Sunday, July 31, 2016

In 50 Years this has never failed to trigger a Bear Market | Jesse Felder


Jesse Felder (Jul 30, 2016 @ Zero Hedge) - Over the past half-century, we have never seen a decline in earnings of this magnitude without at least a 20% fall in stock prices, a hurdle many use to define a bear market. In other words, buying the new highs in the S&P 500 today means you believe “this time is different.” It could turn out that way but history shows that sort of thinking to be very dangerous to your financial well-being.

On July 29 CNN's Fear & Greed Index indicated "Extreme Greed"
Source
: CNN Fear & Greed Index
Citigroup's Panic/Euphoria Model on August 01, 2016 = Most 'euphoric' since August 2015.
S
ource
: Citigroup Panic/Euphoria Model

Europe Doomed by Vassalage to Washington? | Paul Craig Roberts

Creeping US-Conquest of Europe by the occupation of Germany since 1945.
Paul Craig Roberts (Jul 27, 2016) - World War II resulted in Europe being conquered, not by Berlin but by Washington. The conquest was certain but not all at once. Washington’s conquest of Europe resulted from the Marshall Plan, from fears of Stalin’s Red Army that caused Europe to rely on Washington’s protection and to subordinate Europe’s militaries to Washington in NATO, from the replacement of the British pound as world reserve currency with the US dollar, and from the long process of the subordination of the sovereignty of individual European countries to the European Union, a CIA initiative implemented by Washington in order to control all of Europe by controlling only one unaccountable government. 

HERE + HERE + HERE
With few exceptions, principally the UK, membership in the EU also meant loss of financial independence. As only the European Central Bank, an EU institution, can create euros, those countries so foolish as to accept the euro as their currency no longer have the power to create their own money in order to finance budget deficits. The countries that joined the euro must rely on private banks to finance their deficits. The result of this is that over-indebted countries can no longer pay their debts by creating money or expect their debts to be written down to levels that they can service. Instead, Greece, Portugal, Latvia, and Ireland were looted by the private banks.

The EU forced the pseudo-governments of these countries to pay the northern European private banks by suppressing the living standards of their populations and by privatizing public assets at pennies on the dollar. Thus retirement pensions, public employment, education and health services have been cut and the money redirected to private banks. Municipal water companies have been privatized with the result being higher water bills. And so on. As there is no reward, only punishment, for being a member of the EU, why did governments, despite the expressed wishes of their 

Who owns the DAX, Germany’s pre-eminent equity index?
Not many Germans, it turns out. According to fresh research from
the Bundesbank, the share of domestic ownership of the index —
which comprises the 30 largest public companies in traded in the
equities markets — fell from 44.1% in 2005 to 36.3% in 2014.
Meanwhile, the foreign ownership share rose from 55.9% to 63.7%.
The share of private household ownership, included under the
category of domestic, fell from 14.4% to 12.9% over the same period.
Likewise, the share owned by German institutional investors and
investment funds also declined over the same period (HERE)
peoples, join? The answer is that Washington would have it no other way. The European founders of the EU are mythical creatures. Washington used politicians that Washington controlled to create the EU. Some years ago CIA documents proving that the EU was a CIA initiative were released (HERE). In the 1970s my Ph.D. dissertation chairman, then a very high-ranking official in Washington with control over international security affairs, asked me to undertake a sensitive mission abroad. I refused. Nevertheless, he answered my question: “How does Washington get foreign countries to do what Washington wants?” “Money,” he said. “We give their leaders bagfuls of money. They belong to us.

The record is clear that the EU serves the interests of Washington, not the interests of Europe. For example, the French people and government are opposed to GMOs, but the EU permits a “precautionary market authorization” of GMO introduction, relying perhaps on the “scientific findings” of the scientists on Monsanto’s payroll. When the US state of Vermont passed a law requiring labeling of GMO foods, Monsanto sued the state of Vermont. Once the paid-off EU officials sign the TTIP agreement written by US global corporations, Monsanto will take over European agriculture. But the danger to Europe goes far beyond the health of European peoples who will be forced to dine on poisonous foods. Washington is using the EU to force Europeans into conflict with Russia, a powerful nuclear power capable of destroying all of Europe and all of the United States in a few minutes. This is happening because the paid-off with “bagfuls of money” European “leaders” had rather have Washington’s money in the short-run than for Europeans to live in the long-run.

Reflections on occupied Germany
Here + Here
It is not possible that any European politician is sufficiently moronic to believe that Russia invaded Ukraine, that Russia any moment will invade Poland and the Baltic states, or that Putin is a “new Hitler” scheming to reconstruct the Soviet Empire. These absurd allegations are nothing but Washington propaganda devoid entirely of truth. Washington’s propaganda is completely transparent. Not even an idiot could believe it. Yet the EU goes along with the propaganda, as does NATO. Why? The answer is Washington’s money. The EU and NATO are utterly corrupt. They are Washington’s well paid whores. The only way Europeans can prevent a nuclear World War III and continue to live and to enjoy what remains of their culture that the Americans have not destroyed with America’s culture of sex and violence and greed, is for the European governments to follow the lead of the English and exit the CIA-created European Union. And exit NATO, the purpose of which evaporated with the collapse of the Soviet Union, and which is now being used as an instrument of Washington’s World Hegemony.

HERE
Why do Europeans want to die for Washington’s world hegemony? That means Europeans are dying for Washington’s hegemony over Europe as well. Why do Europeans want to support Washington when Washington’s high officials, such as Victoria Nuland, say “Fuck the EU.” Europeans are already suffering from the economic sanctions that their overlord in Washington forced them to apply to Russia and Iran. Why do Europeans want to be destroyed by war with Russia? Do Europeans have a death wish? Have Europeans been Americanized and no longer appreciate the historic accumulation of artistic and architectural beauty, literature and music achievements of which their countries are custodians? The answer is that it makes no difference whatsoever what Europeans think, because Washington has set up a government for them that is totally independent of their wishes. The EU government is accountable only to Washington’s money. A few people capable of issuing edicts are on Washington’s payroll. The entire peoples of Europe are Washington’s serfs.

Therefore, if Europeans remain the gullible, insouciant, and stupid peoples that they currently are, they are doomed, along with the rest of us. On the other hand, if the European peoples can come to their senses, free themselves from The Matrix that Washington has imposed on them, and revolt against Washington’s agents who control them, the European peoples can save their own lives and the lives of the rest of us (see also HERE+ HERE).

Weekly Chart Pattern Indicator Turned Bearish | Thomas Bulkowski

After the close on Friday, July 29th, Thomas Bulkowski's Chart Pattern Indicator for the S&P 500 Index turned bearish.
The indicator is a ratio of bullish patterns to the total of bullish and bearish patterns, expressed as a percentage.
More details on Thomas Bulkowski's Chart Pattern Indicator background (HERE)

The chart pattern indicator line is not as important as the signals which it generates, but I have included a chart of
the indicator itself so you can check for divergence. Divergence often gives hints as to which way the index moves in the
future. Look for lower/higher peaks in the indicator while the index is making flat or higher/lower peaks. The index will
often follow the indicator (HERE)
Warning:

If you use this indicator for periods shorter than weekly, you will likely be in for a nasty surprise. Due to the way I have it
configured, signals up to a week old can change or disappear. Thhe current sell signal may not be valid for another week or it
may change in a few days when more NR7s break out. Thus, this indicator is best used as a weekly signal (that
is, signals older than a week are reliable) of market trend (HERE)

Saturday, July 30, 2016

U.S. Oil Industry | Record Exports and Worst Profits since 1999

Big Oil had a horrible Q2 quarter. So far in Q3, oil prices had averaged lower than in Q2, and refining margins are
much lower too. Exxon has the worst profit since 1999, and the industry cannot survive on current oil prices. “What
we’re seeing is that there’s just no place for the supermajors to hide”, Brian Youngberg, an analyst at Edward Jones
& Co. in St. Louis, said in an interview. “Oil prices, natural gas, refining, it all looks very bad right now.” (HERE)

Friday, July 29, 2016

SPX vs Inverted 354 CD (Lunar Year) Cycle

The Lunar Year Cycle (Medium Term Delta) seems to have inverted recently (from L-L and H-H polarity to L-H and H-L polarity).
If the current polarity persists a major high in the S&P500 by mid August is likely.
SPY | Neural Network-Forecast | by Alphee Lavoie

Emerging Markets Business Cycle | Approaching Gradual Recovery

Source: Morgan Stanley Research
Morgan Stanley Research (Jul 21, 2016) - There are five phases of the emerging markets cycle:

1. Productive growth, a stage of moderate to high productivity-driven growth;
2. Misallocation, in which there is moderate growth driven by bad macro policies;
3. Adjustment;
4. Restoring Macro Stability, and finally
5. Gradual Recovery.

A large number of emerging markets have moved into the “restoring macro stability” recently — which means that growth is still weak, but the economy is stabilizing. Russia, Brazil, Turkey, and Thailand are in this category Global GDP growth might get a boost next year, as some economies approach the end of the “emerging markets business cycle” and begin a gradual recovery.

These economies are not necessarily strong yet, but do show signs of increasing stable growth — except for Turkey, whose economy could be negatively impacted after the failed coup attempt. Thailand, for example, still has weak domestic demand and exports, but its economy is growing, partly due to robust growth in tourism, and Russian oil has managed to prosper even with today’s low prices. Brazil is still dealing with an economic crisis, which is exacerbated by its political one — but financial markets reacted favorably to news of the possibility of the president’s impeachment, and a Brazilian economist said that “the expected changes in the government and its economic policies could represent the beginning of a gradual return of investor confidence in Brazil,” and that the economy should return to growth by 2017.

If these countries move into the recovery stage in the next year, it would drive an acceleration in emerging market growth for the first time in four years. Morgan Stanley expects the GDP growth of emerging markets, excluding China, to accelerate from 2.7% to 3.8% in 2017. Those markets together make up 37% of global GDP. Countries that are already in this “recovery” phase include Mexico, which has the 11th-high GDP in the world but is still considered a developing country, and India, which has been called the “biggest turnaround story” in emerging markets because of its slow, gradual growth over the past few years. Meanwhile, China is still in the “misallocation” stage — the one with moderate growth but bad macroeconomic policies. Also in this category is Korea, whose low growth has been largely caused by declining trade with China.

Most Volatile Seasonal Period About to Begin | Nautilus Research

Source: Nautilus Research
Source: Nautilus Research

Tuesday, July 26, 2016

SPX vs BB 233 var 2 + 125 DMA | Resistance and Support

Upper Bollinger Band (Length 233 Days; + 2 Standard Variations) | 125 Day Moving Average

Thursday, July 14, 2016

VIX | Put/Call Ratio | AI Forecast | Extreme Greed

The VIX should turn up today, meaning the SPX turning sideways-to-down into Jul 20 (Wed).
The next lows in the VIX (= highs in the SPX) are likely Jul 14 (Thu), Jul 28 (Thu), and Aug 16 (Tue).
Source: CBOE
Source: CBOE
FFC Long Range Forecasts rely exclusively on Artificial Intelligence and Machine Learning to analyze and model.
Source: Financial Forecast Center, LLC.
90% of the stocks in the S&P 500 are now above the 20 Day Moving Average.
Source: CNN Fear & Greed Index

Tom McClellan: NYSE vs Haurlan Index | Not A Price Top (Yet)

Haurlan Index - A reliable “Not A Price Top” Indicator. Source: Tom McClellan
Tom McClellan (Jul 13, 2016) -  If you want to have a recipe for a sustainable bull market, the best ingredient to start with is “gobs of breadth”. Strong A-D data is a sign of plentiful liquidity. The stock market can encounter other types of problems, but if liquidity is strong then investors can get past momentary worries about Brexit, earnings, valuations, etc. I like to say that there are really only 2 fundamentals that matter for the overall stock market:
1) How much money is there? and
2) How badly does that money want to be invested?

Source: Tom McClellan

For the first one, we look at things like what the Fed is doing with QE, and what the A-D Line says about liquidity actually hitting the stock market. For the second, we use sentiment indicators of various stripes. In the wake of the June 23 Brexit vote, there were 2 hard down days, and then a long string of up days for the overall market, and with very strong breadth numbers. That brought us a new all-time high for the NYSE’s A-D Line, and a high reading for the indicator in this week’s chart [...] The 10% Trend of daily A-D can only get up to a really high level like this when there is a big surge of positive breadth like what we have just seen lately. And as the vertical lines in the chart show, a really high peak in this indicator seldom coincides with the final price high for the move. That’s the key insight. When this indicator zooms up to very high levels, it can serve as a reliable “Not A Price Top” indicator.  So there is your headline: Not A Price Top (yet).

The Annual-, Presidential- and Decennial Patterns of the DJIA have major highs in mid August and early September (also HERE).
Nautilus Research (Jul 12, 2016)
LPL Research (Jul 12, 2016) - After a new high [in the S&P 500) was made, the returns going out a year
were better than the average return. In fact, going out six months and a full year shows very strong
returns, up 7.3% and 14.0%, respectively, on average. A year later, the S&P 500 has been higher 12 out
of 13 times, with only the May 2007 new high lower a year later.

Friday, July 8, 2016

US pushes the World towards Nuclear War

"How do you not understand that the world is being pulled in an irreversible
direction? You people do not feel the impending danger
[...] I don't know how
to get through to you people
", said Vladimir Putin at a meeting with foreign
journalists at the conclusion of the Saint Petersburg International Economic
Forum on June 17th, when he left no one in any doubt that the world is headed
down a course which could lead to nuclear war
(HERE + HERE + HERE)
If the current situation continues, the outcome could be a devastating nuclear conflict. Washington poured five billion dollars into Ukraine with the aim of eventually instigating a coup on Russia’s doorstep. Washington and NATO are supporting proxy forces on the ground to kill and drive out those who are demanding autonomy from the US puppet regime in Kiev. Hundreds of thousands have fled across the border into Russia. Yet it is Washington that accuses Moscow of invading Ukraine, of having had a hand in the downing of a commercial airliner and of ‘invading’ Ukraine based on no evidence at all – trial by media courtesy of Washington’s PR machine. As a result of this Russian ‘aggression’, Washington slapped sanctions on Moscow.

The ultimate aim is to de-link Europe’s economy from Russia and weaken Russia’s energy dependent economy by denying it export markets. The ultimate aim is to also ensure Europe remains integrated with/dependent on Washington, not least via the Transatlantic Trade and Investment Partnership (TTIP) and in the long term via US gas and Middle East oil (sold in dollars, thereby boosting the strength of the currency upon which US global hegemony rests). The mainstream corporate media in the West parrots the accusations against Moscow as fact, despite Washington having cooked up evidence or invented baseless pretexts. As with Iraq, Libya, Afghanistan and other ‘interventions’ that have left a trail of death and devastation in their wake, the Western corporate media’s role is to act as cheerleader for official policies and US-led wars of terror. The reality is that the US has around 800 military bases in over 100 countries and military personnel in almost 150 countries. US spending on its military dwarfs what the rest of the world spends together. It outspends China by a ratio of 6:1. What does the corporate media say about this? That the US is a ‘force for good’ and constitutes the ‘world’s policeman’ – not a calculating empire underpinned by militarism. By the 1980s, Washington’s wars, death squads and covert operations were responsible for six million deaths in the ‘developing’ world. An updated figure suggests that figure is closer to ten million. Breaking previous agreements made with Russia/the USSR, over the past two decades the US and NATO has moved into Eastern Europe and continues to encircle Russia and install missile systems aimed at it. It has also surrounded Iran with military bases. It is destabilizing Pakistan and ‘intervening’ in countries across Africa to weaken Chinese trade and investment links and influence. It intends to eventually militarily ‘pivot’ towards Asia to encircle China.


Speech by Sahra Wagenknecht in the German Bundestag debate on July 7th
over the Government Declaration on the NATO Summit in Warsaw: "The US
nuclear weapons in Germany are to be modernized - not degraded, Mrs Merkel:
modernized - and missile bases are to be set up in Europe. Supposedly it's
all about deterrence, i.e. to keep Putin from invading the Baltics. I would
be really interested to know whether those who tell us this nonsense, believe
it themselves, even for a second
." 
(HERE + HERE)
Washington’s game plan for Russia is to destroy it as a functioning state or to permanently weaken it so it submits to US hegemony. While the mainstream media in the West set out to revive the Cold War mentality and demonize Russia, Washington believes it can actually win a nuclear conflict with Russia. It no longer regards nuclear weapons as a last resort but part of a conventional theater of war and is willing to use them for pre-emptive strikes. Washington is accusing Russia of violating Ukraine’s territorial sovereignty, while the US has its military, mercenary and intelligence personnel inside Ukraine. It is moreover putting troops in Poland, engaging in ‘war games’ close to Russia and has pushed through a ‘Russian anti-aggression’ act that portrays Russia as an aggressor in order to give Ukraine de facto membership of NATO and thus full military support, advice and assistance. Washington presses ahead regardless as Russia begins to undermine dollar hegemony by trading oil and gas and goods in rubles and other currencies. And history shows that whenever a country threatens the dollar, the US does not idly stand by. Unfortunately, most members of the Western public believe the lies being fed to them. This results from the corporate media amounting to little more than an extension of Washington’s propaganda arm. The PNAC, under the pretext of some bogus ‘war on terror’, is partly built on gullible, easily led public opinion, which is fanned by emotive outbursts from politicians and the media. We have a Pavlov’s dog public and media, which respond on cue to the moralistic bleating of politicians who rely on the public’s ignorance to facilitate war and conflict. 

If Putin is reacting in a certain way, it is worth wondering what the US response would be if Russia had put its missiles in Canada near the US border, had destabilized Mexico and was talking of putting missiles there too. To top it off, imagine if Russia were applying sanctions on the US for all of this ‘aggression’.

In André Barbault's Cyclic Index better times are at the highs, bad times at the lows. In Claude Ganeau's Index of Cyclic Equilibrium
general mundane circumstances are considered to be better above the zero-line. Periods below the zero-line are generally less favorable
and oftentimes coincide with major military conflicts
(see also HERE)

Wednesday, July 6, 2016

The British Pound's 100-Year Debasement & The City's China Wild Card

Bloomberg (Jul 5, 2016) - Sterling first slumped after coming off the gold standard in 1931 in which it had been overvalued, just as it was in 1944 when it joined the Bretton Woods system of managed exchange rates. Another 30 percent devaluation was swallowed in 1949 and then Wilson sanctioned another drop in 1967 amid Britain’s balance of payments crunch. While the IMF was called in to help avoid a sterling crisis in the 1970s, it fell again in the early 1980s. 

UK Equity Markets Dip Below 5%.
Source: Bespoke (Jul 5, 2016)
The U.K. joined the Exchange Rate Mechanism, a precursor to the Euro, in 1990 but was forced out just two years later because it couldn’t sustain a link to the Deutsche Mark. Now there is speculation that life outside the EU will cost the pound its place in the top tier of reserve currencies. It currently accounts for 5 percent of foreign exchange reserves, according to the IMF. A weaker currency may not do that much to prop up the U.K. economy. While it should boost manufacturing and tourism, three-quarters of the economy is dependent on services such as finance and their future is subject to whatever access to the EU the British government can negotiate. There are also
British Pound Sterling (GBP) to Chinese Yuan Renminbi (CNY)
Source: www.xe.com
structural weaknesses leaning against the pound. The U.K. ran a near-record current account deficit of 6.9 percent of output in the first quarter and is suffering from weak productivity. Demand remains weak abroad and prices may not be that sensitive to swings in the exchange rate because producers still rely on foreign components for their goods.

Thierry Meyssan (Jul 04, 2016) - The Western Press keeps repeating the same message – by leaving the European Union, the British have isolated themselves from the rest of the world, and will have to deal with terrible economic consequences. And yet, the fall in the Pound could be an advantage within the Commonwealth, which is a far greater family than the Union, and present on all six continents. Famous for its pragmatism, the City could quickly become the international centre for the yuan and implant the Chinese currency in the very heart of the Union [...] The London Stock Exchange announced an agreement with the China Foreign Exchange Trade System (CFETS), and, in June, became the primary Stock Exchange in the world to rate Chinese treasury bonds. All the elements were in place to transform the City into a Chinese Trojan Horse in the European Union, to the detriment of US supremacy.

Ahmed Farghaly (Jul 6, 2016): GBPUSD: Contradicting the EUR

Sunday, July 3, 2016

Gold + Silver vs COT

The latest Commitments of Traders (COT) report suggests Gold and Silver could see a pullback.
Source: Fibbo SR (Jul 03, 2016)

SPX vs Mercury – Venus Cycle


SPX vs Jupiter – Saturn Cycle


SPX vs Mercury Speed


SPX vs SoLunar Map


SPX vs CBOE Equity Put / Call Ratio | VIX | Fear & Greed Index | NR7

Jul 01 (Fri) = NR 7
The 4 Lunar Month Cycle suggests sideways-to-up of the VIX into Jul 6 (Wed) = sideways-to-down in US-Stock Indices

Near a top.
Source
: CNN Fear & Greed Index

Saturday, July 2, 2016

New Insights in Commodities | Cyclic Vibrations

Ahmed Farghaly (Jul 1, 2016) - The first chart is a synthetic chart of commodities. The way it was constructed was by isolating the second 18 year cycle of three 54 year cycle. The reason why I extracted the second 18 year cycle is because this is the cycle we are in right now in terms of commodities hence it should be correlated more with its counterpart in past 54 year cycles. I have also altered the length of the cycles to match the current average length of the 18 year cycle which is approximately 14.4 years. I then combined those cycles together in order to get a continuous series so I can isolate the cycle via spectral analysis and run neural network models on this particular position of the Kondratieff wave. The indicator that you see above is a neural network model with an 14.4 year cycle used as an input and the detrended zigzag as the output. This indicator's turning point should mimic those in the future provided that no significant changes occur to the length of the nominal 18 year wave. The second chart depicts the dates more clearly.

It is worth mentioning that the 14.4 year cycle with 4 harmonics was used as the input rather than just one harmonic, the reason for this was to aid us in depicted the peaks and troughs of the cycles smaller than the 14.4 year wave. As is visible on the chart above, we seem to have a clear path in the CRB index until late 2017. The projection also suggests that 2018 is likely to be a bad year for commodities. This correction should then be followed by a move into 4th quarter of 2020 followed by a correction to 2022 and so on (third chart).

In the neural network model below the price chart is an up percentage move indicator (fourth chart). It is calculated by having the cycle as an input and measuring the position of moves of over 7% a month and projecting something similar for the future of the current cycle. The likelihood of large percentage months on a closing basis is greatest from here going into mid 2019. Hence capital is best allocated in the commodity market now rather than chase the move after most of the large percentage gains have already been realized (fourth chart).

This indicator (fourth chart) is a forecast of the volatility index indicator using the same input as the charts above. It seems evident that the likelihood of high volatility is greatest from now going into 2020. This would mean that the purchase of call options are likely to be a better play than their sale in the upcoming environment. Trading in expectation of low volatility will probabalisticly lead to a loss going into 2020.