8-Year Cycle Bodes Trouble for UK
05/31/16 INSIIDE Track:
05-31-16 – One of the most recognized cycles in the stock market is the 8-Year Cycle (and its divisions). A cursory look at a longer-term chart immediate reveals the 8-year span from 1966 peak to 1974 low to 1982 low to 1990 high & low to 1998 high & low.
When a cycle begins to lose or lessen its significance – as that 8-Year Cycle did in 1990 and then more so in 1998 – it is giving a convincing clue of an impending shift. And that appears to be what transpired with a new (offset) 8-Year Cycle taking hold in 2000.
Leading the way lower – from the 2000 high – the tech stocks & Nasdaq 100 plummeted. And, it was that same Index that led the bottoming formation of the next meltdown – the 2007/2008 collapse. The Nasdaq 100 bottomed in Nov. 2008 – roughly 8 years from its peak and real collapse… in 2000.
Of course, the obvious conclusion from that discussion is to watch 2016… 8 years from the 2008 collapse(s). However, since I view this as an approximate 8.6 Year Cycle – slightly more than half of an even more uncanny 17-Year Cycle – that focus extends into 2017… 8+ years from the Aug.–Nov. 2008 meltdowns & 17 years from the 2000 peak.
Another 8-Year Cycle
Throughout the past decade, I have described another 8-Year Cycle – the 8-Year Cycle of Attacks against America. That cycle was again recounted in the April 2016 40-Year Cycle: Date of Aggression Report – pinpointing 2017 as the time for a new escalation (and potential shift) in those attacks.
Since that analysis was very recently reiterated and elaborated, there is no need to belabor the point… other than to point it out as another example of an 8-year rhythm that has been uncanny in its consistency. [Please see the April 2016 40-Year Cycle: Date of Aggression Report – available to all current subscribers – for related analysis.]
A Third 8-Year Cycle
There is another intriguing 8-Year Cycle – offset from those other 8-Year Cycles. Although there may not be any direct correlation, it is still intriguing to note the significant developments following the same rhythm. This one involves Britain/UK and is worth discussing in light of June’s impending vote on their continued inclusion in the European Union.
Though this cycle begins much earlier, the start of this discussion surrounds 1960 – when Britain was eclipsed by France & Germany as the economic powerhouses within Europe. In a couple decades, the UK had gone from global power to (only) European power to third place in Europe.
This turning point closely followed the 1957 Treaty of Rome and the establishment of the European Economic Community. In 1960, the UK (and others) launched the competing EFTA (European Free Trade Association) and subsequently (in 1961) bid to join the EEC, a bid that was ultimately rejected due to the objection of Charles de Gaulle.
This seismic shift – in Britain’s economic standing & influence – set the stage for the ensuing 50+ years of economic & currency crisis, repeatedly pushing the Pound Sterling to the edge of the abyss.
In late-1967–1968, Britain went through a tumultuous period of economic & social upheaval (similar to America, but condensed in time) that included devaluing Sterling – resulting in a debilitating financial crisis in late-’67/early- ‘68)… March 1968 – 8 years from 1960 – was the culmination of that financial crisis – as investors threatened to abandon their currency completely AND America asked Britain to shut down the gold market.
8 years later, in Sept. 1976, the UK experienced another humiliating economic crisis – ultimately going to the International Monetary Fund for a bailout of her currency. That immediately followed June 1976 – when the Pound reached a record low after suffering a sharp drop in value. [It is uncanny how this coincided with the Jamaica Accord in 1976… see Metals section for related analysis.]
8 years later, in Sept. 1984, the UK was experiencing record high unemployment during the culmination of a 4-year period that saw their industrial output plummet by about 25%. As their global clout plummeted, in Sept. 1984 the UK signed a deal to return Hong Kong to China in 1997.
Economic & currency malaise would return another 8 years later – in Sept. 1992 (notice that so many of these events occurred during the month of September during each 8-Year Cycle) – when George Soros broke the Bank of England on Black Wednesday… forcing them out of the Exchange Rate Mechanism in Europe. Soros’ massive ‘bets’ against the Pound netted him about 1.5 billion while pummeling the value of Britain’s currency.
8 years later, in Sept. 2000, it was more of an inflationary debacle – related to Britain possessing the highest gas prices in the developed world. That triggered fuel protests & blockades, resulting in ~90% of petrol stations running dry. It also prompted the instituting of food rationing as a result. The 8-Year Cycle continued to wreak havoc!
8 years later, in Sept. 2008, the UK joined the rest of the world in a global economic meltdown accelerated by Lehman Bros. bankruptcy & US housing delinquencies skyrocketing to over 14%. That culminated a very precise 8-Year Cycle from the bursting of the tech bubble in 3Q 2000.
Could another bubble be poised to burst – and another UK financial crisis about to emerge…
On a larger-degree basis, it should be remembered that 80 + 80 + 80 years ago – in 1776 – Britain lost the American colonies and built their ‘Second British Empire’ – with India & Asia as primary components. After 80 years of development, that Empire was dealt a serious blow – beginning with the Indian Rebellion of 1857.
2016/2017 is 240 years & 160 years from two British Empires being dealt severe blows.
In the ensuing ~80 years, Britain suffered two massive depressions, the first one lasting as long as 23 years (by some accounts) in 1873–1896 – and culminating at the 40-Year Cycle midpoint – and the second one throughout the 1930’s.
[80 years from the trough of that first ~23-year depression (1896) – in 1976 – the UK hit one of their lowest points, from a world economic standpoint.]
The 1930’s were also a time of great transition between the UK and Asia – another critical component of the ‘Second British Empire’ . Leading up to 1936/1937, Britain was redefining her relationship with both China & Japan – a delicate balancing act. All that led to naught as the Second Sino-Japanese War broke out and ultimately dealt a 3rd & final (knockout) blow against Britain’s global empire.
2016/2017 is 240 years, 160 years AND 80 years (higher-degree 8-Year Cycles) from the British Empires being dealt severe & ultimately fatal blows.
2016/2017 is also an exact 800-Year Cycle (larger-degree 8-Year & 80-Year Cycle) from the French invasion of England – under Prince Louis (later to be Louis VIII) – during the First Baron’s War. The invasion – and the War – were a direct result of England’s King John refusing to abide by the Magna Carta of 1215 (ultimately influencing the US Constitution in 1787).
Could 2016/2017 perpetuate this 8-Year AND 40- / 80-Year Cycle in the U.K.? IT
05/31/16 – Stock Indices remain positive, having rallied sharply after fulfilling the early-2016 outlook for a sharp decline from mid-Dec. ‘15 into late-Jan./early-Feb. 2016, when weekly/monthly cycles bottomed. Many Indices retested their August lows while attacking their monthly HLS levels AND 2016 yearly support in January 2016.
While the monthly HLS tests project a 3–6 month bottom to follow, the test of yearly support produces a similar expectation – a low that should hold at least into mid-2016. Both of those technical price indicators reinforce cycles that project the next important bottom for June 2016.
That is when a 10-month low-low-(low) Cycle Progression (Oct. ’14–Aug. ’15–Jun. ’16) AND a corroborating (half-cycle) 5-month high-low-low-(low) Cycle Progression (Mar. ’15–Aug. ’15–Jan. ’16—Jun. ’16) recur and portend another low.
IF the parallels continue, the Indices would drop to an intermediate low in late-June – also perpetuating a current 5-month & 10-month cycle that was/is already projecting the same thing.
Corroborating that, the NQ-100 Index peaked on April 19, 2016 – the latest phase of a 19–20 week low-high-high-high-(high) Cycle Progression dating back to the mid-Oct. 2014 spike low…
In the near-term, the Russell 2000 is projecting a secondary top for the first half of June. If it can set a high at that time, the Russell would perpetuate a 6-month/~180-degree cycle that includes a high (monthly close) in June ’14, a high in Dec. ’14 & subsequent highs in June ’15 & Dec. ’15. A high in early-June ‘16 would perpetuate that Cycle Progression AND complete a 50% rebound in time (8 months down/4 months up).
The Russell 2K is also closing in on a .618 (price) rebound – at 1161.2. – the first of two decisive (2–3 month) upside objectives & resistance, combined. The second comes into play at 1183.85–1191.5… and includes the monthly 21 High MARC, quarterly LHR and other 3–6 month indicators.
Reinforcing the potential for an early-June peak, many Indices spiked up to their weekly LHRs in late-May – setting the stage for a multi-month peak in the ensuing week(s). The DJ Industrials & Transports also possess daily cycles & daily trend indicators corroborating that analysis. They could trigger a 2–4 week sell signal in the opening days of June. [See Weekly Re-Lay for related updates.]
6–12 month & 1–3 year equity investors should [reserved for subscribers only].
…Hong Kong’s Hang Seng Index has consolidated since dropping sharply into Feb. That drop had it attacking its 1–2 year HHLdownside objective (18,258) and then spurring a rebound into 3–6 month resistance at 21,800–22,200/HSI. Ultimately, this decline could stretch into (at least) Oct. 2016 – when multi-year cycles align. An intervening low in July ‘16 would corroborate that.
Japan’s Nikkei 225 Index has rebounded after spiking down to its 2016 HLS (15,334) – an extreme intra-year downside target. It needs a weekly close back below 16,500 to extend its decline – that could culminate in 2Q 2016 and perpetuate a 2-year high (2Q ‘08)–high (2Q ‘10)–low (2Q ‘12)–low (2Q ‘14)–low (2Q 2016) Cycle Progression. ~14,000 is 1–2 year support. On an intermediate basis, the Nikkei is testing 2–3 month resistance – at 17,600–17,900.
The Nikkei has also been tracing out a consistent, 5–5.5 month low (Aug. ‘14)–low (Jan. ‘15)–high (late-June ‘15)–high (late-Nov. ‘15)–high (late-April ‘16) Cycle Progression that next comes into play in late-Sept. 2016.
From a technical price perspective, the Nikkei spent the entire month of May trying unsuccessfully to recoup what was lost on April 29th & May 2nd. That ‘failure’ does not bode well for the coming month, with daily cycles turning back down in early-June.
The German DAX Index rallied to – but held below – ts intra-year/year-opening high (10,485), a decisive resistance level. It remains likely to set its next important low in late-June–late-July, when several weekly & monthly cycles converge.
The FTSE remains neutral – on a 3–6 month basis – needing a weekly close below 6040 to turn that trend back down and to project selling into the next intermediate cycle low in mid-to-late-July.
The CAC – based on its weekly trend failure & intermediate cycles – remains likely to drop into late-June/early-July, the culmination of a ~4-month high-high-(low) Cycle Progression. Ultimately, this decline could last into Aug. 2016 – the next phase of a 6-month/180-degree low (Aug ‘15)–low (Feb. ‘16)–low (Aug. ‘16) Cycle Progression…
The British Pound neutralized its 3–6 month trend but would not turn it up until a weekly close above 1.4800/BPM. As long as that does NOT occur, the Pound could still see a drop to 1.3500/BP.” [Refer to June 2016 INSIIDE Track for specific cycles & outlook for related markets.]
The British Pound is poised for another pummeling, expected to plummet to 1.3500/BP… and below. The looming Brexit vote fits perfectly with the 8, 80 & 800-Year Cycle in Britain – projecting crisis for 2016–2017! They all corroborate the 40-Year Cycle that pinpoints 2016 for a UK currency crisis. The FTSE is projecting a sell-off into July 2016 while US Indices are setting the stage for an early-Junereversal lower… and sharp drop in late-June 2016.