Wyckoff logic working in modern day markets

They say nothing works all the time in markets, well maybe some should review Wyckoff logic.


Quotes:

..“The market always tells you what to do. It tells you: Get in. Get out. Move your stop. Close out. Stay neutral. Wait for a better chance. All these things the market is continually impressing upon you, and you must get into the frame of mind where you are in reality taking your orders from the action of the market itself — from the tape.”...


.."Tape reading is rapid-fire horse sense...The Tape Reader aims to make deductions from each succeeding transaction -- every shift of the market kaleidoscope; to grasp a new situation, force it lightning-like through the weighing machine of the brain and to reach a decision which will be acted upon with coolness and precision"..

Richard D Wyckoff

The longer the base normally leads to a greater prize!


Chart 1 - HMY moving in lock step with the Richard Wyckoff Accumulation plan. 

Chart 2 - The Richard Wyckoff Accumulation map. Notice the change in behaviour of price action.  

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USA economy to pick up second half of 2025

Trump has lowered the US dollar, this has allowed China to print.


Note: All the charts below have been built on readtheticker.com 'comparison' chart functionality.

Chart 1 : Favorable US dollar, interest rates, and corporate credit conditions lead the ISM PMI manufacturing activity. The first half of 2025 has seen CEOs sit on their hands while they wait for the TRUMP disruption to settle. These CEOs will roll the dice and produce more as they will see demand from sales orders in the second half of 2025 going into 2026. Just in time for the TRUMP midterm elections.   

Chart 2 : The USA ISM PMI manufacturing index has a relationship with the Chinese 10 year bond rate (inverted). The Chinese boom and bust 10 year bond rate represents the effect of world demand for Chinese goods and the delayed effect on Chinese inflation. As in chart 1, the second half of 2025 and 2026 looks positive for USA manufacturing. 

Chart 3 : The reason why Chart 2 works so well is because the boom and bust cycle of the Chinese 10 year bond rate is associated with the Bank of China money printing periods. More money printing is expected from the PBOC to try exit their current deflationary woes. 

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Semi Conductors ready to bounce.

President Trump makes some big moves post tariff sell off.



Noises out of central leaders. 

This chart is going to bounce (SOX). 

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Mining stocks higher into 2026 Mid terms

Trump wants the House and Senate to remain with the Republicans for his full 4 years.


To do this, Trump must get the American dream back on track during 2026. On the back of a lower oil price, tame inflation, with consumer demand shooting higher. This means he wants the US dollar down, interest rates down, oil down. The big three all at once, wow!

However, during the second half of 2025 a massive period of US debt refinancing is in his way ($13T or more), to overcome this, Trump needs a lower US Treasury 10 year interest rate, this is why oil and inflation must be tame, and maybe the economy a little soft or recession lite.

No wonder Trump wants the Russian war over, because Russian oil back on the market will help with his goals. 

Also, Trump is forcing more fiscal military spending and more debt onto European nations. This means European interest rates will rise. This will move the $EURO higher and the $USD lower as interest rates adjust as the world realises Europe's free military ride is over.  

China is in a slump. They want the world to have lower financing costs, so the world can buy more Chinese goods. To do this the US dollar must be lower. Xi and Trump will be doing a nice deal in May 2025. 

Of course a lower US dollar, with lower world financing costs is great for Technology and Crypto holdings. 

A good summary by Louis-Vincent Gave (Founding Partner & Chief Executive Officer of Gavekel).

Gold and silver miners need two things: Higher metal prices (on a lower US dollar) and cheaper energy costs. This will ensure profit margins are healthy. Which means higher prices for XAU, GOLD and SILVER.

Of course prices will not move in a straight line, many wobbles before prices reach there peak.

Chart 1 - XAU 

Chart 2 - Silver

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Gold warning signal just fired

Gold knows something is up, or in other terms the bankers who have been buying tonnes of gold do.

WARNING SIGNAL SUMMARY LIST
When ever the blue line crosses the magenta line some sort of crisis is known.
This means GOLD YOY% change is out pacing COPPER YOY%.

1990 - Oil price shock, Iraq invasion of Kuwait (Recession)
1993 - Mexico / Orange County
1996 - Asian crisis
1998 - Russia/LTCM
2002 - Enron, DotCom bust (Recession)
2008 - Housing bubble burts, Enron (Recession)
2012 - US Credit down grade
2017 - Corp Credit Bust
2020 - COVID shock
2025 - ?

What could it be in 2025/26 ?

If you read this article by Lyn Alden then you probably need not go any further. Full Steam Ahead: All Aboard Fiscal Dominance.

During the 2025 calendar year the USA must refinance approx $13T of existing debt at rates at least twice as high as is currently set. 

So ... money printing is near!

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Dow Jones Long Cycle Review

The big cycle of the Dow is still working, and it should be a good year in 2025.


Chart 1 - The 100 plus year of the Dow Jones Industrial's.

Note: Draw with readtheticker.com cycle software.

Chart 2 - A close up of the above cycle since 2009, and its working quite well. The Dow will most likely creep along the upper blue line to +50,000.

Chart 3 - 2025 is also the post election cycle year. President Trump will need to make good on promises to go into the midterms, so you can bet he wants a happy time for his first year (of his second term). 

Chart 4 - Bitcoin cycle looks strong into 2025. Bitcoin is a global liquidity measure and it looks bullish as we all know the USA needs to refinance 33% of its debt in 2025 (about $13T). To to do this the world needs to be flooded with US dollar liquidity. They will do what ever it takes to refinance, otherwise the $USD will soar and risk on assets will sink. 

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Bitcoin passes $100,000

The dominate cycle shows the way into bitcoins future.



The low target is $200,000 USD for Bitcoin into 2025/26. 


There will come the day when investors will have to believe the coming down cycle, our guess on too hot inflation (just like the last cycle peak) and expected interest rate hikes.

 

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Post TRUMP win, our top pick

The USA new administration is going to free up risk on.


TRUMP is a crypto friend, and he will remove the dark cloud of legal attacks on the industry. This will allow scared and new money to come back into crypto. 

Ethereum is a sleeping giant, price action since Trump election win is supportive of a good rally ahead.

This is our top pick. 

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China M1 is key to watch.

China is warming up stimulus to escape deflation. This means Chinese M1 is a priority number to watch.



Chart 1 - China is still in deflation and she can not stay there. 

Wall Street bankers have stated that the PBOC must ramp up M1 (via QE) to be over M2, otherwise a Chinese (maybe world) deflation crisis in 12 months will be deeper and harder to get out of. (Reference ZH).


Extract from ZH post..

Goldman's Borislav Vladimirov, who makes a very simple case: China now has no choice but to activate QE - just as we have been saying all along.

If it doesn't, M1 will fail to grow faster than M2, and the government "will spread the monetary crowding out to more weak borrowers in the economy", since the winners will save the impulse and kill the multiplier, resulting in an even bigger hole for China 12-18 months from now, and global deflationary destruction.

On the other hand, if China does do QE, oil will soar, and bitcoin and gold will be orders of magnitude higher once Beijing triggers then next global reflationary tsunami.

Chart 2 - Chinese M1 swings correlates to the GDP Deflator index above. 

Chart 3 - When China does QE, it will affect oil prices and world inflation (green arrows). So forget about inflation being transitory, as a decade of sharp hot and cold inflation cycles is here to stay. Any period of hot inflation will be elevated risk for countries with very large sovereign debt levels (like the USA), another reason for elevated gold prices. 

Chart 4 - US PMI does well with exploding Chinese M1 (with a 5 month lag). Manufacturing around the world does better. An inflationary boom is near. That is rising world GDP with rising world inflation. Of course, just how fast inflation vs GDP rallies will be the hot issue. 2024 gold prices say inflation will be a very hot issue.  

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US Debt to GDP issue, what is next?

The last 100 years USA debt to GDP has exploded on the back of wars and crisis.


The first chart shows how and when this came to be.


Chart 1 - US Debt to GDP%.

The US Debt to GDP% ratio can be fixed in a few ways:

1) Revalue selective assets on the USA balance sheet higher: 8,000 tonnes of gold is currently valued at $34 USD an once. This could be revalued to $10,000 USD and once. 

2) Massive production miracle to boost GDP from some new technology.

3) Cut spending and pay back the debt. Very hard politically and a world wise depression may result.

4) Inflate prices higher while debt stays the same (just like Israel did after several wars). Most likely!



Chart 2 - How Israel fixed its debt problem. Israel inflated the debt away.

Short Answer: Higher inflation and suppressed interest rates are coming to the USA very soon, to simply deflate the debt away. 

Currently USA debt to GDP% is around 122%. This can still go to +150% before Congress deals with the debt. The may be a election issue in 2028, as the interest expense costs becomes too much to bear.





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Market Money Sugar

Is the fuel for the markets coming from private investment or public investment?

Here are some charts investors should know about.


Chart 1 - Fiscal policy via US Congress

Government spending is exceeding revenues and is fueling the US economy more than private investment. Fiscal policy is dominating monetary policy, as it simply has more influence in the economy and unfortunately crowding out private investment.

Chart 2 - Federal Reserve Balance sheet

Since the stock market lows of the 2009 GFC the Federal Reserve's (FED) balance sheet has grown, and this growth has supported the equity markets. 

Chart 3 - Department Of Treasury Funding Accounts. 

The Dept of Treasury (DOT) has been using the TGA, Rev Repo, discount window, and other short term funding tools to massage liquidity into the markets. Add to this issuing new debt as ready cash short term T Bills, and also changing rules for domestic banks to allow 'more' treasuries on the balance sheet relative to their reserves. 

The red line below shows the consolidation of both the FED and DOT actions. The green line is the difference between the two. As you can see, the FED dominated actions from 2009 to 2019, but since 2020, the DOT has played a major role in providing liquidity. In fact, the DOT is the dominant player over the FED.

The point: US Congress fiscal policy combined with Dept of Treasury funding actions simply over powers any monetary policy via Federal Reserve actions. Therefore markets are held up by public actions and not private actions. 

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The uninformed are crushed by money supply growth

Here is why the lower and middle classes struggle to achieve considerable wealth over a life time.


Chart 1 - The US M2 money supply growth has been incredible over time. The greater the supply of money there is, the less the purchasing power of that money. This chart shows the folks with the most wealth do better than those with less, or, in other words, the folks who are closer to the creation of the money are better informed on how to maintain their wealth while the money itself suffers diminishing returns. Simply put, it's the informed vs. the uninformed, and the informed are winning! 

Chart 2 - Here is why the money supply must maintain its rapid growth rate. Money must be created to allow the exploding US federal debt to be absorbed by investors. When the US federal debt could not be absorbed by investors, the Federal Reserve bank purchased the excess (or money printing, BRRRR!). 

Chart 3 - Here is how the informed defend their purchasing power against the exploding creation of money supply (and Federal debt). The informed invest in gold and the stock market. Investing property has not held up well, hence why the uniformed do poorly vs the informed.

Chart 4 - Of course the sophisticated informed investor selects the better performing asset classes like the technology stocks (!COMPQ). Of course the best performing asset classes since 2011 have been Bitcoin and Ethereum, but as we know these assets swing up and down with massive volatility.

It's hard to think that those who create the massive new money supply are not informing those who know how to generate wealth from it. After all, the US election cycle depends on a massive injection of newly created money. 

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