67 thoughts on “END OF YEAR PROJECTION

  1. wifesaidnomoretrading

    Gary,

    Don’t you think looking @ both ERX and GUSH that we have a HCL en route to $62 WTI. I’m still holding my GUSH along w long market, but think GUSH is heading to $40+ as we push $62 WTI and seems like relatively low downside, my stops are in profits @ $23.55. Any thoughts there or would you wait to go short through DWT once we get to $62 if she keeps churning up? Think vertical phase will start getting nutty once the pullback off 1362 SOX plays out in January

    1. Gary Post author

      I won’t be trading energy stocks anytime soon. They are acting strange.

      At this point it’s way too late in the intermediate cycle to trade oil. I’ll just wait a few months and then buy oil (not oil stocks) at the next ICL.

  2. ted

    Gary: One thing you’ll be wrong about is the crypto’s. Everyone is talking bubble. Some are, but some will change the paradigm of cash in the future. I don’t think it will be BitCoin. Possibly DASH. But I do believe they will outperform Gold in the coming decade!

    1. Gary Post author

      What do you mean? Do you think this time is different and human emotions for some reason aren’t going to apply when it comes to Crypto’s?

      How many times have investors said this over the centuries and how many times has it been different?

      The answer of course is 0. It’s never different because human nature never changes.

      Bubbles always pop for the simple reason that price can’t sustain an extreme stretch above the mean forever. At some point gravity always pulls it back down and when that happens human emotions react as strong on the downside as they did on the upside. (The rubber band theory).

      Most traders get more and more bullish the further price moves above the mean. If they could think logically they would get more and more bearish. That’s why most people fall into the dumb money category and the few that can control their emotions move into the smart money category.

      This has nothing to do with the viability of the blockchain technology it is simply a statement that when price has moved 300-400% above the long term moving average then fundamentals have gone out the window and rampant human emotions are now the driving force.

  3. Alexandru Popovici

    USDJPY just produced a failed DC but it will produce a dead cat bounce in a new DC from here, without a higher high (114.7).

    This deadcat bounce of USDJPY should provide the last part of risk-ON mood: gold down to ICL, treasuries down, SM and CRB overextending until USDJPY reaches its DCH 🙂

    1. Alexandru Popovici

      Gold and miners to produce merely ICLs no (not YCLs) –> 200Wma makes a good support for miners to find their ICL.
      Miners need a right-translated YC !!!!!!!!! So their YCH still lies ahead of us (just as EUR’s).

  4. Don

    Hmm… every gold smash down is being bid back up, there is no downside momentum. I think it might be a good time to get back into the sector. Silver looks interesting.

    1. JJHarmen

      Don, I hope you are right. The whpsawing is discouraging for anyone holding the miners. Although GDX is not breaking down, it has been struggling to hang on to gains.

    1. Don

      JJ: Consider that the smash downs may be occurring not because Gold is weak, but because it has been too strong and that is not what the banks want. I think gold is going to make a run for the $1320 area, or higher.

  5. Jimsee

    Nada – looking ahead further than normal, I come up with late Jan as a possible secondary low after a late dec top (gold). interesting times -pivots on Nov 23, Dec5 dates imo.

  6. Margret Kopala

    Here are the basics of the K-cycle, Gary. Since it has been mentioned a few times here on the blog, I hope you and blog readers don’t mind my taking some time and space to explain it.

    You are correct about the K-cycle, at least to the extent that the monetary authorities have become more efficient at deflecting the worst of the deflationary plunge that characterizes depressionary conditions. Stabilizers like welfare and bank deposit insurance have also helped. Also I think it is right to be concerned about the de facto socialization of the stock market – that is through central bank involvement. The price we will pay for that plus other factors in the real and financial economies will be stagflation – high asset prices but little to no growth, at least in the West.

    That doesn’t mean deflationary conditions weren’t in play! Clearly they were. Moreover, central banks can’t correct deficiencies in the main drivers of growth, namely finding new sources of cheap energy and spurring innovation. Their tools are powerful, but ultimately limited.

    This is what the K-cycle is about, the fundamentals of economic growth, as old economies morph into new economies through a process of expansion, crisis and contraction. This takes place every 60 years or so, transforming everything from basic infrastructure and machinery to every day life, to geopolitical arrangements.

    Economies grow old because of underlying conditions to do with overstretched, debt-laden governments and bandwagon effects in the markets. Particularly important is the rusting out, running out and wearing out in the capital goods sector. These have a life cycle of about 50 to 60 years – think machinery, bridges, roads, sewers and pipelines; similarly we get the peaking or the displacement of energy supplies on which new innovations then drive the next cycle. Did you know, for instance, that an electric engine was developed at around the same time as the internal combustion engine? Why did we go with internal combustion? Because of the Texas oil fields. Cheap oil. Automobiles displaced the horse and buggy and changed the world. For the US, where steel and coal created the railway era that opened up North America’s West, the oil and auto era then secured its place as a hegemon as a massive roll out in highways and three car garages urbanized it. Then look at what the main frame computer achieved in the next cycle!

    Expansion consists of the reflationary (spring) and inflationary (summer). This is when new economy discoveries take root and develop while the survivors of the previous economy lead the inflationary surge to its peak. This is followed by a major, 1980s style recession.

    Our most recent experience of the deflationary plunge was the period 2000- 2008, when the tech stock bubble burst (our 1929). After last gasp measures to keep the old economy going, of which sub-prime mortgages were a classic example, it bottomed in 2008. QE, a tool that was used even back in the 1930s, then got underway. Different countries are at different stages of the cycle but I believe the US and Asian countries are well into their reflationary springs while Europe and Canada have yet to see the worst of their winters. Meantime, the old economy tech stock survivors (Microscoft, IBM plus the more recently developed FANG stocks) are leading this part of the expansion to its inflationary peak, due to arrive around 2035, after which (if not before) these stocks, much like railways and autos before them, will become dividend paying utility stocks. This will be followed by the disinflationary K-autumn, during which time the new economy will have arrived in full force, with everything that means for the creation of genuine bubble conditions and the final shakeout of the new economy industries in yet another 1929/2000 stock market crash. And so another deflationary depression gets underway.

    It isn’t clear yet what the new economy will be – though block chain, artificial intelligence, solar power and an aging population’s impact on biotech will play a role. In these areas, the US remains the centre of innovation. Oil v renewables remains in contention but as is already evident, Asia will lead global growth, the movement of people from farms into cities being by far and away the biggest driver of growth. I am convinced, however, that the real driver of the nascent new economy will be the biggest infrastructure build out the world has ever seen, namely China’s One Belt One Road project that will follow the path of the old Silk Road. This will integrate the economies of Asia, the Mediterranean Basin and North Africa, and change the world forever, once again. India with its healthy demographics, good work ethic and plenty of sunshine for a solarised energy base, will do really well too.

    Here again, is the classic longwave analyst chart of the four Kondratieff waves. http://dogboneportfolio.com/charts/ , plus two of my own charts.

    The beginning of the industrial revolution is used as a starting point since it is only from this time that reliable data is available. The longwave analyst charts the financial activity of these waves. Mine describe the economic factors in play.

    Interestingly, Gary, your own work, confirms some of the foregoing. Your secular bull theory fits perfectly with the reflationary phase of the K-cycle currently underway; a monetary reset – the next Bretton Woods – may arrive as early as spring of 2018. After some turbulence perhaps lasting in 2020, the global economy should launch us into the inflationary summer.

    And, markets charted by you https://blog.smartmoneytrackerpremium.com/2017/11/secular-bull.html demonstrate the similarities between today’s markets and those of the 1950s. Which is exactly right. War being the ultimate deflationary event, the end of WWII marked the end of the contractionary cycle that started in 1929. After that markets soared which is what’s happening now.

    For good measure, I’ll just add that the Kondratieff cycle also affects war and hegemonic cycles – usually one 100 + years hegemonic cycle consists of two K-cycles. So far, only the British Empire prevailed through 2 hegemonic (4 Kondratieff cycles). The US has just completed one hegemonic cycle. While innovation is important, it is those countries that turn innovation into productive capacity that win wars and become hegemons.

  7. Don

    There has been a significant increase in trading volumes over the past five months. Does that mean something or are there just more gamblers taking a chance? Goild, are you a gambler?

    1. Nada

      They are not off the table when its time for the ICL. Gary and I differ on the duration of the intermediate cycle. To summarize a bit; 3 days ago, Gary entertained that the ICL may have happened in October for gold. He said this knowing full well that cycle theory dictates that one must have a failed cycle before the ICL can be in place – and gold has yet to produce.

      This is kinda of why I went ape shit when Gary suggested the above. “This time is different”. His main focus has been that the ICL will occur at FOMC on Dec 13th. While not a bad idea and also would be considered a “short-cycle” if that holds to be true – however, dec 13th was never his intended purpose for a “short cycle theory”.

      My theory is that this will be a normal IC duration. This chart represents my expectations;
      https://gyazo.com/d7713b8cddb573a2b382498d32c08322

      The thing that we have butted heads about his his terminology. He has been very adamant over the past few months, saying multiple times that gold was about to deliver a failed cycle. He walked backed his statements vs just saying “oh hey I was wrong” 🙂

  8. victor

    UJ down big, hopefully bounce is next as Alex posts…., my metal shorts in red so as NG. That’s it!!!! Im not going to touch NG ever…., thankfully even 20% of my cannabis holding offset that crap NG loses, you guys miss a lot if you didn’t bought it…, cannabis I mean

  9. isavage

    Gary the USD has broken down strongly below your line on the chart the other day & metals continue to strengthen. At what point will you call a change to the expected higher high in the USD ?

    1. Gary Post author

      The euro will need to make a higher high above 1.1919 to confirm a new intermediate advance has begun.

      Once that happens then we can start to look for the megaphone on the dollar to break down soon.

      1. isavage

        OK THANKS & Happy thanks giving to you & all the blog crew here 🙂

        Some humor for you all.
        i just read an artificial in the London Evening Standard ( well respected & old paper) that explained to us Brits what thanks giving is all about.

        it went on to explain that the Pilgrims who shared there harvest food were “REFUGEES” !?! WTF i wrote them back with disgust & told them i had enough of this rewriting of history to fit the globalists Politically correct & socialist agendas.

        i reminded them that the Pilgrims were in fact pioneers seeking religious & political freedom prepared to endure a harder life to have that.

        REFU BOOLDY GEES !! LOL

  10. Americano

    My official Bitcoin forecast is & has been
    June 2018 $15K
    EOY 2018 $25K
    Do NOT listen to charlatans like this guy that try to low-ball reality just to look cool. That’s just not cricket.
    https://www.cnbc.com/amp/2017/11/22/wall-street-strategist-tom-lee-raises-bitcoin-forecast-now-predicts-40-percent-rise.html
    Happy Thanksgiving to all & if you can’t go & get even $100 of Bitcoin over the holiday on Coinbase to at least play with……hopefully you can get in on TQQQ. Not as much fun but whaddya gonna do lol.

  11. Anthonyo

    Looks like NASDAQ 4750 and then 4000 are nice support levels too…
    Just saying.

    If it has to correct might as well make it a quick deep bear market and get it over with … Oct 1987 style.

    1. Gary Post author

      Now why would the Fed allow another crash? Central banks have been supporting stock markets for years now.

      You saw how easily they halted the election night crash. Yet you think they are going to allow the market to all of a sudden drop 20%.

      Crashes don’t just happen overnight unless an asset is in the very end stages of a parabola and stretched far above its 200 DMA (bitcoin).

      Crashes occur after several weeks of weakening price and once a major support zone gives way.

      1. BeachandBiscuits

        The Fed basically said this explicitly in their minutes yesterday:

        “In light of elevated asset valuations and low financial market volatility, several participants expressed concerns about a potential buildup of financial imbalances. They worried that a sharp reversal in asset prices could have damaging effects on the economy.”

        The know there is some excess in the market, but are concerned that a crash would throw the economy for a loop….no way they’re going to allow a crash if they can prevent it. However, I do think they’d like to see a gradually reduction in the excess, but bubbles don’t work that way.

  12. Goild

    Don,

    Yesterday I was beaten by poorly playing UVXY, today I did play it again to realize it is hard to play.
    So I sold all shares I will not play it till January when I think the SM will have a decent crack.
    Changing securities is like visiting different houses, all are very different.
    So I got back to JNUG and made my turkey money today.

    I agree with Nada, AT, and you. Gold is likely going up.
    I may load shares at the first opportunity as I sold yesterday my JNUG shares.
    Perhaps the time to get in would be after the FOMC. Hard to predict the future.
    The point that gold is leaning higher might be temporarily due to NK stuff.
    The economics appear against gold.
    But as you or RAS have pointed out before, let price talk.

  13. Alexandru Popovici

    Dear Victor, 1.1881 is the very mark!
    yes, we need to see EURUSD touching 1.1881 to confirm a failed DC for USDEUR just as USDJPY failed yesterday (I consider Oct13 to have been DCL for USX and USDEUR) — the STEP 1 was mentioning 2-3 days ago.

    Then we will go to Step 2: the move to HCL of EURUSD and of JPYUSD to set the ICL of gold.

  14. Alexandru Popovici

    Yes, indeed. I am getting sick too of Political Correctness.
    This PC is in a bubble, just as financial bubbles are driven by mass psychology the same applies to PC: bubbles start from a fundamental need (PC started from deep inequality btw sexes/races, crude bubble in 2008 had been started by China’s economic expansion and Crypto’s most likely by a “Switzerland” effect) and then extend way too long beyond the original fundamental trigger.

    I do hope the bubble of Political Correctness will burst soon!
    Happy Thanksgiving! and then we will Happy Christmas! (not happy holidays)

  15. jyoung3759

    This analysis of Gold is indicating it should move lower and move down to a double bottom and then takes off very aggressively into 2019 peak. Now keep in mind this does not mean this analysis is correct, but it is based on cycles running back to the 1997 low which if were to continue at a similar rhythm suggest this pattern. If Gold starts moving lower soon as the pattern suggests then you can have more confidence in it and the analysis is likely accurate, but let’s just see if that is what happens first before jumping to any conclusions. After running a trough, peak, and combo (trough and peak) analysis this one follows the current pattern more closely and thus is more likely to be a more accurate analysis. We saw another lower low after the lower high on the 17th. Like I said I cannot be certain where things are going until I see confirmation and you must wait to see movement confirmation first. Not a reason to trade but a reason to watch. Remember I am not predicting anything just using math to show one possible outcome.

    https://gyazo.com/11a6e2f573f4e513188a02eba3d109bb

  16. Gary Post author

    Another classic sign of a bubble.

    Copycats start springing up like weeds in an attempt to take advantage of the mania. In 2000 any idiotic idea for a website get funding no matter how unrealistic the chances of the company ever making a dime.

    Now the sheep think they’ve found a way to print free money. Not surprisingly we are seeing the crypto market literally explode with new issues as everyone tries to print their own money.

      1. Gary Post author

        A secular bull market in counterfeiting.

        1320 crypto’s and counting.

        Everyone wants a piece of the money tree.

        The further price rises the more irrational people become.

        It’s the same with every bubble in history.

        Most people jump in right before the top. We’re seeing that now. With price already stretched 300-400% above the 200 DMA people have become convinced that price will rise indefinitely and all they have to do to get rich is just keep buying.

        Maybe 1 in a hundred will make a little bit of money. Most will lose everything because they bought too late and held too long.

        1. Gary Post author

          The time to enter is before the bubble phase starts. When most are in denial and think price can’t go any higher. This is the sentiment we are seeing in the stock market right now. Most are looking for a crash. That’s how bubbles begin, with very few on board.

          Only a very few can see the signs. Those are the ones that get in early and make money from the bubble.

          Right now no one believes me when I say 10,000 will be a piece of cake and 20,000 isn’t out of the question.

          Three years ago I could have made the same statement about bitcoin. When bitcoin was under $1000 if I had told you it would go over $8000 everyone would have laughed at me. Yet now no one is laughing. They’ve gone in hook line and sinker, not because of any fundamental (let’s face it, Bitcoin is a Ponzi scheme, It’s nothing more than the ability to counterfeit money), people are going all in because price keeps going up. They equate that to mean there is a fundamental reason for price to rise, when in fact the only reason price is rising is because human emotions are out of control the same as every other bubble in history.

    1. Gary Post author

      Hard to say. The banksters are toying with the metals market, whipsawing it back and forth and fleecing both sides.

      At some point they will get out of the way and price will bottom, it should be about the time the dollar confirms a bear market and breaks down out of the megaphone top. That would presumably be the time they will no longer be able to hold gold artificially down.

        1. Gary Post author

          We always knew the megaphone pattern would eventually break to the downside and confirm a new bear market. The question was never “if” only “when”.

  17. Bluebellkid

    This is from Liz Ann Sonders at Schwab:
    Due to the Thanksgiving holiday, the next version of the Schwab Market Perspective will be published on December 8, 2017.
    Unstop-a-bull?
    The long-running bull market continues and has shown few signs of faltering. Even modest pullbacks have failed to gain any momentum and the uptrend has been largely intact throughout the course of 2017. There are signs that the potential for a “melt up” is heightened. Investor sentiment is well into the extreme optimism zone based on the Ned Davis Research Crowd Sentiment Index. Strategas Research reports that the S&P 500 has posted a 15% year-to-date gain through October, 17 times since 1950, including this year. While past performance is no indication of future results, the average return in those years for November and December was 2.7% and 4.9% respectively, above the historical average for those months of 1.5% and 3.2%. Additional support for the ongoing bull market could come from the holiday shopping season, which is shaping up to be a good one. For starters, there are 32 days between Thanksgiving and Christmas—the second most possible—and consumer confidence is quite high heading into the most important period of consumerism each year.
    We don’t want investors to be complacent however, as pullbacks are always possible and exogenous events are inherently unpredictable. Stretched valuations, combined with signs that investors may be complacent and/or overly optimistic, mean that the risk of pullback is elevated.
    Unstop-a-bull?
    The long-running bull market continues and has shown few signs of faltering. Even modest pullbacks have failed to gain any momentum and the uptrend has been largely intact throughout the course of 2017. There are signs that the potential for a “melt up” is heightened. Investor sentiment is well into the extreme optimism zone based on the Ned Davis Research Crowd Sentiment Index. Strategas Research reports that the S&P 500 has posted a 15% year-to-date gain through October, 17 times since 1950, including this year. While past performance is no indication of future results, the average return in those years for November and December was 2.7% and 4.9% respectively, above the historical average for those months of 1.5% and 3.2%. Additional support for the ongoing bull market could come from the holiday shopping season, which is shaping up to be a good one. For starters, there are 32 days between Thanksgiving and Christmas—the second most possible—and consumer confidence is quite high heading into the most important period of consumerism each year.

  18. Don

    Gary, are you concerned that your call for a blow off top is becoming a widely accepted as being the probable outcome because of all the money printing? Only the fringe guys are talking about a crash.

    1. Gary Post author

      It’s not even beginning to be widely accepted. As I’ve shown a couple of times in the past, the Robo ratio isn’t even vaguely close to a normal bull market top, much less a bubble top.

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