
Good examples are the previous cycles 2000-2001 longer and rounding bottom, 2008 shorter cycle and sharp decline 33% and reversal.
For a bottom this summer the cycle will be shorter than 7 years and rounding bottom for two years since mid 2013 does not fit at all.

EW what I see is that A-B-C correction is running since November 2014. It should stay below 1450 if it is expanded flat...

The shorter cycles - the article from David Chapman make me look at the internal three cycles of the 8 years cycle. The first important bottom was in December 2011 the second in November 2014(the red arrows). Both consist of 7 smaller cycles 20-25 weeks and lasted relatively long 3 years each.
I expect the last one to be shorter 2 years roughly respectively the internal 7 cycles to be shorter 15-20 weeks and the price to move sharply lower in its final stages of the decline. Autumn is favorable for precious metals and the previous two important bottoms were in November and December. So I expect the bottom between August-December 2016.

EW wave Silver it looks like a triple zig-zag... most of the silver miners have similar counts.

GDX it looks like expanded flat wave C should be an impulse and develops like an impulse.

GDXJ and silver miners the EW counts look like zig-zag.

- Cycles - important bottoms in 2001 and 2009 that makes me think we have 8 years cycle in play, the next bottom should be in 2017.
It looks like every 2-2,5 years there is an important bottom. The next one should be later this year.
- EW - it looks like we have an impulse which is not finished. The difference between the two scenarios(red/yellow) is part of what structure is this impulse. Taking into account cycles and if stocks move lower next year which translates in problems in real economy the yellow scenario looks more probable.
For trading intermediate term there is no difference in the next 1-2 years for both scenarios, so do not think about it too much.

I wrote that natgas probably bottomed, since than it did not rally but made higher low. I still think the next bigger move is higher.


  1. Very good analysis :-)

    I completely agree with you about the the Secular Bull market having not yet begun, I think we will see another big move down before it's up up and away.
    I suspect the lows of 2009 may be tested certainly as far as the European markets are concerned.
    Rising rates will be a massive game changer as everyone seems to expect low rates to be here forever.
    Thanks, Paul