Saturday, March 23, 2013

2013.03.22 Cycle Charts
















































Comparing this to the last cycle chart for the DJIA, there are several high-amplitude historical cycles that continue to attract prices lower.  As I mentioned previously, the take home message is that the Fed, by buying financial assets from banks at the rate of $85 billion per month, may have been successful in extending the cycle amplitudes, but is pushing against history.

Like everyone else, I am trying to make sense of what appears to be a major misstep by the ECB/IMF with respect to the Cyprus dilemma. Since confidence is the spittle holding the banking system together given the drought of liquidity, anything that inspires people to move their assets out of banks is exactly the wrong way to restore trust in the banking system. The ECB may have made bank runs a major topic of discussion not just in Cyprus, but in any EU country with a lame banking system. Perhaps as Martin Armstrong likes to say: It's just time.

8 comments:

Paolo said...

The first quarter gold cycle chart has been updated. The results are interesting. While the timing of the upcoming low has not significantly changed, the low is much higher than previous. This illustrates that these cycle charts are perhaps, and a BIG perhaps, somewhat better at estimating turning points than price levels.

Paolo said...

I have updated the first quarter silver cycle chart. I am pleased with the predictions of the previous model update, but again, turning points are probably more accurately determined than absolute price levels.

Paolo said...

Because of inclement weather, I had some time to finish off the cycle chart set, ending with the Amex Oil Index. I'm also pleased at the results of the predictions from the beginning of the year.

I received an abusive e-mail regarding the XOI.X chart at the beginning of the year, accusing me of supporting price manipulators. Not being a psychiatrist, I'm not sure what was going on, but I would like to remind people that while I cannot but help injecting some bias, even in something as quantitative as a model, I have no control on where the models flow. This particular model, originally set up as a favor for a reader, is now the best predictive cycle model of the four.

MP said...

The DOW looks as if it might break the 2009 low. I have the cycle date at April 8th or May 21, 2013.

Anonymous said...

thanks for continuing to present your model. its good to have a view from a different angle.

Paolo said...

I looked at the chart on your blog, MP, and it seems like the cycle models are congruent. My short term "Neuro" trading models show a sell for the SP500 and a buy for VXX - both signals as of EOD on Friday. I keep wondering how liquidity risk might alter the pattern as lame global banks lose non-insured deposits, and the market initially perceives the US as a safety zone. Theoretically that should be a plus for the US share markets.

Paolo said...

Thanks anon- I'm glad you find them useful.

Paolo said...

I would like to point readers to this wonderful historical account of ho the Federal Reserve may influence business cycle periods. Entitled: Here's What Happened The Last Time The Fed Owned All Outstanding Treasuries by Matthew Claassen.