Friday, March 29, 2024

Crude Oil's 10-Year Leading Indication for US Stock Market | Tom McClellan

One of the big picture forecasting tools is crude oil prices as a leading indication for the overall stock market. The first chart shows crude oil prices back to 1890 compared to the Dow Jones Industrial Average plotted on logarithmic scales. The price of crude oil is shifted forward by 10 years. The correlation isn't always perfect, but generally speaking, when there is a rise in crude oil prices, 10 years later, there is a rise in the stock market. When crude oil prices go flat, the stock market goes flat. 


We are not yet quite at that 10 year echo point in stocks, which would equate to June of 2024, 10 years after crude oil peaked. That means the next few years are not going to be so great, especially between now and early 2026. Early 2026 will be a great time for investors to ride the stock market long all the way to 2028. 
 

 

Wednesday, March 27, 2024

ICT Silver Bullet Strategy | Darya Filipenka

The ICT Silver Bullet Strategy is a time-based algorithmic trading model for all assets. For the 10 AM Silver Bullet strategy, focus on 10-11 AM, using fair value gaps and Fibonacci levels for entry/stop adjustments, aiming for a minimum 3R risk-reward, and exit by 11 AM to maximize profits and minimize risks. 
 

3:00 AM - 4:00 AM New York Time
  1. A Silver Bullet trade begins with a directional move either up or down.
  2. Fair Value Gap (FVG): After the directional move, a Fair Value Gap is left behind. This gap is an important indicator for the Silver Bullet trade.
  3. Market Structure Shift (MSS) after taking liquidity. A Market Structure Shift is a shift in direction of price delivery. When price is going in a direction and shifts to the exactly opposite. It occurs when price takes out previous short-term lows or highs within a trend. Identifying these shifts allows for an understanding on which side of the market to be trading with. A Market Structure Shift must be energetic and leave behind displacement to ensure that market is looking to reverse.
  4. Displacement is a location in price where someone with a lot of money comes into the marketplace with a strong conviction to move price higher or lower very quickly. Displacement is characterized by strong and quick price movement that leave behind Fair Value Gaps.
  5. Entering the Fair Value Gap: Once the Fair Value Gap is identified, we enter inside it. This means we take a position in the market.
  6. Target and Exit: I aim for Asian Session Liquidity Level or Higher Time Frame Premium/Discount levels.
10:00 AM - 11:00 AM New York Time
The first thing we think about is the previous New York PM session. If, within the first 30 minutes after the market opens, we're not close to the PM range, we focus on the London Session Raid. This refers to the time between 2:00 AM and 5:00 AM, which is shown on the ETH chart. During the first 30 minutes after the market opens at 9:30 AM, we check where we stand compared to the previous PM session or London session. The market might go up or down, or it might stay stable. Then we wait for the Displacement between 10:00 AM and 11:00 AM, which sets the stage for the Silver Bullet setup.
  1. Every day between 10 AM and 11 AM EST, identify an obvious pool of liquidity that has not been tapped into or engaged.
  2. Wait for displacement (use 1-3-5 minute charts) towards liquidity pool between that time. Find a Fair Value Gap (FVG) on the opposite of the targeted liquidity pool.
  3. Wait for price to trade back into the Fair Value Gap and then reprice out of the FVG towards the targeted pool of liquidity.
After identifying the Market Structure Shift (MSS), I recommend drawing an Optimal Trade Entry (OTE) retracement from the Swing Low (High) to the Swing High (Low). The optimal entry point for trades is typically at the 62% retracement level of that range. Once the trade is entered, the first target is typically set at the -27% extension level, and the second target is set at the -62% extension level.

2:00 PM - 3:00 PM New York Time
The first thing we focus on is the morning and lunch time trading sessions. Our goal is to identify the AM Session Buy Side and Sell Side Liquidity (BSL/SSL) or Lunch BSL/SSL once the PM Session starts (from 1:30 PM to 4:00 PM). This will serve as our reversal point during the afternoon Silver Bullet, where our target will be the opposite liquidity of the lunch/AM session. If it's Friday, our target can be 20-30% of the weekly range. This is known as the T.G.I.F. setup according to ICT.
  1. We wait for the Displacement between 2 PM and 3 PM EST, which sets the stage for the Silver Bullet setup.
  2. We look for a clear pool of untapped liquidity. It's recommended to pay attention to the liquidity levels during the AM and Lunch sessions.
  3. Find a Fair Value Gap.
  4. Wait for the price to trade back into the FVG and then move out of the FVG towards the targeted pool of liquidity.
Once again, we usually consider the AM Session BSL/SSL or NY Lunch BSL/SSL as our clear liquidity pool that has been taken. Then we wait for Market Structure Shift (MSS) and displacement.
 
Consider the 6 hour, the 90 minute, and the 22.5 minute cycles.
Expect highs and lows on the 1 minute chart around Micro-Quarter turns.

Reference: 

Monday, March 25, 2024

Prepare for April S&P Correction Now │ Allen Reminick

Short term, the S&P market is topping in the next two weeks.


We've been discussing the 18 year cycle and the 12 year cycle and the 24 year cycle, all having agreement since March 12th, where they all implied that the market would rally until Monday, March 25th or longer. There is a very good chance that is the beginning of a sideways phase that could last until as late as April 10th. We're not expecting a dramatic continuation on the upside. Potentially the market goes slightly higher between now and April 10th, but it's a topping phase. 
 

It's a down, up, down, up, down, up kind of pattern. And finally, in the later part of April, it should make a low. Between April 16th and the 24th of April. But it may gyrate and just do nothing much until it's ready to fall between April 10th and April 24th.

 
After that, of course, we're expecting to see further, higher prices until May 23rd , between 5,400 and 5,600. This could be completing the move that started October 27th of 2023.

Sunday, March 24, 2024

S&P 500 March-April 2024 Seasonality │ Jeff Hirsch & Wayne Whaley

After 5 months of solid gains, are markets ready for a pause? Bullish Presidential Cycle Sitting President Pattern flattens out the mid-February to late-March seasonal retreat considerably without 2020 in the average.

 'Best Six Months' ends in April.

April is the final month of the “Best Six Months” for DJIA and the S&P 500. From our Seasonal MACD Buy Signal on October 9, 2023, through (March 21, 2024), DJIA is up 18.4% and S&P 500 is up 20.9%. Fueled by interest rate cut expectations and AI speculation, these gains are approximately double the historical average already and could continue to increase before the “Best Months” come to an end.


This AI-fueled bull market has enjoyed solid gains since last October and will likely continue to push higher in the near-term, but momentum does appear to be waning with the pace of gains slowing. With April and the end of DJIA’s and S&P 500’s “Best Six Months” quickly approaching we are going to begin shifting to a more cautious stance. We maintain our bullish stance for 2024, but that does not preclude the possibility of some weakness during spring and summer.
 
 
 
THE CORRELATION MODEL SEES A NEGATIVE LAST WEEK OF MARCH FOR THE S&P. Provided a time frame of interest, my correlation model calculates the Correlation Coefficients (-1 to +1) for the past performance of 4165 different time frames over the prior 3 months vs the performance for the time frame of interest in search of the period which has demonstrated the most barometric acumen in predicting the performance of the upcoming time frame of interest. 
 
This week I ask the model for it’s prognosis for the S&P in the last week of March. It responded that the prior ten calendar days (Mar10-24) had a very uncanny track record of forecasting the last week of March with those 2 time frames having a very strong NEGATIVE correlation which doesn’t bode well for next week given that March 10-24 was up 1.63% this year.  
 
Note the 3-10, March 24-31 performance in the far right category below in those 13 prior years where March 10-24 was greater than 1.2% for an avg wkly loss of 0.74% with 1% moves 1-7 to the downside.  This contrasts dramatically to the 11-2 performance when March 10-24 was less than -0.5%.  Fingers crossed that it is wrong this year. 
 
The outlook for April is much brighter. 
 
  
Reference: 
 
[ oftentimes true: ]
 
In Bull Markets, New Moons are Bottoms, and Full Moons are Tops. 
In Bear Markets, New Moons are Tops, and Full Moons are Bottoms.
 
The SoLunar Rhythm in March 2024.
 
 
 
 
 

Pervasive Euphoria Across The Market | TomTheTrader

The markets closed another week at record highs, with the S&P 500 up by 2.3%, the Nasdaq by 3%, and the Dow by 2%. [...] I want to share two charts that caught my attention: The first chart, courtesy of Sentimentrader, depicts the small speculator index at the bottom. The annotation succinctly captures the essence of the chart— "small speculators are all in." 
 
 Small speculators are all-in.

This mirrors my observation last week regarding fund managers being fully invested based on the NAAIM index. The alignment between market participants, both large and small, underscores the pervasive euphoria across the market.

 Tech leadership vs S&P 500 is at highs exceeding the Great Financial Crisis.

The second chart, from Bank of America Global Research, highlights the Technology leadership versus the S&P 500, reaching levels surpassing those seen before the Great Financial Crisis. This serves as an intriguing backdrop to maintain awareness as sentiment and positioning continue to stretch.

Quoted from:
 
This week’s
NAAIM Exposure Index number is 93.22
Active fund managers are all-in.
 

Friday, March 22, 2024

500 Years of Western Dominance - What Comes Next | Glenn Diesen

Felix Abt: A great European religious war and the first pan-European conflict over superpower status came to an end in 1648. After 30 years of devastating wars and chaos, especially on German soil, with millions of deaths and shattered economies, the Peace of Westphalia brought a new, rules-based order to Europe, as the Western political class would call it today. This included the inviolability of borders and non-interference in the internal affairs of sovereign and equal states; it is regarded as a milestone in the development toward tolerance and secularization. How did this affect the new powers that emerged afterward and their quest for hegemony?

Glenn Diesen: The lesson from the Thirty Years War (1618-1648) was that no one power could restore order based on hegemony and universal values, as the other states in Europe would preserve their own sovereignty and distinctiveness by collectively balancing the most powerful state. This was evident when Catholic France supported Protestant Sweden to prevent the dominance of the Catholic Habsburgs. The Peace of Westphalia in 1648 gave birth to the modern world order, in which peace and order depend on a balance of power between sovereign states. The Westphalian system prevents hegemony as other states collectively balance the effort of an aspiring hegemon to establish economic and military dominance, and universal values are rejected to the extent they are used to reduce the sovereignty of other states.

» The Westphalian system prevents hegemony. « 
The 1648 peace treaty between the parties in the Thirty Years' War established the Westphalian system.
 
The principle, known as the Westphalian principle of sovereignty, prohibits interference in the internal affairs of another state, and every state is equal before international law, regardless of its size. Thus, every state has sovereignty over its territory and its internal affairs, to the exclusion of all external powers. But when the European colonial powers used violence to impose their will on other continents, they violated this ideal. Was this the beginning of this principle’s demise?
 
The Westphalian system should in principle be based on sovereign equality for all states. However, it originated as a European security order that later laid the foundation for a world order. Under the original Westphalian system, the Europeans claimed special privileges and the principle of equal sovereignty for states did not apply to everyone. Sovereignty was deemed to be a right and a responsibility assigned to civilized peoples, a reference to the Europeans as white Christians. The international system was divided between the civilized and the barbarians. There was one set of rules for the Europeans in the civilized garden, and another set of rules when the Europeans engaged with the so-called despotic barbarians in the jungle. The interference in the internal affairs of other peoples and the development of vast empires was framed as the right and the responsibility of civilized states to guide the barbaric peoples towards universal values of civilization. This responsibility to govern other peoples was termed the white man’s burden and the civilizing mission.

 » The gardeners have to go to the jungle. «
Josep Borrell's universal mission.

In our current era, we have abandoned the civilized-barbarian divide, but we have replaced it with a liberal democracy-authoritarian divide to legitimize sovereign inequality. The West can interfere in the domestic affairs of other states to promote democracy, invade countries to defend human rights, or even change the borders of countries in support of self-determination. This is the exclusive right and a responsibility of the West as the champions of the universal values of liberal democracy. As the EU foreign policy chief Josep Borrell explained:
The gardeners have to go to the jungle. Europeans have to be much more engaged with the rest of the world. Otherwise, the rest of the world will invade us.

International law in accordance with the UN Charter defends the principle of sovereign equality for all states. The so-called
rules-based international order is based on sovereign inequality, which introduces special privileges under the guise of universal liberal democratic values. For example, the West’s recognition of independence for Kosovo was a breach of international law as it violated the territorial integrity of Serbia, although it was legitimized by the liberal principle of respecting the self-determination of Kosovo Albanians. In Crimea the West decided that self-determination should not be the leading principle, but territorial integrity. The US refers to liberal democratic values to exercise its exclusive right to invade and occupy countries such as Iraq, Syria and Libya, although this right is not extended to countries in the jungle.  

» The so-called “rules-based international order” is based on sovereign inequality, 
which introduces special privileges under the guise of universal liberal democratic values. «
In 1945 fifty countries established the United Nations System. With the help of this supra-national governance
system the Anglo-Frankish-Zionist-Dönmeh-Wahhabi-Takfiri elites of the UK, France, Turkey, Saudi Arabia, the US and
some others, expected to secure their hegemonies beyond the foreseeable demise of traditional colonialism
The Bretton Woods conference, World Bank, IMF, nuclear bombing of Japan, dividing Korea 
and creating the State of Israel in Palestine are early show cases of what Pax Americana and UN are all about.

[...] The Ukrainian conflict is essentially an extension of American geopolitics, which aims to carry out Mackinder’s aforementioned stanza, He who rules Eastern Europe rules the world. What are your thoughts about it?

Preventing Germany and Russia from controlling Eastern Europe means that much of the Eurasian continent becomes landlocked. US control over Eastern Europe implies that Russia can not bridge Europe and Asia, but rather becomes an isolated land-locked region at the dual periphery of Europe and Asia.

Brzezinski outlined the strategy for developing and preserving US global primacy, which relies on the age-old wisdom of divide-and-rule. Brzezinski wrote that the US must
prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and keep the barbarians from coming together. Historically, the British and the Americans have worked to prevent Germany and Russia from coming together as it would form an independent pole of power. Hegemony requires conflict between Germany and Russia, as Germany becomes a dependent ally and Russia is weakened. This logic is also applied to why it is beneficial to perpetuate tensions between the Arabs and Iran, or between China and its neighbors. The US has been very concerned about the economic integration between the Germans and Russians, which is why the US was so hostile to the Nord Stream pipelines and most likely was behind the attack on these pipelines. 
 
 Anka Feldhusen, a fine example of a German Neonazi apparatchik of the 21st century.
March 22, 2023.
 
 Wehrmacht 2.0 south of Kiev. 
There will be hell to pay.
March 22, 2024.


The problem is that the world is no longer Western-centric and by pushing Russia away from Germany, the US has pushed Russia towards China – a technological and industrial power much greater than Germany. In the mid-19th century, the British fought against Russia in the Crimean War with the explicit purpose of pushing Russia back into Asia, where it would remain technologically and economically backward and stagnant. NATO’s war in Ukraine is a repeat of the efforts to push Russia back into Asia, although this time Asia is much more dynamic than the West. The failure of the West to adjust our grand strategy to this new reality has been a mistake of immeasurable proportions. We have not subordinated Russia, rather we ended Russia’s 300-year-long Western-centric policies in which Moscow looked to the West for modernization.

What is driving this stunning anti-Chinese obsession in the United States against a country that upholds the principle of non-interference in other countries, that used its mighty navy only for trade and not for gunboat politics when it was a superpower in the past, and that follows the millennia-old concept of “Tianxia” (天下), which literally means “everything under heaven”, that is, an inclusive world full of harmony for all?

China does not threaten the US, but it threatens US dominance as the foundation for the unipolar world order established after the Cold War. The US is currently attempting to weaken China through economic warfare, convincing its allies to decouple from the Chinese economy, and knocking out Russia in Ukraine as a vital partner of China. If the US fails to achieve its objectives, then it will likely stoke conflicts between China and its neighbors to make the neighbors more dependent and obedient, and also create instability for the Chinese that will bleed it of resources. The ideal would be greater tensions between India and China, as India would have to make itself more reliant on the US and it would be an important ally to weaken China. If all fails, then the US could also fight an indirect war through a proxy similar to the way they are using Ukrainians to fight Russia – by for example pushing for Taiwan’s secession. Besides securing its supply chains and building a military for deterrence, China should prioritize resolving its disputes with India as any friction with China can be exploited.

» This is a Westphalian system with Eurasian characteristics. « 
Since 2009 BRICS is establishing a Multipolar World Order based on Westphalian principles and controlled by the 
Eurasian great powers China, India and Russia. Egypt, Ethiopia, Iran and the United Arab Emirates joined BRICS
on January 1, 2024. To date 15 more countries have formally applied to join.

Finally, in your new book you say that a new Westphalian world order is reasserting itself, albeit with Eurasian characteristics. Can you explain this in more detail?

We are returning to a Westphalian system based on a balance of power between sovereign states. However, the former Westphalian system was based on sovereign equality among the Western powers while the barbarians or despots outside the West were not deemed to be qualified for the responsibility of sovereignty. It was a dual system of collective hegemony of the West, with sovereign equality between the Western states. In the new Westphalian system, there are several powerful states that are not Western, with China as the leading economy in the world. The Eurasian powers such as China, Russia, India and others are developing the economic foundations for this system with new technologies, transportation corridors and financial instruments. The Eurasian powers are more prepared to include the Global South as sovereign equals. The Eurasian powers reject the so-called rules-based international order based on sovereign inequality, as Western dominance should not be legitimized by a civilized-barbarian or liberal democracy-authoritarian divide.

The Western powers over the past centuries have had an inclination for dominance and empire by controlling limited maritime corridors. Russia’s Eurasianism in the 19th century was a hegemonic strategy by dominating the Eurasian landmass through land corridors, although under the multipolar distribution of power the Russians do not have the capability or intentions to pursue hegemony. Instead, Eurasian integration entails moving from the dual periphery of Europe and Asia, to the center of a new Eurasian construct. Even China as the leading power does not have the capability or intention to pursue hegemony. Countries like Russia are content with China being the leading power, although they would not support China if it demanded dominance and hegemony. The Chinese demonstrate that they are not attempting to limit Russia’s economic connectivity with other states to make itself the only center of power. In the Global Civilization Initiative, the Chinese are also advocating for respecting civilizational differences and that all states have their own path to modernity, which implies that China is not claiming to represent universal values that legitimizes interference into the domestic affairs of other states. The West assumed that the Russia-China partnership was a marriage of convenience and that they would clash over influence in Central Asia, but this never happened because neither side demanded hegemony. Instead of sabotaging each other’s relations with the region, China and Russia harmonized their interests in Central Asia. China, Russia, India and other Eurasian powers have different visions and interests in terms of Eurasian integration, but they all need each other to realize their goals and pursue prosperity. Hegemony is not an option. This is a Westphalian system with Eurasian characteristics.

Quoted from:
 

See also:

Thursday, March 21, 2024

The 500 Year Cycle | Raymond H. Wheeler

The 1000 year cycle tends to break down into halves of about 500 years each. Centering on the dates of 375 BC, 30 AD, 460 AD, 955 AD, and 1475 AD, climate was dry and colder than usual. The warm periods were short and were often disrupted by drops in temperature. Midway between these dates, the warm periods stretched out; the interruptions were not as long, and the cold periods shortened. The result is an intermediate cycle averaging 510 years in length.
 
 » Mass migrations were extensive, and all the ancient civilizations collapsed. «
Vandals sacking Rome, 455 AD.

The beginning of the first of these 500-year rhythms marks an important place in the history of climate. Prior to 575 BC, climatic cycles were longer and more extreme than they have been since then. In the two centuries immediately following, from 450 ta 320 BC, it was warm much of the time. Two 100-year cycles were almost fused into one. The cold period between them, at 420 BC, was very short. After that, the cold periods lengthened. By the end of this 500-year period, at the time of Christ, there was an exceptionally long cold period.

The cold phase centering on 460 AD, at the end of the next 500-year cycle, was also exceptionally cold. Mass migrations were extensive, and all the ancient civilizations collapsed. There was a long-term downward trend in rainfall. Although there were long cold phases in the 600s and 700s, they were frequently interrupted by silts to the warm side and did not seem to be exceptionally bad. The cold phases of the 800s and 900s were extremely severe, causing many migrations, primarily from the northern countries — especially when conditions began to deteriorate approaching 955, near the end of the 500-year rhythm.
 
 » Civilizations broke up and new ones took their places. «
 Migrants storming European Union borders, 2024 AD.

Subsequently, temperatures warmed suddenly. The 1000s were so warm that trees grew in Greenland. This was the period when Vikings crossed the Atlantic, One of the most severe hot droughts in history occurred in the 1130s. The 13th century saw a long warm period. Then climate began to deteriorate again. While the 14th century was warm much of the time, there were frequent and sharp drops in temperature; often it was very stormy. During several winters, the straits between Denmark and Sweden froze over solid enough to support horses and sleds, Greenland began to freeze. In the 15th century, there was no long warm period.

The next 500-year rhythm terminated at 1475. Subsequently, temperatures warmed up again. The 17th century was so warm that the next 100-year cycle had but a short cold phase, centering on 1655, and this was quickly interrupted by a shift back to the warm side. During the 19th and 20th centuries, climate deteriorated again.

 
» The 500 year period beginning at 1475 is drawing to a close. «
 Migrants breaching US southern border, 2024 AD.
Climate change? Sure.

Events of great importance occur every 500 years. Midway between 575 BC and 460 AD, the Roman Empire began its decline as Christianity rose. There were no strong European civilizations for a long time. On the other hand, there were very strong Asiatic empires such as that of the Huns. Midway between 460 and 1475, in the 9th and 10th centuries, a vast change occurred, again involving mass migrations, These events divided the Middle Ages into two halves. In the first half, there were brilliant empires like those of Justinian with its capital at Constantinople, Charlemagne in the West, and the Arabs in the East. The Arabs moved into Spain and India, developing brilliant civilizations at Cordoba and Bagdad. But all this came to an end. These civilizations broke up and new ones took their places. Following 975, the feudal period developed, with the growth of principalities that were to form modern European states. Amazing empires were built by the Mongols in Asia, the Incas in South America, and the Mayas in Central America. In India and Japan, new empires were born. The Balkans achieved their Golden Ages during this period.

All this came to an end in the 15th century. The Medieval economy, customs, and modes of thought disappeared. With the new 500-year climatic cycle came the Renaissance, the Reformation, and the building of modern nations — first under absolute monarchs, then under constitutional governments. This most recent 500-year cycle has witnessed the awakening of modern art, science, and economics. In these more advanced civilizations, the common people have, for the first time in history, come into their own under democratic political and economic systems.

 » The same types of events occurr with almost clock-like regularity. «

The 500 year period beginning at 1475 is drawing to a close. We are now witnessing many of the same types of events that have occurred under similar circumstances with almost clock-like regularity five times before in history. These events are of the utmost significance for the businessman and student of today — and tomorrow.
 
Quoted from:
Raymond H. Wheeler (1943) - The 500 Year Cycle. 
With a Forecast of Trends Into the 21st Century.
 
  » A 500-year cycle is now terminating, which belonged to Europe.
The next 500-year cycle will belong to Asia.
«
Raymond H. Wheeler, 1951.

See also:
Raymond H. Wheeler (1943) - The 100 Year Cycle - Climate, Regime Change and War.
Donald A. Bradley (1943) - Cycles Write World History.