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India Hurst Cycles
hi RCKS,
I've looked around at a few things the past couple of weeks trying to decide where the larger cycles are taking the emerging markets this year. It doesn't look all that bullish for the time being. Here's my best read on it.
In the spring of last year, the Hurst analysis I was getting looked like this. There was bullish potential, but at some point a 4.5 and 9 year cycle low was due in late 2011/early 2012.
Today it looks like this. The weak amplitude of the rally and early peak foretell a significant low is in the offing. A 9 year low is due late this year.
So it looks like a 40 week low has come in recently, and I expect some kind of bounce. But be aware that it may not last long.
Then I look at the monthly charts of India, China, and Brazil. We are squeezing for a move. If the long term cycles are in, then things break upward. If not, duck for cover later this year.
cheers,
john
Everyone has run over to one side of the boat here ...
Not that I blame them. We can thank the FED!
http://www.zerohedge.com/article/nyse-short-interest-lowest-level-years-who-will-be-bid
If I didn't know any better, one would think the stock market should get pasted for a fews days in March. Give me that 40 week cycle low!!
cheers,
john
hi bubbleboy,
I think a probe long on bonds is worthwhile, but the current bounce may be short lived. I still think we need a little more time for the 30 yr to establish a bottom in this larger cycle, ideally due by June.
I will also be interested to see if the 30 yr will test last year's lows. Price held the 4.5 year VTL from the 2007 bottom.
I have added a small bond Canadian bond position recently, but won't add until we get a clearer view of this low we are looking for.
cheers,
john
P.S. What about oil? I have Hurst 40 week low (actual cycle 44/45 weeks) that likely came in late last month. A rally for several weeks is possible here, but then larger cycle lows are due late this year.
That's always the problem with this kind of bull thrust. Once they end there are no buyers, bulls nor bears ...
edit:
At SPX 1300 I have price right on the uptrendline from the Sept. lows. This should break to confirm that the current 40 week cycle has topped (which started in July 2010).
cheers,
john
The SPX gap at 1286-88 beckons. 5 week low due by Friday. But there's still the 40 week low to be concerned with.
cheers,
john
hi BT,
I expect the gap at 1288 to fill for the coming 40 week cycle low. There is an outside chance at the one just below it at 1260. No way to know for the time being. It doesn't seem possible right now, but ...
cheers,
john
NAS,
Best guess is a 5 week low next week (so we should correct here from Friday's high), then a short rally and then a decline into the 40 week cycle low (due by mid-March, possibly late March).
cheers,
john
A quick SPX update:
The SPX made a 10 week low mid-late Jan (Jan. 20th?). As this 10 week cycle progresses, be aware that a 20 and 40 week nest of lows is due in the coming weeks. So I expect a lot of volatility soon. A 2.5/5 week low is due next week. This is unclear. It is difficult to see how this market will exhaust itself. I see no low risk trade here. There is no sell signal per Hurst, so I cannot short. But based on the astro comments of late, I expect a 5 week low to come next week or early March.
The SPX grinds higher into what looks like an expanding triangle. The 1:1 extension of the thrust out of the late Aug. low is near 1360.
Sentient Trader sees higher targets, but recognizes the risk of a looming 40 week low. My preference is to short a break or bona fide Hurst signals, otherwise I'll just wait for a 40 week low to arrive.
cheers,
john
P.S. Apologies for the chart but image shack went to a subscriber basis for direct link uploads.
[URL=http://img233.imageshack.us/i/spx10weekcyclesfeb2010d.png/][/URL]
Uploaded with [URL=http://imageshack.us]ImageShack.us[/URL]
One has to start entertaining the idea of taking profits on longs here. And thinking about selective shorts. 40 week low due later in March.
cheers,
john
hi RCKS,
I am currently working on it. The short answer is that the emerging markets are bearish here, and I am trying to understand why? Some point to inflation as the cause.
India, China and many emerging markets came out of the 2009 lows early along with precious metals and a lot of commodities (ie. before the $SPX and many other stock markets bottomed). But now we may have seen some of these assets already top in this cycle (I would have thought they would top last ie. after the $SPX). Gold is tricky here, and many commodities are due to correct, along with oil.
I'll look at the cycles and do some analyses as I have been looking at taking new emerging market longs here.
cheers,
john
hi Chris,
The 10 and 20 week cycles have had me a bit confused out of the summer lows. But I am going with this (generated by Sentient Trader). So the July low was a nest of lows for the 80 week on down. Early Sept. was the first 10 week low and the Nov. 15th low was the 20 week. We just saw a 10 week low come in late Jan. Now we are in the final 10 week cycle heading into a 40 week low due by late March. What I can't predict is how we proceed into that low.
Here is a look at the 40 week cycle off the March 2009 lows. If you look closely, and if you agree with the above phasings, you'll see that the 10 week and 20 week cycle periods are running a little longer now.
Hope that helps. My thinking is to wait now for the coming 40 week low, peeling off longs into mid-Feb.
cheers,
john
Looks like the 10 week low is in ...
No. If the high is in here for the 40 week cycle, maybe 1200 +/- 10. But there is no indication we will get that kind of break just yet.
cheers,
john
$SPX Hurst Cycles Update
The 1st chart below was posted in August 2010 suggesting July was likely to be the 80 week low. So far the Sentient Trading software has held to that view. It is also consistent with Airedale's phasings and the expert model used as reference.
The SPX did likely make a 20 week low in Nov. The SPX is due for the next 10 week low. It is likely to come in this week (by Feb. 4th). It could also drag on until mid-Feb. (ie. Feb. 21). Price touched the 5 week FLD on Friday’s sharp decline (see chart 2). A close below the 5 week FLD (near 1285 today) could target a 10 week low at the 1250 – 1260 level, where the 10 week FLD is likely to provide support.
From the coming 10 week low, the SPX will rally to retest last week’s high and possibly make new highs. But from there a correction will come into a 40 week low due in March.
Note that the SPX met and exceeded the 40 week cycle target of 1260 – 1270, which per Hurst is bullish in the intermediate term. I expect a good 40 week cycle low in March and then another solid rally into June.
One thing is clear is that the cycle periods have lengthened from 2009 - 2010.
cheers,
john
hi bubbleboy,
I think that is the concern for bulls here. If this is a bearish cycle, then gold and PMs don't do anything bullish until a late summer low, or the next 17 month cycle low as you have suggested. I'm not sure how that jives with my USD view.
I'll have to look at it some more.
cheers,
john
Y worry,
The low soon and new highs near June is still the trading pattern I expect. If PMs have topped on a larger degree basis, then PM investors are in for a world of hurt this year. This will be one tough sector to call in 2011.
cheers,
john
Y worry,
A low soon, a rally into June, and then another decline into a late summer low? That's what I got. The unknown is what kind of rally is possible here into mid-summer.
cheers,
john
US Dollar Index Hurst Cycles
hi Doc,
I updated the THT view of the USD. Not pretty.
The USD index did break below the 18 month FLD into the early Nov. low, a late 40 week cycle low which actually ran 50 weeks. Price took out the supposed 4.5 year cycle low of Nov. 2009. Bearish.
A 10 week cycle low is due and should lead to some kind of bounce in February, but then at some point the USD should slide into the next 40 week and 18 month low due this summer.
This looks like a bearish 18 month cycle for the USD Index, this coming in the first 18 month cycle off the Nov. 2009 4.5 year cycle low. If this phasing is correct, and it seems to agree with Bob's original work, then the USD is already in a bearish trend in this current 4.5 year cycle. An 18 month low is due in the June timeframe +/- month.
Bear in mind that if this analysis is correct, we are about halfway through a bearish 9 year cycle for the USD.
Here is the longer view with the 4.5 and 9 year cycles agreeing with Bob's original phasings.
So if you are wondering when a good SPX multi-month swing short might setup, I'd wait until there is some evidence of a USD rally before getting really brave.
cheers,
john
PS bubbleboy, hope that helps you on the USD Index phasings. And BTW, I am using the THT nominal Hurst setting for this analysis.
I once noted that the Foundation of Cycles has a 12.3 Year cycle peak to peak for interest rates. So based on this I ran trough analysis on 30 Yr Treasuries and peak to peak analysis on TYX.
These charts suggest the important lows were for the 30 YR were:
1981
1994
2007
Here is the US 30 year which looks much like yours:
Here is TYX for the last 10 years:
Can the 30 YR rate test 5.0% this spring?
So based on these charts, I go with this long term phasing for now.
On the shorter term basis, I have a good cycle low due in March - June period. Once the low is in, the 30 YR will rally one more time before dropping into larger cycle lows in 2012. So this has to be a multi-month swing trade and no more IMO.
cheers,
john
P.S. Note that THT was run with the Initial Cyclic Model setting (ICM), not the Hurst nominal model (NM) setting typical for stocks.
30 year Treasury Seasonals
http://charts.equityclock.com/30-year-u-s-treasury-bonds-futures-us-seasonal-chart
The above chart represents the seasonality for 30 Year U.S. Treasury Bonds Futures (US) Continuous Contract for the past 20 years.
Date range: January 1, 1990 to December 31, 2009
Type: Interest Futures – US
Symbol: US
30 Year U.S. Treasury Bonds Futures Continuous Contract Seasonality
Analysis has revealed that with a buy date of May 13 and a sell date of March 18, investors have benefited from a total return of 121.73% over the last 10 years. This scenario has shown positive results in 8 of those periods.
Conversely, the best return over the maximum number of positive periods reveals a buy date of October 16 and a sell date of September 26, producing a total return over the same 10-year range of 111.73% with positive results in 10 of those periods.
The buy and hold return for the past 10 years was 79.66%.
**Results shown are compounded
Welcome aboard the THT train bubbleboy. I have been waiting patiently for some Hursties to get involved.
Nice work on the long term cycles. I'm not sure where the last 4.5 and 9 year lows occurred. But I have an important cycle low due sometime before June 2011. It could be as early as March but I will have to have a closer look tonight.
A lot of traders are looking for the start of a major bear market in bonds. Given we are likely in the last 9 year cycle, a major bear is not likely until we see a break of your long term trendline. My thought is another good test of that trendline might be the place to go long bonds for a trade.
BTW, what data are you using form the 30 year?
cheers,
john
US Treasuries
hi techcharter,
I haven't looked at bonds in a while, but I know that I do not want to be long treasuries for some time. They are due for a bounce short term, but then once it is over, big down is likely from there. Shorting treasuries could be one of the best trades in the coming year. I'll look at TMV once the 40 week low has come and gone for bonds. I'll look at TLT in the coming days though to get a fix on a coming low.
Want this time stamped?
Posted Aug 27 2010, 01:46 PM
http://www.traders-talk.com/mb2/index.php?showtopic=122982&hl=
cheers,
john
hi A,
You could be right and I guess time will tell. Given we should have had a good 20 week low to buy and trade long, this is not setting up at all. I'm leaning with the Sept. low as an 80 week low and so if correct, there will be lots of chop until we see the next 10 and 20 week nest of lows in the New Year. Cycles will likely lengthen from here too.
I also wonder when things start to turn sour in this 80 week cycle.
How's the reading going? Good to see you.
cheers,
john
hi BT,
Actually, this correction and how it has come about is a bit of a surprise. It reminds me a bit of how the Feb/March correction took place (ie. Eurozone angst). No doubt the FED QE2 has spiked the market in the short term, a distortion really.
Thing is this current 10 week cycle could be very volatile. I assume a new 10 week cycle started last week. And it continues to beg the question as to where the last 80 week low came in. Was it early July or was it in early Sept? If the market has put in a 10 week low last week, it doesn't look very bullish for the time through my lenses.
The other issue is the financial sector. I have already pointed out the bearish behaviour in stocks like BAC and the price action in XLF is problematic. If there is an underlying problem, the banks are likely to feel it first.
Of course we cannot forget that the end of this 80 week cycle will lead us into a 4.5 and 9 year Hurst cycle low. I can see precious metals and certain commodities will have another run next year, but the general market may underperform.
So from a $SPX cycles point of view things are not crystal clear.
I have concluded that I will get a lot braver at the next 10 week cycle low and trade this one on very short term swings. The 10 week low is not due now until Feb. most likely.
cheers,
john
Hurst ramblings ...
http://www.traders-talk.com/mb2/index.php?showtopic=125410&st=10&start=10
cheers,
john
Y worry,
I'm just playing cycle lows. The last one was good for a near 100 point rally. The next 7/8 week low is due in early Dec. I have no idea how we get there. But I plan to be buying it for another swing until it doesn't work.
http://img152.imageshack.us/img152/58/xau15weekbuyoct20101.png
cheers,
john
hi RCKS,
I'm long DPF.UN on the TSX from summer lows and INXX (Nasdaq).
Other ETFS are IFN, SCIN that I track.
There's no easy entry here right now as Oct. 27th was likely a 10 and 20 week cycle low for Indian stocks. I'd look to the next 2.5 week low for an entry which is due late week.
cheers,
john
Nothing has changed since I made this comment.
hi Y,
Not necessarily. Some lead some lag. I expect IAG to lead. We'll see.
Here's a view of the XAU.
http://www.traders-talk.com/mb2/index.php?showtopic=124742
cheers,
john
OK, then I'll want the same prognostication coming into 2012. That will be an important low.
GL/GT
cheers,
john
cheif,
I gotta ask. Have you ever been bearish?
I just go with the cycles and a 4.5 and 9 year low is due in 2012. At some point the $SPX will drop into a 2012 low. But we will likely see a top just as we did in 2007/2008. Massive speculation is coming. Then straight down once again. All thanks to Benny. It is what it is and I'll play along.
BTW, RIM.TO, put in an 18 month low in Sept. I'm long from $50 with a stop there.
cheers,
john
chief,
The decline into 2012 lows will start only after a significant rally in everything. Could take until March 2012 before we see it. But it will be big when it comes. For now enjoy the ride.
cheers,
john
hi cheif,
Nice to see you here.
My investing themes into 2011 are:
Ag (grains, soft commodities, ag stocks)
Uranium (take out a dart board)
Gold (new highs to come)
Emerging markets (particularly India) & their debt
Infrastructure plays (to India in particular)
TSX should do well
Bonds will do poorly as we will see a massive inflation of assets
I'm very negative on the US Financial sector. It will hold back the major US indices. Next important low comes in 2012 (it will be a crash like decline into 4.5 and 9 year cycle lows).
cheers,
john
BT,
I know one thing. I am done with shorts for now! We are too close to an important cycle low to bother with shorting. And all this might be is a high level consolidation. Boy am I surprised.
cheers,
john
BT, can we get an abc? Or will this just be a falling wedge? Also sometimes the bottom just falls out of those wedges.
http://www.traders-talk.com/mb2/index.php?showtopic=124452
cheers,
john
BAC in bearish trend
When the US markets topped out in October 2007, most of the US banks had already tipped into bearish trends. As the $SPX topped out in October that year, many US banks either double topped or put in secondary highs before rolling over. Well, judging from what I’ve seen this week, we may be seeing this repeat again. The US banks look as if they have started another bearish trend. The primary stock I follow is BAC and I’ve attached two charts for your review.
The markets have put in 80 week cycle lows either early July or early Sept. However, BAC has cut to new lows here today and that confirms a likely bearish trend for the US financial sector IMO. An important Hurst 80 week, as well as 4.5 and 9 year lows is due in 2012. I do not expect the US banks to perform well into that timeframe.
If you look closely at the 2007 October timeframe, BAC, as well as, all the US banks rolled over immediately after the Oct. 11th top. When they cut to new lows in the following month (Nov. 2007), price took out what should have been a bullish 18 month cycle low. Once price had taken out this major cycle low, it was a warning that the larger market was in longer term trouble. See the first chart for illustration.
Looking specifically at the significance of this week’s new lows for BAC, the stock is bound by the FLDs (Hurst speak for future line of demarcation). As long as the stock price cannot penetrate above these FLDs (which is basically price offset by a given number of calendar days), the stock will trend downward and cannot generate a new buy signal or any upside target. See second chart.
From a Hurst cycles point of view, a bullish market holds its major lows and then rallies for months or years, never visiting that low price again. A bearish market develops when important cycle lows are breached to the downside.
So looking at the latest price action for BAC, it is flashing a major warning IMO (as will the other US banks) for the US markets. BAC took out its price low from early Sept. which should have been a major cycle low. It also confirmed that the stock is once again in a major bearish trend that will likely not end before 2012, where major lows are due at the next 18 month cycle low.
I know that the US mortgage and housing market is a mess and so fundamentally this will be a continuing problem in the US. But I think the US Financials are key to supporting a bullish market. I also recognize that the US market can delay the onset of any decline due to FED shenanigans, but at some point, the weak financial sector will have its consequences.
cheers,
john
BT,
It's done or we just saw a failed 5th ...
Nice hook on this morning's rise.
Either way, a 5, 10 and 20 week nest of lows is due as early as next week.
Thanks for the excellent charts.
cheers,
john
hi Scott,
Here's the $SPX with Hurst FLDs. A close below the 5 and 10 day FLDs (brownish and pink lines) might yield the sell by the end of the week for a decline into 10 and 20 week nest of lows. This nest of lows is due by the end of October.
The 18 month FLD (yellow line) should easily provide support if this market is bullish.
Nice to see you here.
cheers,
john
P.S. The actual level of the FLDs for Oct. 13 is listed below.
Bar# 7589
Wednesday 13 October 2010
O: 1171.32
H: 1184.38
L: 1171.32
C: 1178.1
M: 1177.85
18m FLD(h): 1141.345
18m FLD(m): 1142.228
18m FLD(l): 1141.345
40w FLD(h): 1105.67
40w FLD(m): 1079.465
40w FLD(l): 1091.81
20w FLD(h): 1086.25
20w FLD(m): 1080.435
20w FLD(l): 1079
80d FLD(h): 1110.88
80d FLD(m): 1111.142
80d FLD(l): 1103.92
40d FLD(h): 1144.072
40d FLD(m): 1145.96
40d FLD(l): 1144.072
20d FLD(h): 1148.16
20d FLD(m): 1151.72
20d FLD(l): 1131.87
10d FLD(h): 1167.73
10d FLD(m): 1162.887
10d FLD(l): 1155.58
5d FLD(h): 1164.118
5d FLD(m): 1165.35
5d FLD(l): 1164.118
l=low, m=median, h=high