Tuesday 26 November 2019

Energy sector to bounce off cycle bottom into 2020

Low prices fix low prices, and eventually the shorts will be forced to cover and buy back their shares and force prices higher. This sector is 'this close' to such and event.
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Both Hurst cycles and Wyckoff supply and demand action are warming up to the bullish side for the energy sector (XLE).

This is on the back of growing inflation fears. Inflation sourced from wage growth in the US and world wide central bankers (Japan [BOJ], Europe [ECB] and the USA [FED]) printing money at the same time. You should note this has never happened before, all three at the same time, printing.

Yes, the energy sector has suffered from the lower oil prices but soon the shorts will have to judge how much lower energy stocks can go, as you can see the SPDR Energy Etf (XLE) has been unable to get below $50. Demand is present. 

What to do? Watch for significant Wyckoff demand foot prints to see price test upper resistance (sign of strength), and then take action from a strong change of character.    


SPDR Energy (XLE) dominate cycle.


XLE



The energy sector leading commodity and the crude oil dominate cycle.


Oil



If the wider SP500 holds up into the US elections then energy stocks percentage returns could out perform.

Bullish oil fundamentals from Mark Gordon








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Date Found: Tuesday, 09 July 2019, 01:48:48 AM



Comment: FED has no ammo in the next crisis!



Date Found: Friday, 12 July 2019, 02:38:12 AM



Comment: YIP Corporate debt blows up when economy does: Fireworks like the 4 of July.



Date Found: Saturday, 13 July 2019, 10:36:51 PM



Comment: Dumb and Dumber



Date Found: Tuesday, 16 July 2019, 08:28:38 PM



Comment: Negative yield corporate bonds - Grows as well



Date Found: Friday, 19 July 2019, 08:50:29 AM



Comment: All the foreigner selling USTs, guess who owns them now. The US Primary dealers. Why? They cant sell them to the domestic US market. OOPS



Date Found: Friday, 19 July 2019, 09:12:09 AM



Comment: Congressman LIBRA so scary, prefer Bitcoin ( and Litecoin by relation)



Date Found: Saturday, 20 July 2019, 12:42:14 AM



Comment: Trend Model To watch



Date Found: Sunday, 21 July 2019, 10:48:39 PM



Comment: Divergence (higher highs for the T-Bond in parallel with lower highs for the gold/commodity ratio) - Means Inflation will send interest rates (long end of curve) higher..[subject to a deflationary bust like 2008)



Date Found: Tuesday, 23 July 2019, 06:19:39 AM



Comment: Dr. Peter Brain forecaster of credit crsis (from an Aussie point of view)



Date Found: Tuesday, 23 July 2019, 11:35:44 PM



Comment: More slowing activity - Trade War related



Date Found: Wednesday, 24 July 2019, 03:23:39 AM



Comment: South Korea (Exporter) stocks leads US 10 yr rate



Date Found: Thursday, 25 July 2019, 06:16:52 PM



Comment: Two FED FUNDS cuts and then stocks react



Date Found: Thursday, 25 July 2019, 08:19:25 PM



Comment: Yield Curve inversions not a 100% strike rate forecasting recessions



Date Found: Saturday, 27 July 2019, 09:16:14 PM



Comment: Recession Signal - lag = 0 less than a year, 1 a year



Date Found: Sunday, 28 July 2019, 03:25:57 AM



Comment: Trade Wars COUNT ... Ouch!



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Sunday 24 November 2019

Bitcoin Supply and Demand Update

Big swinging bitcoin. Let's review the Wyckoff demand and supply action to further explain price action with more clarity.
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More from RTT Tv





Wyckoff accumulation chart from video above.

BTC 1




Chart from here, it works until it does not.



BTC 2




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Thursday 14 November 2019

Dow Jones cycle update and are we there yet?

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?
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readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle: The 900 period cycle (or 880) is the dominate cycle in the Dow Jones. 

B) Notice how the cycle low 1,2,3 and hash [#] is timed with market recession (in order): 1982, 1991, 2001, 2008 (out of sync). The last has a recession forecast for late 2020 or 2021 [a maybe].

C) CAUSE 1, CAUSE 2 and CAUSE 3 are the normal stepping stones of Richard Wyckoff cause and effect logic. Very typical price action: market rallies, consolidation, rallies, consolidation, you guess it, it rallies. Of course if a rally does not follow a consolidation then the 'cause and effect' confidence trend is broken. So far this is has not happened. This is why one can not be bearish to any strong degree, the bullish status quo continues.

D) RTT Momentum reflects price momentum relative to the cycle. The current position of momentum is elevated and bullish.


Dow Cycle





CHART 2: Below is the Richard Wyckoff Point and Figure 1 to 3 risk reward forecast.

A) As the above Dow Jones cycle suggest markets are still bullish, and CAUSE 3 forecast suggest the SP500 can reach at least 3,400
B) And why not, price has done this twice before.


SP500 PnF Forecast





The $64,000 dollar question is next.

Question: Is the above cycle a mid or late cycle event?

A late cycle event is when inflation trickles down to masses. In other words wage inflation is a late cycle event. Unfortunately since Nixon went off the gold standard it is a consistent situation just as the masses gain a wider wage increase a deflation event (recession) crushes the hard won pay increases. 

The next two charts confirm the late cycle event of wage inflation is occurring now.

CHART 3: When YOY% wage inflation is greater than GDP the labor element within the economy is becoming very expensive. This is because labor is scarce and hence wages increases. If labor is scarce and expensive it is unlikely the economy will enjoy high levels of production and hence GDP will continue to suffer and be very venerable to recession. The chart below supports the cycle is in the late stages.

 

Wage1




CHART 4When YOY% wage inflation is greater than employment mass, the employment mass will continue to suffer. CEO's watching the bottom line will trim costs, capital expenditure and labor to ensure the company maintains profitability. The chart below supports the cycle is in the late stages.

Wage2



Question: How long to go with the current cycle?

Ref: Consumers Are Keeping The US Out Of Recession? Don’t Count On It.

This extract answers the question exactly

Just recently, Jeffry Bartash published an interesting article for MarketWatch.

“Like a stiff tent pole, consumers are keeping the U.S. economy propped up. And it looks like they’ll have to do so for at least the next year.

Strong consumer spending has given the economy a backbone to withstand spine-tingling political fights at home and abroad. Households boosted spending by 4.6% in the spring, and nearly 3% in the summer, to offset back-to-back drops in business investment and whispered talk of recession.”
That statement is correct, and considering the consumer makes up roughly 70% of economic growth, this is why you “never count the consumer out.”

The most valuable thing about the consumer is they are “financially stupid.” But what would expect from a generation whose personal motto is “YOLO – You Only Live Once.”

This is why companies spend billions on social media, personal influencer's, television, radio, and internet advertising. If there is an outlet where someone will watch, listen, or read, you will find ads on it. Why? Because consumers have been psychologically bred to “shop till they drop.”

As long as individuals have a paycheck, they will spend it. Give them a tax refund, they will spend it. Issue them a credit card, they will max it out.


Short Answer: The US consumer is 70% of GDP, they are the uniformed and they spend until their paycheck shrinks or their neighbor loses his job. This means there will be no recession until the consumer gets informed. History suggest that this may take anywhere between 6 to 18 months. 

Ray Dalio has confirmed the above thinking by stating we are in the 7th innings of the credit cycle and the next 2 years may see the ending of this debt cycle. He refers to a 1937 correction as most likely. 


A good summary of his recent views below.







Question: It does not matter how the cycle ends, the FED can print over any crisis or does it?

This is general thinking. But what happens when the bail out is in the trillions and not the billions. The FED will not want to encourage MMT logic, as this approach could destroy the US dollar and the US economy.



To conclude ... 

In short, the next 6 to 18 months will be very interesting, equities should continue higher until the consumer cracks, and if you have enjoyed 10 years of profits it may be time to sell into the 2019-2021 very late debt cycle rally. Or more to the point watch the big boys to see if they are.

Of course everything is subject to an event blowing strong bearish winds from left field. 








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Tuesday 5 November 2019

Gold Gann and Cycle Review

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.
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It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.

Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency. 

Gann Chart review.


Gann gold



Cylce Chart Review

Gold Cycle





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