2015–2017 = Acceleration Period

1/02/15 INSIIDE Track: “Outlook 2015–2017

          01-02-15 – If I was pressed to use one word to describe expectations for 2015, it might be acceleration.

2013–2014 was projected to provide or reveal the initial phases on an expected ‘Shift’ of epic proportion.

2018–2021 is expected to see many (initial) results or consequences of this ‘Shift’ reach fruition (including ‘Cycles of Unification’ in both the Middle East & Europe; perhaps there will be some overlap like a S. European/N. African/Middle East alliance… or it could be two very distinct and/or competing unions).  In either case, 2018–2021 is like the mirror or book-end to 2011–2014.

And 2015–2017 is when this ‘Shift’ has been/is expected to really take hold… to accelerate forward… to leave little doubt that a Major transition is underway.  So far, these expectations have unfolded according to plan.  The period between January–April 2015 could provide the next level of fulfillment…

Back From the Future

Some of the discussions related to this topic dealt with expectations for 2018–2021 & analysis that continues to receive powerful validation.  As just noted, that analysis dates back to 2011.

If one knows where they are currently and knows where they are likely heading (and what it looks like), it is easier to anticipate what unfolds in between.  While that may seem over-simplified or even naïve, that approach has proven itself enough times to warrant some respect.

Here again, we only have to examine expectations published in 1999–2000 (for a major drop in Stock Indices & the emergence of War Cycles and/or ‘a surprise attack on America’s shores’ in late-2001)… or analysis published throughout 2007 (for a 1–3 year, 35–50% drop in Stock Indices to take hold in 4Q 2007)… or even earth-disturbance analysis published in 2009–2011 (projecting a major quake in S. America/Chile for 2010 & Japan in 2011) to see how this works.

The initial conclusions were drawn (in 1999, 2007 & 2009) – from a myriad of cycles & related indicators – and then intervening events corroborated them.  Many of these intervening events were also anticipated with the use of shorter-term analysis – in the context of the bigger-picture expectation.

Europe’s Other Shoe

A similar scenario has been unfolding in Europe for the past few years.  In May 2011 – and the ensuing months – INSIIDE Trackdescribed why the Euro had major resistance at ~1.5000/EC and why it should drop to at least ~1.1000/EC before it would have any realistic potential for embarking on a new impulse wave higher.

An expected scenario was described then – and reiterated many times, including in April & May 2014 – in which the Euro would suffer a sharp decline and appear to be on the verge of collapse… before it would have any real chance of bottoming (in my opinion).  A REAL crisis in Europe was projected as part of this ‘Shift’.

In May 2014, INSIIDE Track described why the Euro had multi-year resistance at ~1.4000/EC and why it should peak in early-May 2014 and then drop to at least ~1.1000/EC – stretching that decline into late-2015 – before it would have any realistic potential for bottoming.

The Euro peaked at 1.3989/ECH on May 8, 2014 and has since plummeted below 1.2000/EC.  All of a sudden, 1.1000/EC doesn’t look so unattainable.  In fact, at the rate things are going, 1.1000/EC might only be a stopping point on the way to even lower prices.  And suddenly, the fundamentals are kicking back in and confirming this analysis (they usually lag the technicals AND price action)…

A.A. Meeting

As 2015 nears, the standoff between the Greek population and the ECB is nearing a flashpoint.  A snap election was just triggered – and is scheduled for late-January – in which the Syriza Party is feared to wrestle control in Greece.            Though I don’t know much about the Syriza Party, there is only one platform that matters to the global economic community – they are a staunch ‘anti-Austerity’ party.

In other words, if Syriza comes into power in Greece, they have threatened to immediately suspend austerity measures with the ECB.  And, the hyperbolic rumblings are that the ECB could/would shut off the spigot of financial aid to Greece quickly.

While that extreme action – on either side – is probably NOT what will unfold, it doesn’t have to.  All the markets need is the equivalent of an Obama vs. Republican Congress budget showdown… and the Euro could go into a tailspin.

It’s all about perception!

And, don’t assume this would be an isolated incident as there remains a lot of ‘dry kindling’ spread around the European landscape… that could quickly erupt into a blazing inferno.  Spain is also on the radar of many analysts & economists.  And once that initial fire takes hold, who knows where other smoldering embers will burst into flames.

Some markets (the Euro, in particular) are already anticipating trouble.  Others could begin to corroborate, between now and late-January.  And that leads into a topic that is worth revisiting at this time.  And, it holds a VERY strong parallel to late-2007… and the Dollar.

H.A.M.C…. & the Dollar Tipping Point

In 2007, I repeatedly described a scenario that I thought would usher in a projected, 1–3 year/35-50% plummet in Stock Indices.  And that scenario had the same bottom line as the one I expect in 2015.  And that can be summed up in 4 words:

It’s all about perception!

The scenario described in 2007 was very simple… The Dollar had been declining since 2001 and already had adverse effects on various markets.

However, this had been viewed as a positive for Stock Indices since it was a relatively orderly decline AND since Stock Indices were still in the throws of ‘Stock-flation’ – an inflationary advance in equity prices.  As long as the Dollar did not get crazy, the Stock Market reveled in its decline.

But, a funny thing happened on the way to a cheap Dollar… it got too cheap.  A Dollar Index around 90.00?  No problem.  A Dollar Index around 85.00 – less than 10% from its all-time low?  No problem.  A Dollar Index at 81.00 – less than 3 basis points from a 40-Year bottom?  Not to worry… stocks were drunk and didn’t notice a thing.

What about a Dollar Index at 80.00 – the lowest point in 12 years?  Barely a hiccup… Stock Indices set more new highs.

The Dollar Index at 79.00 – having dropped from 121.00 to 79.00, a 35% decline (on top of decades of already declining value)??  New highs in Stock Indices… Weeeeeeeeee!!!!!

What about the Dollar Index at 78.00 – a mere 1 basis point decline from 79.00 and less than a basis point below its all-time, 1992 bottom?

Party’s Over!  Cops are here!  Everybody scramble for the exits!!!

On September 30, 2007, the Dollar Index gave its first monthly close below the 1992, multi-decade (and, for all intents & purposes, multi-century) low.  Less than two weeks later, Stock Indices put in their final highs and then entered a 17-month, 50% freefall!  Why?  (Everybody join with me…)…

It’s all about perception!

H.A.M.C…. & the Euro Tipping Point

It would seem logical that paper assets priced in Dollars would suffer if the Dollar is dropping.  But, that is only the case when the Dollar is dropping in a disorderly manner… or has reached some sort of extreme phase (like dropping to new 40+-year lows).  Now, where have I heard that before?

Hint: “Markets only follow other markets when the lead market is going parabolic or is in an extreme phase.”

Ah, yes.  It is that Axiom of Market Correlation.  And, the Dollar action of Sept., 2007–March 2008 reinforced that principle yet again.  The Dollar had exited a ’rational’ decline – in traders’ minds – and had entered the realm of irrational… when fear & panic become far more likely.

At the exact same time in 2007 (well, it was a 10-day lag), the Stock Indices turned down and dropped in lockstep with the Dollar… even after hearing for years that a cheaper Dollar was good for stocks.  That was then and this is now.

…Enter 2011…

From 2007 into 2011, most commodity markets (and related inflationary indicators) experienced a blow-off advance.  Some peaked earlier.  Some later.  But 2011 was really the turning point.  It was – as described leading into that year and then throughout that year – a ’Date with Destiny’, when Gold & Silver, Coffee, Cotton & Crude reached a pivotal turning point.

Gold & Silver were forecast to set Major peaks in 2011 and enter 1-2 year & 3-5 year declines…

…Enter 2015…

For several years, I have surmised that Europe still had to go through more pain before there was any realistic chance of progress (an often hard-to-define term).  That conclusion was based partially on human nature – and a study of history – and partially on the charts, which projected a Euro drop to 1.1000/EC or below.

When the Euro was approaching 1.5000/EC (in 2011) and 1.4000/EC (in April/May 2014), it was hard to imagine the Euro at 1.1000/EC.  But those were the times when this forecast was reiterated so that traders would not lose sight of the bigger picture.  And now that the Euro has dropped below 1.2000/EC, it does not seem so impossible…

The first move is usually on fear – when only the technicals pick it up.  The final move is when the fundamentals reach fruition and everybody recognizes what’s going on.  So, in 2015, hold on tight!    IT