From an every other month letter to some trader cyber-friends that follows up on tidal timing and other similar methods I sometimes post here, plus a postscript written later:
Hello
Late again! Sorry. Life is very busy and good.
The 4 day cycle starts with a day 1 on 8/1 and a day 4 of 9/1.
Tide turn days for August and September are 8/4 (hmmm), 8/11, 8/18-19, 8/25, 9/1-2, 9/8-9, 9/16, 9/23-24, and possibly 9/30.
The Berg Timer Data high for the year was 6/18 which was the SPX high close of the rally from May. There is secondary high on 9/21 and then down into November. According to Berg's long term chart at his website, 2010 was to be the rally top and then the next four years are marked for lower. http://www.justgoodtiming.com/id47_stock_market.htm
There is Bradley turn date for 8/10.
Helge Sundar Loekke's charts show a major high for mid June and mid August: http://cyclelt.com/PT.htm Also look at his Big Picture chart which shows his data signals since 1980: http://cyclelt.com/LTR.htm
With the early but on-going reversal of the global market and economic policies of the past 30 years, we are seeing a reversion to government activism and possibly to future command economies. Thus retrenchment on globalism, free trade, and free markets will proceed along with de-leveraging, increased savings, and recapitalization of banks and governments. Since governments will now keep their ears closer to the ground, listening for sounds of potential revolutions, I believe that sentiment will become ever more important in market analysis and will clearly lead technical analysis which has been in the ascendancy since the 1970's. In my view many of these timing methods above are measuring sentiment or at least sentiment precursors. Normal market sentiment measuring methods will remain important too, but world-wide government involvement in markets may reduce the effectiveness of some standard methods. I would expect Elliott and Gann methods to become more important again than they have been since 1999. Also the Long Wave has seemingly "skipped a beat" and extended its down wave from the late 1970's by a decade to 2012-14 as the massive debt destruction which was prevented for so long completes.
All that said-- and "all that" is just my own opinion-- I expect cash, bonds, and gold to be the primary beneficiaries of investment and protection for another few years.
Cheers all, and happy summer.... off to a long vacation here!
Tom Drake
PS: There is a lot of deflationary talk recently which centers on the demography of developed nations which = falling birthrate ---> older population ---> less spending --->deflation. While I am leaning toward deflation--mild, I hope-- as an interim reality, I think there are some weaknesses in this demographic suggestion. I don't have time to go into it now, but there is a very long and strong literature on this issue going back to the earliest days of the industrial revolution which is now over 200 years ago.
Everyone, whether interested in economics or not, is familiar with the Malthusian proposition that population would increase faster than production so that people would starve everywhere. But countering that idea was, among other ideas, the "general glut" theory which posited that increased production due to the industrial revolution would result in an oversupply of goods leading to probable deflation and certainly not to mass starvation.
A third idea somewhere between, but actually more classically tuned economically, was J. B. Say's Law which stated that all production costs (materials, labor, factory, machines, sales costs, profits, and taxes are paid are paid for during production so that the production cost payments are added into the economy before the finished goods are sold. This increases the wealth--today we might say money supply or velocity thereof--sufficiently enabling other people (consumers in our lingo) to buy the produced goods with the money received from production cost payments. Thus instead of a glut there is an expansion of the economy. Naturally, as you'd expect, Marxists and Keynesian's did not at all agree with this idea, nor did gloom and doomers like Malthus and his followers. Nevertheless as it turned out, Say was nearer the mark of how capitalism has actually worked.
Of course all three positions are much more complex than these very simple outlines. A good place to read about it is in Thomas Sowell's "Say's Law". Sowell is a well-known academic economic historian and sometimes newspaper columnist who expanded his PhD thesis on Say into a book published by Princeton University Press in 1972. ISBN: 0-691-04166-0
One of these months I want to spend some more time on Say who might have some clues in his work or tradition for some more positive outcomes than either the boomers or the doomers foresee for our age of bewilderment.
Recent Comments