Bonds Bottom w/Natural Year Onset; Project Bounce into ~July ’21.
Outlook 2021 – Natural Year
03-30-21 – “The markets recently entered an annual period of transition. For those that view the calendar from a ‘natural’ standpoint (as W.D. Gann did and as most agrarian societies do), this period is the 1st month of the Natural Year in the N. Hemisphere – beginning with the vernal equinox.
If one were to begin a calendar on the vernal equinox (start of the Natural Year on ~March 20), the first month of that year would end on April 19/20th (Date of Aggression; more on that in a minute). It would be the ‘opening range’ for that Natural Year; the determining factor for the ensuing intra-year trend. Since we have recently entered a new (~11-Year) Solar Cycle, it is important to place this discussion in proper context…
The Natural Year
The Sun governs our seasons (and a good part of our lives), which are measured by the solstices and equinoxes. This has been true in agrarian (agriculture/farming-based) societies for thousands of years and is still prominent in many cultures.
It has been true in civilizations that worshipped the Sun (and established their calendars based on that religious focus; like the ancient Egyptians and Babylonians). As such, it starts the clock on the ‘opening range’ of each Natural Year.
It is when the northern half of the earth transitions from seasonal ‘death’ to ‘life’. In the old days, it was also when ‘kings went off to war’ (coming back to life just in time to go perpetrate death; refer to the Biblical account of when David chose not to go off to war, but to instead hang around the palace and let some idle time get the best of him with Bathsheba).
Anyone that suffers from SAD could certainly attest to the psychological aspects of longer days and more sunlight when the shroud of depression lifts and the rays of hope come flooding back into their lives.
From a trading standpoint, the action in that first 30 days represents a type of ‘opening range’ that would influence the trading of the rest of the Natural Year. This is similar to how I treat the first week and month of the calendar year, the first 3 trading days of each month, and the first day of the week.
Once that opening range (first 30 days) of the Natural Year is complete, you have resistance and support for the entire period – both when the market is trading in that range AND once it has broken out of it.
You also have an important gauge of trend for that year (if the market is trading above that range, it is in an uptrend on an intra-year basis, etc.). From a broader perspective, that ~30-day period often sets the tone for the remainder of that Natural Year – in politics, society, etc.
Emphasis on the Natural Year was more significant in Gann’s time (1920’s – 1940’s) since the commodity futures markets were almost all agricultural. Mid-April was the time when ‘carry-over stocks’ were at their lowest and when planting conditions and expectations for the new crop year – or growing season – were becoming apparent.
But, it is not just trading that is impacted…
Date of Aggression
This period – from March 20/21 to April 19/20th – marks a very important transition period linked to various means of measuring time with physical (natural), celestial (astronomy), metaphysical (astrology) and supernatural (Jewish & Christian commemorations) implications and influences.
It is a time to watch each year for signs of ‘change’.
In many ways, April 19/20th acts like a deadline for determining what to expect in the coming (Natural) year. As I have discussed for the past three decades, that time (surrounding April 19) is what I term the Date of Aggression. This date has impacted America’s destiny – beginning with our independence and incorporating many decisive wars & attacks since.
From a market perspective, the year of 2020 provided perfect fulfillment of this Natural Year shift with the entire stock market, most metals, and many commodities bottoming on March 18 – 23, 2020 and beginning new bull markets from there.
That was due to the synergy of many corroborating cycles and timing indicators all projecting the same thing. (See March ‘19 analysis regarding the 11-Year Cycle of Stock Panic Cycles & Global-Shaping Events – projected to shock the markets and globe in late-’19/early-’20… in sync with the Solar Cycle.)
From a cycle basis, 2021 is not the same (not near as much synergy and even some contrasting or competing indicators) but the first month of the Natural Year remains significant and is likely to provide some very telling clues in various markets.
There are several markets projecting significant moves into – and/or turning points during – the period surrounding April 19. Gold, Silver and the XAU are projecting rallies from March 30/31 into April 16/19. Energy markets could be set to peak by mid-April. The stock market just triggered a buy signal on March 25 that could last into mid-April. So, this ’opening range’ is poised to impact key markets…
Bonds & Notes are in the process of completing an initial decline from what was/is expected to be a multi-year peak (July ’20). That peak perpetuated an uncanny 4-Year Cycle that timed multi-year highs in July ‘12 & July ‘16 (after timing previous lows in mid-2004 and mid-2008) and was forecast to time a final peak in ~July 2020.
The next phase of that 4-Year Cycle comes into play in ~July 2024 and should time a secondary, lower high. In between, Bonds & Notes are expected to decline for 2 – 3 years and then rebound into mid-2024. That means that interest rates could slowly rise in 2021 and 2022, possibly extending into 2023.
On an intervening basis, they have been expected to see a secondary, lower high (on a lesser magnitude basis) in June – Aug. ‘21. That potential is receiving some corroboration from recent action.
Bonds & Notes are trying to signal a bottom after dropping into the latest phase of a 64-week low-low-low Cycle Progression that links to the two most significant lows of the past few years (Oct. ’18 & Dec. ’19). Bonds dropped right to the level of the Dec. ’19 low (155-05/US basis continuous contract) – reinforcing the current link to those previous lows.
If the late-March lows hold, a subsequent 50% rally in time (32 weeks down/16 weeks up) would take Bonds & Notes into July ’21 – the middle of the June – Aug. ‘21 period when an intervening peak (lower high) is expected and when an ~11-month low (Oct ’18) – high (Sept ’19) – high (Aug ’20) – high (July ’21) Cycle Progression recurs.
Longer-term investors and hedgers could have been liquidating long positions in Bonds & Notes and selling on intermediate rallies in 3Q/4Q ‘20. Wait until July ’21 before adding to short positions.” TRADING INVOLVES SUBSTANTIAL RISK!
Bonds & Notes are in a projected 2 – 3 year downtrend after fulfilling analysis for a multi-year peak in ~July ’20 AND the top of a final, wave 5 of V advance (v of 5 of V). A multitude of factors were projecting an initial surge in inflation into 2021… with other phases expected to follow. Bonds should drop into at least 3Q ’22 (1/2 of 4-Year Cycle) and likely longer (2Q ’23?)
Stocks & Silver (paper & commodity inflation) triggered 6 – 12 month buy signals in March ‘20 as multi-year cycles bottomed… with stocks projected to advance into May ’21 before a multi-month peak would become likely. Lumber & Natural Gas also triggered March ’20 buy signals… ushering in a multi-year inflationary period in many commodities.
2021/2022 is expected to usher in the first shift in multi-decade cycles (40-Year & 80-Year Cycles) – timing everything from War (late-2021 into late-2025), Climate (Drought Cycles peak in 2021/22 and shift to Deluge Cycles in 2022/23), Agriculture (80-Year Cycle shifts in 2022/23), Currency Wars (2021)… and Interest Rates. The final year(s) of a 40-Year Cycle of Drought (into 2021/2022; see 90/10 Rule of Cycles) could magnify commodity inflation in the coming years.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.