2nd Year of an Even Decade ... Best time to Buy?

[Jaz]

We are in the latter part of the 2nd Year of an even decade. In all even Decades, except 1900's, 1920's, where it was the 3rd year, the Market moved on to new highs. This is statistically the best time to buy, with 120 Years of Data points!

My only reservation is if it weren't for Covid, we probably would have experienced a normal recession, anyway. So, Dow should have been stuck in a sideways trend for two years from March 2020, to October 2022. All that QE, and now QT might have distorted this cycle? i.e. FED broke it.

What do you all think?

See for yourselves ...

https://www.barchart.com/stocks/quotes/ ... tive-chart

(Select Monthly Timescale for Max Data)

What I really DO NOT like, is the fact that the DOW is more higher this October than the preceeding March 2020 low than in any of the other Cycle. By a massive long shot when compared to other cycles!

IS the cycle now broke, or will the cycle playbook play out once more?

[SOL]

@Jazz that is why we suspect there is one more downward leg. Remember back in 2008, when it appeared a bottom was in. The markets mounted a strong rally and everyone finally felt relived but then when they dropped below the 2008 lows, almost everyone felt demoralized. I bring that correction up because not everyone will remember the 1973 to 1974 correction. This correction is likelier to follow the latter but the duration will/should be different. People are afraid but they are not demoralized. The big players have no mercy, when they see an opportunity they don't mind destroying millions of lives.

This is why Powell is probably acting like a rabid hound, he must have instructions that for every piece of candy he hands out he should follow up with 1-3 lashes.

[Jaz]

@Jazz that is why we suspect there is one more downward leg. Remember back in 2008, when it appeared a bottom was in. The markets mounted a strong rally and everyone finally felt relived but then when they dropped below the 2008 lows, almost everyone felt demoralized. I bring that correction up because not everyone will remember the 1973 to 1974 correction. This correction is likelier to follow the latter but the duration will/should be different. People are afraid but they are not demoralized. The big players have no mercy, when they see an opportunity they don't mind destroying millions of lives.

This is why Powell is probably acting like a rabid hound, he must have instructions that for every piece of candy he hands out he should follow up with 1-3 lashes.

Interestingly, the Dow bottomed in October 1974, only to make a very slight lower lower in December of that year.

How low do your indicators suggest a new low could go?

[SOL]

@Jazz that is why we suspect there is one more downward leg. Remember back in 2008, when it appeared a bottom was in. The markets mounted a strong rally and everyone finally felt relived but then when they dropped below the 2008 lows, almost everyone felt demoralized. I bring that correction up because not everyone will remember the 1973 to 1974 correction. This correction is likelier to follow the latter but the duration will/should be different. People are afraid but they are not demoralized. The big players have no mercy, when they see an opportunity they don't mind destroying millions of lives.

This is why Powell is probably acting like a rabid hound, he must have instructions that for every piece of candy he hands out he should follow up with 1-3 lashes.

Interestingly, the Dow bottomed in October 1974, only to make a very slight lower lower in December of that year.

How low do your indicators suggest a new low could go?

For now, the projection is that the subsequent low should be a multi-month low. It could also be a multi-year low, but given the current madness plaguing the geopolitical arena. I will hold off until the low next year is and then study the rally and the geopolitical landscape.

[LoriPrecisely]

@Jazz that is why we suspect there is one more downward leg. Remember back in 2008, when it appeared a bottom was in. The markets mounted a strong rally and everyone finally felt relived but then when they dropped below the 2008 lows, almost everyone felt demoralized. I bring that correction up because not everyone will remember the 1973 to 1974 correction. This correction is likelier to follow the latter but the duration will/should be different. People are afraid but they are not demoralized. The big players have no mercy, when they see an opportunity they don't mind destroying millions of lives.

This is why Powell is probably acting like a rabid hound, he must have instructions that for every piece of candy he hands out he should follow up with 1-3 lashes.

Interestingly, the Dow bottomed in October 1974, only to make a very slight lower lower in December of that year.

How low do your indicators suggest a new low could go?

For now, the projection is that the subsequent low should be a multi-month low. It could also be a multi-year low, but given the current madness plaguing the geopolitical arena. I will hold off until the low next year is and then study the rally and the geopolitical landscape.

This sounds like madness. This whole year has been a low. You can look at indicators all day long, you are still only guessing as to the future projection.

[Yodean]

This sounds like madness. This whole year has been a low. You can look at indicators all day long, you are still only guessing as to the future projection.

Indeed, this whole year has been one big, fat bottom, in a way. Sorta like "long covid." Lol.

Spring '20 was a short, sharp bottom, followed by a one to two-year rally, more or less.

So whenever the bull market resumes after the current stage 4/stage 1 hybrid phase, the overall bull market could last many years.

Stocks to the moon!

[Cinnamon]

This sounds like madness. This whole year has been a low. You can look at indicators all day long, you are still only guessing as to the future projection.

I think you might have missed the point. Jazz was talking about how low the markets would go during the second corrective wave. From what I read I see that SOL feels that the end of the second corrective wave will lead to a multi-month bottom but wants additional data before calling it a multi-year bottom.

As for this year, the markets have dropped but there have been three rallies to date and in a market that is correcting that is to be expected. What does not happen to often is to see a market remain in a corrective trend for so long. it did happen in 2008-2009 and 1973 to 1974. But as Yodean and others including SOL have pointed out, long corrections lead to even longer bull markets.

I have been selling positions that became profitable over the past few days to build up my cash position. I will continue to play the long side as I think there is a good chance that the Dow will hit the 34K ranges.

I took on too much of risk starting from the 4th quarter of 2021. I understand that i might fall somewhere between medium and high risk. I have divided my portfolios into three. One is low risk, one is medium risk and one is high risk. I think if i had done this before I would have taken on less risk. Using this setup makes it easier to build up cash on positions that are in the black. I sold CPB, APD, K, CHPT; on the QCOM calls I would have normally only sold half but I sold the full position as I only managed to get into two and not three calls. Overall still down but the new MU format, reassessing my risk profile, is helping a lot. Got luck yesterday Sold Nov 135 puts on CYBR, bought them back today for a gain of almost 65%. I stopped using margin, that was a mistake. I will wait for an MOAB or FOAB

[Jaz]

What I am saying is, the Market should have bottomed last month, if you follow these Even Decade cycles over the last 100 years.

But ... Has QE and QT wrecked the Cycle?

I would wager that had Covid not happened, we would have dropped about 20% from the Feb 19th 2020 high anyway. It was going to happen anyway, regardless of Covid. Of course Covid made the drop happen deeper and faster.

I remember investing BIG in September/October 2019, and looking at the chart pattern, thinking the Market wants to retest the December 2018 low. But, couldn't work out what would do it. So I put my Money to work. This was months before Covid was even a thing.

So if it wasn't for Covid, I would expect DOW to have traded between 21700 to 29600 for the two years between March 2020 and now.

FED is doing QT. Attempting to take the Covid money out of circulation. However, they ain't got no chance of taking it all out of circulation. My estimate is they won't take out more than $2tn at most. So will still have $7tn on the balance sheet by the time they give up, $3tn of that Covid money. They never managed to take out more than a fraction of what they printed in the past, so why would it be any different now?

Anyway, I think I answered my own question. If most the QE money remains out there, then yes, the Market can remain at an 'elevated' bottom, compared to prior cycles. So the Fed has not broke the the Cycle.

BUT ... What happens when everyone know of the Existence of the Cycle?

It breaks!

How well known is the Cycle, is now the Question?

[LoriPrecisely]

What I am saying is, the Market should have bottomed last month, if you follow these Even Decade cycles over the last 100 years.

But ... Has QE and QT wrecked the Cycle?

I would wager that had Covid not happened, we would have dropped about 20% from the Feb 19th 2020 high anyway. It was going to happen anyway, regardless of Covid. Of course Covid made the drop happen deeper and faster.

I remember investing BIG in September/October 2019, and looking at the chart pattern, thinking the Market wants to retest the December 2018 low. But, couldn't work out what would do it. So I put my Money to work. This was months before Covid was even a thing.

So if it wasn't for Covid, I would expect DOW to have traded between 21700 to 29600 for the two years between March 2020 and now.

FED is doing QT. Attempting to take the Covid money out of circulation. However, they ain't got no chance of taking it all out of circulation. My estimate is they won't take out more than $2tn at most. So will still have $7tn on the balance sheet by the time they give up, $3tn of that Covid money. They never managed to take out more than a fraction of what they printed in the past, so why would it be any different now?

Anyway, I think I answered my own question. If most the QE money remains out there, then yes, the Market can remain at an 'elevated' bottom, compared to prior cycles. So the Fed has not broke the the Cycle.

BUT ... What happens when everyone know of the Existence of the Cycle?

It breaks!

How well known is the Cycle, is now the Question?

Very logical and insightful analysis. Makes complete sense.

[SOL]

But ... Has QE and QT wrecked the Cycle?

QE has modified the cycles, made them more volatile. Say there was a cycle that would appear every 10 years now it could be delayed up 2 years

QE skews things. Everything started to change after forever QE. QT is a lie, it will never remove the excess from the previous QE cycle. Net-net QE will never end. The cycle has been destroyed and can only be replaced when technology advances so much that deflation will become a major force. The only way to achieve this will be to replace at least 50% of humans with AI and Robots and once you get to 50% it would take long to get to 90%

BUT ... What happens when everyone know of the Existence of the Cycle?

It breaks!
How well known is the Cycle, is now the Question?

These cycles are not that well known, but history never repeats itself and the other thing to factor in is that, the world has never had to deal with such massive amount of money. The bigger the money supply, the greedier the top players become. Greed and power blind and these guys almost have absolute power, so they take delight in watching others squirm. On our end the chart was not showing anything regarding a large 2 year correction in 2020. However, COVID came out of nowhere and created hell, but as there was no prior sign of a correction and bearish sentiment was extremely high, we jumped in hard.

Our error this time was not emphasizing the two corrections we foresaw last year. Hence the change in format. We also noticed that a larger number of individuals are playing with margin, something we have always been against.

The only time we support margin is if and when an MOAB or FOAB is triggered and then only experienced traders and those with the ability to pay the margin debt off easily should use it. Using margin is absolutely deadly and one is begging for trouble if its employed before the market hits an extreme zone. We are not at an extreme point of inflection yet and few months ago, we were far away from one.

When the second correction runs its course, the markets will experience a very strong rebound. The only question that will remain is will the markets follow the path they took from 2009 onwards or will the follow the path of 1974, where they experienced a strong rally and then dropped to new lows. To determine that more data is needed but that data will come early in the cycle so we will have time to calmly position ourselves. Normally I would say they are more likely to put in a multi-year low next year, but given the current atmosphere, it's better to examine all the possibilities and err on the side of caution.

Let's assume that the opposite occurred we were shorting the markets while they were trending upwards. Then at this stage of the game I would say we were in big trouble, because it is very hard to recover from a short position if it goes against you.

However a bull position one can recover if one holds but the same can never be said of a short. If you hold too long, you are dead. Not all the bullish positions will recover, but enough of them will to make up for the shortfall in the other longs. For this to work, one should not be using margin and one should not allocate more than 25% ( if they are pros) of their portfolio into options, non pros should limit it to 15-20 percent. Also when the options portfolio increases in size, the whole portfolio should be rebalanced so that the amount to allocated to options falls in the 15 to 25 percent range

[outof thebox]

Cash is king, with investors fleeing to the safety of cash funds at the fastest pace since the coronavirus pandemic as the Federal Reserve remains firmly hawkish, according to strategists at Bank of America Corp.

https://finance.yahoo.com/news/bofa-say ... 07884.html

[MarkD]

I follow Tom Mclellan, son of the creator of the Oscillators and Summation, on Twitter. He regularly posts items of interest (to me). Below is one he has distributed recently that shows a second pivot is imminent - tax receipts are too high relative to healthy economic growth. It's one reason why things have stalled/slowed as money has been removed from the real economy by the current administration. And the character of this economic behaviour is a cycle. This is from earlier in the year as it's not been posted recently. Very elevated.

https://imgur.com/3S8pWkI

[Budge]

I follow Tom Mclellan, son of the creator of the Oscillators and Summation, on Twitter. He regularly posts items of interest (to me). Below is one he has distributed recently that shows a second pivot is imminent - tax receipts are too high relative to healthy economic growth. It's one reason why things have stalled/slowed as money has been removed from the real economy by the current administration. And the character of this economic behaviour is a cycle. This is from earlier in the year as it's not been posted recently. Very elevated.

https://imgur.com/3S8pWkI

And will those 87000 new IRS agents will be employed to drive the number up or down?

[SOL]

I follow Tom Mclellan, son of the creator of the Oscillators and Summation, on Twitter. He regularly posts items of interest (to me). Below is one he has distributed recently that shows a second pivot is imminent - tax receipts are too high relative to healthy economic growth. It's one reason why things have stalled/slowed as money has been removed from the real economy by the current administration. And the character of this economic behaviour is a cycle. This is from earlier in the year as it's not been posted recently. Very elevated.

https://imgur.com/3S8pWkI

And will those 87000 new IRS agents will be employed to drive the number up or down?

The republicans are thirsting for blood; if they win both in the senate and in the house, they could water things down. Historically they hate raising taxes. They are not the good guys but right now the choice comes down to bad or terrible

[Jaz]

I follow Tom Mclellan, son of the creator of the Oscillators and Summation, on Twitter. He regularly posts items of interest (to me). Below is one he has distributed recently that shows a second pivot is imminent - tax receipts are too high relative to healthy economic growth. It's one reason why things have stalled/slowed as money has been removed from the real economy by the current administration. And the character of this economic behaviour is a cycle. This is from earlier in the year as it's not been posted recently. Very elevated.

https://imgur.com/3S8pWkI

I do not think that is enough data to be useful. Is there anything which goes back further, like the 1970's?

Best regards.