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Morning Brief* – April 30, 2014

Morning Market Brief.


Macro economy in terms of business cycle model-

4/29- Coming up is the April PMI report. Housing and Durable Goods reports were positive input. Economy should pick up pace in coming months. 2014 to be a growth year better than 2013.

Markets in terms of business cycle model:


L5-L13 trends durations are hours to fraction of one second.

L4 trend duration is ½ to 2 days. Intra-week trend. A very short term trend.

L3 trend duration is 2 days to 2 weeks. Intra-month trend. A short term trend.

L2 trend duration is 1 to 2 months. Minor intermediate intra-year trend.

L1 trend duration is 1 to 5 months. Major intermediate intra-year trend.

3yr cycle trend duration is 5 to 27 months. Minor long term trend. Intra-decade trend. Can make or break your business and investment year. But can be choppy at times. May relate to famous Kitchin cycle used in business and economic analysis.

9yr cycle trends last a few years to nearly a decade. Major long term cycle. Intra decade to decade. Economy follows this cycle with growth trends of 7 to 12 years and recession trends of 1 to 3 years. This cycle is found in weather/climate, production, consumption, prices. Similar to same cycle as the Juglar cycle used by business and economy analysts.

Super cycles- 27/36, 54/72, and 216 years. Create trends lasting a decade to a century.

See end of document for favorite technical studies.

All trends integrate for the big picture- for a clock like model. Consider people conduct business on a basis of daily, weekly, monthly, quarterly/semi annual. Relative society, monetary, multi-generation, plus business, people create trends on a basis of decade, century, etc. The second hand of a clock times the minute hand that times the hour hand.

Managed Alternative Investment-4/4- My fund, CWL, posted a new record high for March. CTAs have underperformed as a group for three years. Hedge funds out performed CTAs, but under performed the stock market.

Commodities –(mostly based on DJUBS index)–4/25- L2 top as expected week of 3/3. L1 bottom week of 3/24. Trend is up into L1 top due early May. Some commodities however can peak in April. L1 bottom due during May raises risk of a correction during May. But what of long term trend relative long term bullish macro economy cycles.

Stocks – L3 trend(next 5 days)--4/29-L3 bottom 4/28. Trend is up into next week. 1890S to around 1900 feasible. L1/L2 trend(next 2 months)-4/25- L1 cycle up trend into May, likely late May and with potential for 1940-1970 for SP500, but keep in mind old target of 1910. Considering chance for less downside potential during June, and considering chance for 2014 to be another bull market year.

Euro Forex –L1/L2 trend(next 2 months)--4/29-L1 top week of 3/14 and related bottom week of 4/4. Current up trend is L2 type and due to peak week of 5/5 to late May. More of a struggle higher than desired. Watch weekly high and low for trend clue. Range bound into L2 top? Once L2 has peaked then decline into June for L2 bottom. Not expecting large moves in either direction for some time.

Yen Forex –L1/L2 trend(next 2 months)--4/29- L1 top week of 12/30. L2 top week of 4/4. Trend is down into L1 bottom week of 4/18 to 5/5. Range bound? Trend should be up into early June. But June can finish as a down month. Not expecting a major move in either direction.

Gold – L1/L2 trend(next 2 months)--4/29- Still long term bullish but see no reason for a major bull market.

Oil-L1/L2 trend(next 2 months)-Jul oil is due for a L3 bottom this week that should lead to final rally into L2 top next 2 to 3 weeks, and then a downswing into L1 bottom due by June. All of this may relate to range but with chance for overall bearish tone in the end. However, the long term trend does allow for monthly based upswings later this year. Adequate supply should limit upside potential but growing economies should limit downside potential. U.S. Oil supply rallied along side the price rally so far this year. Refiners purchased ahead of summer driving season.

Additional model input-

Core model is cyclical price only. Total model research includes conditions from quantitative, fundamental, and economic studies as well as simple observation (discretion opinion), plus cycle model concept applied to a variety of fundamental/economic data including PMI, nominal GDP per capita, various supply/demand data, and climate. The core model and the use of the concept applied to non price data is called Cycle Series Analysis.

Twitter: @cycleszeitgeist YouTube: Richard Posson Stocktwits: cycleszeitgeist rposson

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Alternative investment managed by Richard Posson.

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