Showing posts with label Cycles. Show all posts
Showing posts with label Cycles. Show all posts

Wednesday, March 26, 2025

Are Metals Kicking Off the Next Commodity Supercycle? | Alex Krainer

Market analysts tend to attribute great significance to the price of copper as an important leading economic indicator: if demand for copper is rising, the economy is growing (and vice versa). For that reason, they pay close attention to what "Dr. Copper" is saying. But last week, Gold also made new all time highs at around $3,050/oz. Silver rallied quite strongly as well, but it's still trading well below its ATH price, which was just shy of $50/tr.oz. in April of 2011. Here is what the whole COMEX metals complex looks like:
 
 COMEX Metals Complex (January 01, 2021 = 100)
 
There has been an overall rising trend in the metals, building gradually from late 2023. However, platinum barely moved thus far and palladium actually dropped by more than half in the last four years. The rise in Gold, Silver and Copper may be driven by inflation fears rather than economic growth. Those three metals are investors' preferred inflation hedges. Inflation hedging demand is likely what's behind the upward pressure on prices. 
 
Europe's great rearmament frenzy and the hundreds of billions of euros being allocated for it might end up adding more upward pressure to prices of industrial metals, as well as energy. In all, this will end up giving a strong boost to commodity price inflation in what could end up being a self-reinforcing cycle, triggering the next leg in the widely anticipated commodity supercycle.

US Commodity Price Index (1795 to Present)
with Major Inflation Peaks (Red Dots) & Major Inflation Troughs (Blue Dots).
Shown as 10 Year Rolling Compound Growth Rate with Polynomial Trend at Tops & Bottoms.

Long commodity cycles suggest that currency debasement and inflation may peak in the early 2040s. A commodity supercycle could reach its peak by 2045 (indicated by the last red dot), following a long cycle wave that spans approximately 55 years, with each cycle growing 5 years longer over the past 200 years. This pattern implies that the next peak will occur around 2045, 65 years after the peak in 1980.

None of this will happen overnight: the commodity supercycle is expected to span a period of 10 to 25 years, and it will be marked with many price rallies, followed by corrections and consolidations in that time. It should therefore be navigated with due caution and an iron discipline.

 

Tuesday, February 11, 2025

Monday, January 20, 2025

How Markets Move: The Natural Cycle of Range Change │ Larry Williams

Markets typically shift from small ranges to larger trend moves. When the market is in a large trend move, wait for it to settle into smaller ranges before getting involved. This gives more reliable setups when the market trends again. Market tops generally occur when the price closes well off its low, while market bottoms happen when the price closes near its low. Most traders get emotional during these times, buying at tops and selling at bottoms. Once you understand this, it becomes easier to make smarter trades.

Small Ranges Beget Large Ranges. Large Ranges Beget Small Ranges.


Markets move from congestion to creation (expansion), transitioning from small ranges to larger, more defined trend moves. A small range signals buildup, and a large range signals an impending trend. If I see a small net change from open to close, I know a large trend move is likely coming and am prepared to act on it. Here’s an example using the NASDAQ: Notice how volume fluctuates throughout the day: heavy volume in the morning, a dip in the middle, and a surge towards the end. 

"U" shaped intraday: Heavy volume in the morning, a dip in the middle, a surge at the end.

This pattern is consistent across markets. It’s like a freeway: traffic is heavy in the morning, dies down in the middle of the day, and picks up in the afternoon. Understanding this helps day traders identify opportunities in the morning and towards the end of the day, while avoiding the midday lull. Volume drives range, and large ranges happen at the start and end of the day. This is when short-term traders make money. We need volatility and large ranges to profit.

 There are three key cycles in market behavior: 
(1) small range/large range, (2) moving closes within ranges, and (3) closes opposite openings. 
All three cycles work equally well in any timeframe and market.
"Do yourself a big favor: Mark off all the large-range days [in the chart above], and then study the size of the ranges just
prior to explosive up-and-down days. See what I see? We are given ample warning of virtually every large-range day 
by the shrinkage of ranges a few days earlier."

The key takeaway for short-term traders is that not every day offers a high-probability trade. You need to identify days with potential for explosive moves and not expect large profits daily. It’s about finding that opportunity.

As for market tops, they usually occur when prices close near their highs, and bottoms happen when prices close near their lows. Focus on these closing patterns to determine when to buy and sell.

Trend is a function of time. The more time in a trade, the more opportunity for trend.

The most important insight in trading is that trends are the basis of all profits. Without a trend, there are no profits. But what causes trends? Trends are fundamentally a function of time—the more time you hold a trade, the more opportunity for a trend to develop. The challenge with day trading is that trends occur only about 15% of the time. Most of the time, prices are consolidating, making it difficult to catch a big trend move. Limiting yourself to a few hours of trading only targets that small window when trends are likely to occur.

 My Day Trade Secret: HTTC - Hold To The Close.

The day trader dilemma is that they have limited time to catch trends. Holding positions overnight allows you to capture longer trends and larger profits. A small bet with the potential for a big move is the key advantage of holding positions over time. 
 
 » How you know a large trend move is coming. «
 
Many day traders are afraid to hold positions overnight. However, if you do the math, you'll see that most market moves happen between the close of one day and the open of the next. Moves within the day are often smaller and less reliable. For short-term traders, the key to success is recognizing large range days and holding positions to the close. This is how you catch a big move during the day.
 
 
 » Hold To The Close. « 
S&P 500 E-mini Futures (daily bars).
 Narrow Range 4 & 7 Days and Inside Bar Narrow Range 4 & 7 Days.

 Narrow Range 4 & 7 Days and Inside Bar Narrow Range 4 & 7 Days.

See also:

Monday, January 13, 2025

Hurst Cycles Forecast Bearish Q1 for S&P 500 & NASDAQ │ David Hickson

The first quarter of 2025 is expected to be bearish for the S&P 500 and the NASDAQ. Following the 40-day cycle trough observed in early December, the S&P 500 is expected to form a 80-day cycle trough around mid-January, i.e., this week.
 
 S&P 500 down into late March or early April.

A significant cycle trough in the first few months of 2025 is anticipated, likely around March or April. The price action as it exits the 80-day cycle trough will be crucial in determining the strength of the recovery or the continuation of the bearish trend.

 NASDAQ down into May.

The NASDAQ's 20-week cycle trough was formed in mid-December, and a significant 18-month cycle trough is expected around May 2025. A weak bounce from this week's low would indicate further bearish movement into May.

Sunday, January 12, 2025

2025 Gold Forecast │ Namzes

Big picture: November 3, 2022, marked the 8-year cycle low in Gold, and we are currently in a secular bull market. The overall trend, which shows an upward bias from Q2 2025 onwards, is illustrated below:


The positioning of the current 4-year cycle low is challenging to determine, as the cycle is irregular and not as robust as in other markets. The average 4-year cycle, shown below, suggests a low occurring in spring 2025. However, as seen, this cycle exhibits significant variation. The best estimate is that, if it does occur, it will likely be in March 2025, featuring a rapid sell-off and recovery rather than a prolonged bottoming process:


The 18-month cycle also exhibits some variation, with two potential paths shown. The last low occurred in October 2023, meaning that either November 14 marked the low, OR the low is still ahead, potentially in spring 2025, which could coincide with the 4-year cycle low:


The shorter, tradable composite cycle is shown in red. The bottom panel displays statistics for the individual cycles. The 40-day cycle is expected to peak and then move downward into the January open, followed by an upward movement into the early February 20-week cycle peak. This period also marks the seasonal peak, when the topping window opens:


Seasonality is shown below with high-confidence zones. The topping window opens in early February, with the seasonal low occurring in the third week of March. Additionally, there is a high-confidence zone from July 26 to September 2, during which the market has risen in 85% of the past 26 years:


The most similar years (though based on a small sample size) experienced some consolidation followed by a move higher, with an 87% correlation:


Conclusion: Gold is in a secular bull market, and the most likely short-term path is as follows: consolidation for a week leading into the January 17 OpEx, followed by an upward move into early February. After that, the market is expected to decline into the third week of March. The 2,400-2,450 range provides strong technical support for any correction. From there, the market is likely to move higher, with the July 26 to September 2 period being a high-confidence zone. The next upside target is 3,000+ in the second half of 2025, with 2006 serving as the best proxy year (shown in purple):

 Consolidation into January 17 OpEx – up into early February – decline into third week of March
(2,400-2,450 strong support) – up into July 26 to September 2 top (3,000+ target) – steep decline in Q4 – up into mid 2026.

 

Markets Amidst Trump 2.0: Geopolitics & Geoeconomics in 2025 | Simon Hunt

In recent years, I have analyzed several long-term cycles, including demographic, economic, weather, war, inflation, and interest rate cycles. To my surprise, they all appear to converge around 2028. While geopolitical tensions will likely remain tense in 2025, the ultimate crisis may emerge as these cycles align.


Continuing US Economic Decline and Stock Market Crash by September 2025
The US economy is weaker than portrayed. Employment data, revised down for the first quarter, shows a likely weak second quarter, with retail sales, adjusted for inflation, declining last year. Big US companies will be laying off thousands. The Biden administration has inflated economic indicators, but the reality is far bleaker.

 S&P 500 Bull-Trap Reversal, Rotation Fragility, and Cycle Risk in 2025.

I anticipate a sharp stock market drop by September 2025, with the S&P 500, the NASDAQ and tech stocks (Mag 7) falling by 20% to 40%, respectively. By Q4, Trump’s policies—tax cuts, deregulation—will take effect, and governments will likely respond with fiscal and monetary stimulus. Over the next few years, equity, base metal, and precious metal markets may surge. This will be highly inflationary, possibly mirroring the 1980s, when US CPI surpassed 13% and global inflation hit 15%. The key question will be the impact on long-term bond yields. Bond vigilantes will likely push 10-year US Treasury yields into double digits, with similar trends globally (excluding China), leading to a crash in asset prices, especially in an already highly leveraged system with a 360% debt-to-GDP ratio. 
 
The primary drivers of inflation are excess liquidity and rising wages, along with a trend where a larger share of wages is being allocated to capital on corporate balance sheets. I expect US CPI to remain elevated, with the official CPI possibly reaching 13%, mirroring 1980 levels. However, John Williams of Shadow Government Stats estimates the real CPI averaged 10.8% last year. This persistent inflation will push long-term interest rates into double digits, likely triggering a crash in the debt-laden global system. Comparing current inflation to the 1970s, we see a pattern of volatility, with asset prices potentially deflating before structural inflation resurges, driving CPI to double digits.

Empire Cycle, Risks of War, BRICS, and the Emergence of a Multipolar World Order
Today we have two major powers—one established (US), the other emerging (China)—each with conflicting goals. One seeks to maintain global dominance, while the other rejects that vision. The only resolution could be through a significant crisis, possibly war. Afterward, we might see the emergence of a multipolar world, but this will likely take place in the early to mid-2030s, once we’ve gone through the crisis. The empire cycle, as outlined by voices like Ray Dalio, typically culminates in revolutions, internal conflicts, and proxy wars, followed by political and debt restructuring before a new world order emerges.
 
 Geopolitical tensions will continue to simmer through 2027,
with open conflict likely not breaking out until 2028.

The current geopolitical and geoeconomic picture is shaped by several major cycles: Since 1991, and potentially as far back as 1946, the US has sought to weaken Russia in order to control its vast natural resources. Simultaneously, China has emerged as America’s primary competitor, and to maintain hegemony, the US must constrain its rise. A related theme is Washington’s growing concern over the BRICS nations, which, if they mature into a serious rival, could undermine US dominance, particularly over the dollar. The war in Ukraine and tensions in the Middle East fit into this broader geopolitical strategy. Israel has long served as America’s foothold in the Persian Gulf, and a key aim of Trump’s foreign policy could be to disrupt the China-Russia alliance while isolating Iran, given their strong ties. The US has already made progress in Brazil, where key ministries are anti-BRICS and pro-Washington, with President Lula aware of the risks of opposing the US. Despite potential challenges for BRICS under Brazil’s leadership, the group’s recent expansion with Indonesia’s full membership is a significant shift, especially in South Asia.

Geopolitical concerns are at the forefront for many investors, and they’re my primary worry. It’s not a matter of if war will happen, but when. Geopolitical tensions will continue to simmer through 2027, with open conflict likely not breaking out until 2028, though this is my best-case scenario. In the worst-case scenario, Israel, after defeating Hamas and Hezbollah, may decide to attack Iran. In response, Iran would retaliate with overwhelming force, using advanced missile technology, including hypersonic missiles, capable of bypassing Israeli and US defense systems. While the risk of war is high before 2028, I believe open conflict will likely occur no sooner than then.
 
Weather Cycles, Severe Drought in the US in 2025, and Global Food Supply Shortages by 2026
However, one cycle that remains largely unaddressed but could disrupt Trump’s domestic agenda is the weather cycle. This cycle, particularly the Gleissberg cycle, a 90-year pattern, is aligning with US drought cycles for the first time since the 1930s. This could mirror the impact of the Dust Bowl. As the cycle begins to take effect this year, reports from areas like Pennsylvania indicate food shortages—beef and chicken in particular—which could drive soaring food prices by 2026. This will pose significant challenges for Trump’s efforts to regenerate America, especially considering the global nature of this issue, as the US is a major food exporter.

Shawn Hackett on weather cycles, their relationship to price action in agricultural commodities,
and the potential for a major drought in the US in 2025 based on the 89-year Gleissberg cycle. (see also [HERE])

The weather disruptions are linked to a shift in the Atlantic Ocean’s cycle, transitioning from a 40-year warming phase to a cooling phase starting in 2025. Historical parallels show that this cooling period could cause extreme weather, including shorter growing seasons and disrupted food production. Additionally, the Sun’s quiet phase, along with the 60-year Yoshimura planetary temperature cycle and the 90-year Gleissberg cycle, will likely exacerbate these effects, creating a pattern of climate instability not seen since the early 1600s. This emerging cycle, largely overlooked, could lead to global food supply shortages and soaring food prices, impacting markets, debt, and interest rates.

Two-Year Commodity Boom: Rising Food, Crude Oil, Copper, and Gold Prices
Food prices are expected to rise sharply, and by 2026, oil prices are likely to increase despite efforts by President Trump. Disruptions, such as sanctions on Iran, could lead to China sourcing oil from Russia instead. By 2028, oil prices could surpass $150. Once inflation cycles begin, they often become self-perpetuating as people hedge by buying in advance and companies stockpile goods. For example, copper prices could double from $7,000 to $14,000 by late 2027, reflecting the inflationary dynamics at play.
 
While commodities are underperforming equities, they are relatively cheap and primed for a rebound, especially with inflationary pressures. Precious metals have already shown strength, and sectors like energy and food may follow, particularly if weather disruptions occur. Although we won't enter a supercycle until the early 2030s, we could see a two-year commodity boom. This period will set the stage for a return to 4% global GDP growth, marking the true supercycle.

 Although we won't enter a Commodity Supercycle until the early 2030s
we could see a two-year commodity boom.

Gold had a remarkable 40% rise last year, signaling inflation concerns and currency instability. Central banks are diversifying into tangible assets like gold, and both China and Russia hold significant, underreported gold reserves. If China’s currency faces pressure, it could announce gold backing, possibly from its 25,000 tons of gold. Russia holds about 12,000 tons. The BRICS nations may also introduce a gold-backed currency in the next five years, further driving gold's upward trajectory over the next decade.

US Dollar Index (DXY) Decline to 0.90 by the End of 2025, and as Low as 0.65 by 2028
The dollar, often referred to as the "king of currencies," is expected to peak around 110 on the dollar index in the coming months before beginning a decline. By the end of 2025, it may hover closer to 0.90, and by 2026, closer to 0.80. By 2028, the dollar could fall as low as 0.65, marking a substantial decline ahead. Policies such as trade tariffs could impact the dollar, with some close to the Trump camp suggesting he may favor a weaker dollar to boost exports. However, the broader trend is clear: increasing trade among BRICS nations, excluding the dollar, will reduce demand for the currency.

China's Economic Recovery in 2025 and Bull Market into 2028
Despite recent challenges, the Chinese equity market has surged, suggesting potential for an inflection point. A key shift in China is the transition to collective decision-making, moving away from President Xi’s sole influence, likely driving fiscal and monetary expansion. I expect a sharp recovery in China’s economy in the latter half of 2025, boosting global performance. The Shanghai Composite will likely mirror global market trends—approaching a peak, followed by a correction, and then a bull market into 2028. Despite negative narratives, China’s consumer spending is up 10%, and the property market appears to be bottoming out. Consumption patterns are shifting, but not necessarily unfavorably.
 
 
See also: 

Friday, December 13, 2024

US Stock Market at the Cliff — Don't Be a Lemming | Lars von Thienen

[...] The chart below depicts a composite model of all identified cycles in the P/E Shiller data from 1900-2024. Notably, the "cliff" phenomenon, where all cycles synchronize their peaks at a single point in time, has only occurred in 1929, 2000, and now appears to be happening again in 2024. 
 
 Composite Cycle Analysis Model for the P/E Ratio of the S&P500 from 1900-2024 | December 6, 2024.

[...] The 42-Month Cycle has the highest strength and is the dominant cycle in the dataset. This 42-Month Cycle is generally significant for financial markets, as it has been identified across numerous financial assets. Let's take a closer look at what makes this cycle so special in this case. Starting with the current situation, the 42-Month Cycle has topped at major market peaks, such as the internet bubble in 2000, the financial crisis in 2007, and 2021. Additionally, the bottoms of this cycle have been synchronized.
 
42-Month Cycle in the P/E S&P 500 Ratio | 1900-1950.

42-Month Cycle in the P/E S&P 500 Ratio | 1999–2024.

[...] A cycle that remains remarkably stable in length and phase over 120 years is quite uncommon. As shown in the upper chart, the 42-Month Cycle is also currently reaching its peak and transitioning into a downward phase, which is expected to continue into 2026.

Tuesday, December 10, 2024

2025 in J.M. Funk’s '56-Year Cycle of Prosperity and Depression'

In J.M. Funk's chart of the "56-Year Cycle of Prosperity and Depression," the year 2025 belongs to the sequence of 1801-1857-1913-1969. This sequence is connected by a long clock hand or needle to the center of the chart, labeled "Panic. Dumping.
 
2025 in the 56-Year Cycle of Prosperity and Depression.
(J.M. Funk's original chart of 1932, redrawn by David Williams in 1982)
 
» A knowledge of the present and history is therefore a key to the future. Until Government Standards are based upon the recognition of exterior forces (which govern human conduct) history will repeat itself. THE CHART WILL PREDICT THE FUTURE because the human make-up includes, aspiration, greed, intemperance, fickleness, etc., which traits are governed by endurance; 
endurance is governed by exterior forces which fluctuate in rhythm and tempo 
as constantly as the Sun in its journey through the heavens. «  
James Morris Funk, 1932.
 
  • The Panic of 1801 marked the end of the first phase of the Napoleonic Wars and brought an abrupt halt to the prosperity the US had been experiencing from the carrying trade. Stock prices on the NYSE fell by about 25%.
  • The Panic of 1857 was caused by bank failures, railroad overextension, and falling commodity prices, leading to a financial collapse. The stock market lost about 30%, and numerous businesses and banks failed. The crisis resulted in a severe recession, which lasted until 1859.
  • The Panic of 1913-14 was triggered by the Balkan Wars (1912-13), which foreshadowed war among Europe's major powers. This resulted in a gradual liquidation of US securities by European investors, culminating in a 40% loss by August 1914, when the NYSE closed for four months.
 
 DJIA (daily closes) 1912-1915.
  • Throughout 1969, the S&P 500 continued to decline from its November 29, 1968 peak, falling by 37% to its low on May 25, 1970 (18 months)—marking the worst bear market since 1937-38.  
 
  DJIA (daily bars) 1965-1973.

 Through the 9-year subcycle, 2025 is also related to 2016, 2007, 1998, etc. 
 
There are two other long needles extending from the center of Funk's chart, pointing to the sequences 1817-1873-1929-1985 and 1837-1893-1949-2005: According to Funk, in each 56-year period three major panic periods occur at 20-20-16 year intervals.  
 
So, was there a panic or significant decline in 1985? No. The DJIA closed the year up by 28%. But then in fact, 2005 was the first "fifth year" of any decade in the history of the DJIA to close in the negative, with a shocking decline of 0.6%. Since the 1880s, the fifth year in each Decennial Cycle has been, on average, the most profitable year of the entire cycle, and this pattern may well repeat itself in 2025 as well. The best argument against a positive outlook for 2025 is the fact that the US stock markets have already surpassed the crest of the 42-month cycle, which is expected to bottom out in the first quarter of 2026.
 
 Dow Jones industrial Average 1985 and 2005 (weekly bars).

Then there is this needle from the outer white ring, pointing to 2024, with the label
"High Prices. Sell Save" (which corresponds to the major high of November 29, 1968 and, as expected, a major high in December 2024), and another needle from the inner white ring, pointing to around the cusp of 2026-2027 is labeled "Low Prices. Buy" (which corresponds to the January and May 1970 major lows in the S&P 500 – for more details, see the monthly chart below).
 
Since the 1760s, all major financial crises in the US and Western Europe have consistently clustered around Funk's 56-Year Cycle and its subcycles, which all appear to be closely connected to Moon-Sun tidal harmonics. David Williams concluded: "The results show conclusively that regardless of wars, rebellions, population changes, industrialization, technological, and monetary changes, American business has been dominated by a 56-year rhythm." 
 
The 56-Year Pattern of American Business Activity since 1761 vs. Planetary Cycles & Table with the
Accuracy of Major Planetary Aspects of the Jupiter-Uranus Cycle and the Jupiter Saturn Cycle at 
Business Cycle Turning Points 1929-1982 (Williams, 1982).
  
However, also note that the projections of the Four Year Presidential Cycle (see also HERE), the Decennial Cycle (see also HERE), and the Benner Cycle present distinctly different scenarios and outcomes for 2025 and the coming years. And, by the way, BlackRock just canceled the Business Cycle.
 
Reference:
J.M. Funk (1932) - The 56-Year Cycle in American Business Activity. Privately published. Ottawa. IL.
LCdr. David Williams (1947) - Rhythmic Cycles in American Business. 
LCdr. David Williams (1959) - Astro-Economics.
LCdr. David Williams (1982) - Financial Astrology
 S&P 500 Index (daily bars) vs 56 Year Cycle.
December 11, 1968 to December 11, 2024 = (365.2422 * 56) = 20,454 days apart.
Blue line = S&P 500 daily closes shifted forward 20,454 days = Funk Cycle.

  S&P 500 Index (monthly bars) 1966 - 1972.
» Throughout 1969, the NYSE continued to decline from its December 1968 peak 
[= December 2024], falling by 37% to its low in May 1970 [= May 2027]. «

See also: