Nenner on bonds 02-11

"Now, in an interview with Business Spectator, he warns that US bonds have now entered a bear market.
Although Nenner says we might see small bounce in bond prices from this point, the low point for bond yields has already passed. (Bond prices move inversely to yields.)."


http://www.businessspectator.com.au/bs.nsf/Article/bonds-interest-rates-Australia-dollar-economy-pd20110211-DY4B9?opendocument&src=rss

See my latest comments on TLT: http://swingcycles.blogspot.com/2011/02/gold-silver-bonds-ags-watch-2-13.html

Comments and outlook 02-15

Longer cycles keep topping and the market keeps going up.  Hard to explain.  The most logical theory I hear is the FED with QE2 is pumping in liquidity with POMO and this supports up cycles and acts to dampen down cycles.  Now I don't claim to be smart enough to know if this is true and if true to what extent it affects the cycles.  It is true there are unexpected events that can affect the market (IE 9-11 caused a big spike down) and that cycles do not account for 100% of market movement.  Something like 25% or more of market movement is probably due to news and other factors.

If QE2 is the cause of cycles being supported to the upside and suppressed to the downside this is not natural and sooner or later nature will win out.  So we have this huge spring being wound tighter and tighter and the response will be substantial when the pressure is removed as nature takes its course.

as to the near term it appears that the short term cycles should be down most of the day.  As to what impact this will have I assume it will provide some downside bias.  Here is the short cycles:

Gl traders.  Don't forget to keep your stops in place to preserve gains.

Gold, silver, bonds, ags watch 2-13

• Gold (PHYS) topped late Nov and should bottom mid April.
• Silver (PSLV) bottomed around Christmas,  should top around Mar 11, bottom again Apr 29.
• Bonds (TLT) bottomed early Dec and should top around Mar 25, then bottom late June
• Ag commodities (RJA) should pull back some by first week of March, then next high is early May

Here is charts:

GL traders.  Do your own analysis - this information is only meant to give you dates to watch (not act).  Trade the market you see not some prediction.

The week ahead 02-13

Last week did not work out as predicted.  If we get a correction - I was early.  To be honest I had rather be early than late  (bad habit - always early for appointments too).  Based on the current alignment of cycles we are due (some may claim over due) a correction. 

If you looked at my prior post you will see:

• The 10 year cycle is down
• The 41 month (Kitchin) cycle is down
• The 2 year cycle is up until early October

Now I believe:

• The 1 year cycle topped in January and is down into early/mid July
• the 20 week cycle topped and is now down
• The Wall cycle is up thru the end of February
• the 45td cycle is ready to top

Here is the chart:

Considering the alignment of cycles it seems that I was early going out on a limb last week, but that a correction could well start this week.

GL traders.  Do your own analysis. I may add shorter cycles later.....

Does history repeat in the market? 2-11 (cont2)

Now I know some people look for similar chart formations (I believe they refer to them as fractals) to try and predict future stock action.  What is their rational in selecting date ranges?   If you are going to compare patterns then I believe you need a reason for selecting the the date ranges to compare.  I believe as good a reason as any is a similar alignment of dominant cycles.

In 2002 from Jul-Oct you had 3 dominant cycles bottoming.  They were the 10year cycle, the 41 month (Kitchin) cycle and the 2 year cycle.  Now the 10 year cycle should bottom again around Oct 2012.  Since the 10 year cycle is 120 months it is approximately three 41 month (Kitchin) cycles. Finally a 10 year cycle is the length of five 2 year cycles.  So based on rational one might expect 2000-2002 to look like 2010-2012.

And all things being equal that comparsion may have worked.  But on 9-11-2001 there was a non-cycle event that caused a sharp spike down which we cannot expect will be repeated this year. If we make allowances for that though we can make a stab at predicting how the next 20 months or so will look.

With this in mind I constructed a possible scenario for 2011- 2012 (thru Oct).  Here is that scenario (based on similar cycle alignment in 2001-2002 and 2011-2012:

This is for entertainment purposes only and should not be a basis for investment.  Only time will tell if it is even close to reality. It does illustrate though how the study of cycles can assist you in setting expectations and where the pitfalls may lie.     

Does history repeat in the market? 2-11 (cont)

I showed you 2 charts that look remarkably similar.  So does history repeat or just rhyme?  Well one chart covers about 2 years, the other about 4 years.  The first chart was 2001-2002 time frame.  The second chart was 2007-2010 time frame.  So I think we can agree - not a repeat of history, but a rhyme. 

In other words the market is moving at a slower pace down/up than it was during the ".com" bust and recovery.  So keep that in mind when viewing the charts (if 2001-2002 chart makes a move in 1 month it would take 2 months to make the same move today  if that relationship continues).

So here are the charts with labels (time and price):

Hope you found this enlightening.  GL traders.

Does history repeat in the market? 2-11

I contend that history never exactly repeats in the market, but there are times when it rhymes very well.  I have two undated  vanilla charts of the DJIA for you to view.  They are real charts - and they are amazingly similar.  No I didn't got back to the 1930s-90s either.  Look at them.  Which is a current chart?

Here they are:

Now in the case of one chart we know what came later.  In the case of the other we are waiting to find out.  Is that a clue as to what is to follow? I will post complete information later.  Post your guesses as a comment.