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Possible Paths: 2003 or 2001

Executive Summary


The Market has tracked the behavior of the 2002-03 lows quite well since the October 10, 08 crash low and that pattern suggests a little more consolidation before a breakout to much higher prices. However the market internals and sentiment are not indicative of a bear market low like they were in 2003 and the 4 year and 8.6 year PI cycle lows suggest the final low is likely to be in 2010-11. If we align the 2000 and 2007 bear markets, we notice a repeating pattern 91 month or 7 year and 7 months apart and suggesting a June and early August double top between 950 and 1000. The seasonal pattern of selling in May should work out this year and the Astrological similarities between the Saturn and Jupiter retro periods of 2008 and 2009 suggests weakness into mid July and October. The Jupiter retro period ends in October and is more often bearish than bullish and the rhythm of the Nasdaq 100 to SP-500 ratio suggests market weakness into September as well. The Nasdaq 28 month cycle high is also suggesting a Sell in May year, since it has only given two early signals in the last 30 years.

Breadth Summation Indexes (BSI)


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Cycles and Wave Counting


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A Crash alignment for the 02-03 and 08-09 lows


A good fit is found by aligning the crash lows of July 02 and October 08 with a Fibonacci 60% time scale. The Tick line broke out but was much weaker than in 2003, and the Put/Call showed a lot more skepticism back in 2003, compared to the growing optimism we are seeing since the October 07 lows. Even at the beginning of the 2003-2007 Bull market, the SPX went sideways for two months before it started another move higher, and we have only gone sideways for a month so far. The Jupiter retrograde period starting June 15th and the cycle date of June 19th may mark a significant change of trend into October.

Full Moon high and New moon low?


The Full Moon of June 7th will probably be at least a short term high, which could also turn into a nasty decline towards the triple witching expiration week of June 19th, since the New Moon of June 22nd is near a Cardinal Date and can generate extreme volatility and even panic selling three days before the New Moon. This New Moon is highly charged being directly opposed to Pluto, and 120 degrees from Jupiter and Neptune retro, and 90 degrees from explosive Uranus. Since Venus and Mars are also together and 120 degrees from Saturn, all these market moving planets are likely to have quite an effect on an otherwise quiet market. Some of these Venus-Mars-Saturn angles have a history of dramatic moves with the May 8, 06 high, the Mar 9, 07 low, and the Nov 30, 08 high as examples.


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Sell in May 08 and Saturn/Jupiter retro periods




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The price action compared to last year is quite similar with both December highs, followed by March lows and rallies into May but this rally is stronger in magnitude and time as well. Both of these periods line up well with the Saturn and Jupiter retrograde periods and are suggesting seasonal weakness into October this year too.

The QQQQ to SPY ratio marks major turns


The Nasdaq 100 to SP-500 ratio is a good measure of sentiment as riskier Nasdaq issues are favored when expecting much higher prices. Previous High-Low-High cycle turns near Oct 07, Mar 08, Aug 08 and Nov 08 were all very significant within weeks and the May 09 cycle high has turned down from a slightly lower low in overbought suggesting a decline into Sept 09 as the Jupiter retro period also suggests.

The 91 month or 7 years and 7 months cycle between bear markets


The 91 month cycle is a combination of Prime numbers since it is the 13th repetition of the 7 month cycle, and turns out to be significant as the timing between the bear markets of 2000 and 2007 shows in the chart here. A look at the March 6th low aligned with the 9/11 low 90 months ago shows many similarities and it suggests a decline in June followed by a retest of the highs in July before a decline to new lows by October.


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The 30 day cycle in the Dow suggests weakness into Triple Witching Expiration


 

The Nasdaq 28 month cycle high of May 2009 suggest weakness in June and/or July


May 2009 is a 28 month cycle high in the Nasdaq, and in the last 30 years only two out of six signals were early. The May 1983 cycle was one month and 10% early, and the January 1992 cycle was one month and 3% early. Since we have already exceeded the May 2009 high of 1774 in the Nasdaq by 6% we may be in one of those special extensions, but the odds remain 2 out of 3 that we close below Nasdaq 1774 in June, and even more likely in July.

Debt, the USD, Deflation and Inflation

Executive Summary


In summary, the holders of paper assets are clearly moving gradually and in some cases dramatically into hard assets like Oil, Gold and other Commodities as well since 1998-2000, and the current global debt problems are only going to accelerate this process in the following decade, probably resulting in the establishment of a new Gold based international settlement agreement much like Bretton Woods.

Attempts to reflate the Debt Bubble are unsustainable


During the 8 years Bush was in power total US Treasuries increased from 5.5 tn to 9.5 tn for a 72% increase or 7% annualized inflation in US Treasuries. Since Treasuries are less than Corporate Debt, this 7% figure actually gets at least doubled and if we add mortgages which are also larger we at least triple it into a 20% rate of annual inflation in debt and money supply. This is unsustainable and the system is already having a heart attack, and now comes Helicopter Ben and Power to the People Obama who will stop at nothing to prove they are right and can fix this, when History says no one can. The trillion and more the Obama administration has added to the US Treasuries already makes the annual rate of inflation this year at 15%, and that is assuming they issue no more for the next 6 months and that is doubtful.


Courtesy of BullAndBearWise.com/

Foreigners not giving up on the US Dollar for now


This will eventually end with Hyper-Inflation like all other fiat bubbles of the last 2,000 years, but before that happens, the USD must be isolated and no longer a reserve currency. The chart below shows that support from Foreigners has been in an up trend that so far peaked in 2003, and the next turn down if it does not make a new high could have wave 3 character and accelerate downwards rather quickly supporting a Hyper-Inflation scenario in the USD. The CRB to Gold ratio is already dropping in a wave 3 character and warning of the possibility of such a Hyper-Inflation scenario in the future. This chart also shows that the yield curve is not signaling a bull market yet, and it always does. Since the 4.3 year cycle high in the USD is in January 2010, next year could see the start of the decline of the USD into an eventual Hyper-Inflation death by one of the 4.3 year cycle lows of May 2014, September 2018 or even December 2022 since it will probably be a lengthy process.


Larger Image

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Where will all the US Treasuries and US Dollars go?


Since Asia owns about 3 tn and Europe 2 tn, or about 50% of total US Treasuries, what they do with them will be key to where Hyper-Inflation might show up first, and they wont really tell us what they are doing until its done, but money flows usually make things rise in price and we can detect what they are doing easily. The following chart clearly shows that Black Gold (Oil) and real Gold are where they are moving their funds and reserves, with general Commodities not far behind. All of these trends are very impulsive and most eWavers will quickly detect they are probably not complete.


Courtesy of StockCharts.com

 

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