Morning Brief* – June 2, 2014
Morning Brief* - June 2, 2014Morning Market Brief.
Macro economy in terms of business cycle model-
6/2-Employment and PMI reports are due this week. 5/22-The 9yr cycle is up until late this decade when a recession will occur. Last bottom was 2009. Last top was 2007.
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.
Commodities –(mostly based on DJUBS index)–6/2- L1 top week of May 2. Trend is to be down into L1 bottom due during June. Long-term 3yr and 9yr cycles bottomed January 2014. (Some indexes bottomed earlier.) The long-term trend is up until late this decade. But the trend channel can be wide. Commodities were in a bear market from 2011 to 2013 and contrary to the overall economy and the stock market. Commodities have now joined the economy growth cycle. Supply was balanced to what the economy could afford as of 2013.
Stocks – L3 trend(next 5 days)-6/2-L3 top May 13. Related bottom May 20. Trend is up and of minimum variation and should peak this week. And so what of this week's ECB meeting and the U.S. Employment report. And what of PMI. L1/L2 trend(next 2 months)-6/2- L1 cycle up trend until early June and with potential for 1910 to 1940 for SP500. A correction is due during June. A bull market began from last year relative 3yr cycle and will last until some time 2015. The 9yr business cycle is bullish until 2017 to 2019. Shanghai SE 50 index over 1565.17 a long-term bullish sign. If trade over 15164.39 Nikkei 225 consider the 3yr cycle has returned to bullish. I remain long-term bullish India. Eurozone is out of recession and a bull market for stocks is underway.
Euro Forex –L1/L2 trend(next 2 months)-5/28-L2 top May 8 was as expected. Trend is down until sometime June. 1.36?
Yen Forex –L1/L2 trend(next 2 months)-5/28-L1 bottom that occurs two to three times per year was placed May 21. A long-term 3yr cycle bottom should occur as well. A L1 uptrend offers strength for the dollar side for first half summer, while the long-term trend offers strength for this year if not until early next.
Gold – L1/L2 trend(next 2 months)-5/28- The trend is down unless trade over $1294. Still long-term bullish but still do not see reason for a significant move higher.
Oil-L1/L2 trend(next 2 months)-6/2- L1 top in August 2013, December 2013 and May 2014. Trend is down into L1 bottom due during June. Last bottom was during January 2014. Spot chart can return to $99. The long-term trend is likely up still and may remain so into next year, but I do not see a significant bull market. May see more of range trade with a bullish bias at times. Supply is on the rise alongside rising global demand.
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.
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