Morning Brief* – June 16, 2014
Macro economy in terms of business cycle model-
6/16-Industrial production and manufacturing reports showed improvement. No change to 9yr business cycle forecast for growing economies until near end of this decade when a recession is due.
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)–6/16- L1 cycle low January, top in May and a low as of last week. Higher values are expected by next month. The long-term 3yr cycle is up into next year. The 9yr cycle is up until late this decade. Commodities joined the economic growth trend as of January.
Stocks – L3 trend(next 5 days)-6/16-L3 short-term top June 9. Related bottom June 11. Trend is up until late next week. L1/L2 trend(next 2 months)-6/16- L1 cycle top June 9 and related bottom June 11. A L2 trend is up until early August. 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.
Euro Forex –L1/L2 trend(next 2 months)-6/16-L2 top May 8 was as expected. Trend was down as expected with minimum objective of 1.36. A L1 cycle low I due now. Trend should turn up and last into July. Recovery to 1.3733?
Yen Forex –L1/L2 trend(next 2 months)-6/16-L1 bottom that occurs two to three times per year was placed May 21. A long-term 3yr cycle bottom should have occurred as well. A L1 uptrend offers strength for the dollar side for first half summer, while the long-term trend (3 year cycle) 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)-6/16- L1 top in August 2013, December 2013 and May 2014. L1 bottoms were during January and June. Spot chart possible $99 objective negated due to recent high on Irag event. L2 trend is likely now up into July and I would not rule out the L1 trend to be up until September. However, price appreciation may be a struggle at times. $112 likely major resistance for WTI. 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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