Bonds & Notes Poised for Secondary Peak; ~12-Month Decline Should Follow.
Outlook 2021/2022 – 40-Year Cycle Transition
07-28-21 – Throughout the past decade, INSIIDE Track has discussed the uncanny 40-Year Cycle and its relationship to recurring events such as ‘Currency Wars’. The focus was on the period from 2016 – 2021, with expected parallels to 1976 – 1981, 1936 – 1941, 1896 – 1901, 1856 – 1861, 1816 – 1821 & 1776 – 1781.
One key aspect of this was the forecast that Gold would bottom in late-2015 and then enter a 5 – 6 year bull market beginning in early-2016. That was forecast to create an advance into 3Q ‘20 and potentially into May ‘21 – encompassing the majority of that 2016 – 2021 period.
The following is an excerpt from the Jan. 2014 publication: 2016 – The Golden Year – written to prepare readers for a new bull market in Gold AFTER remaining downside was seen into the second half of 2015:
Jan. 2014 – “With Gold & Silver just coming through a pivotal cycle – midway between 3–5 year cycle highs in 2011 and 3–5 year cycle lows in mid-2015 – it is an appropriate time to pull together some key analyses from the past couple years and look ahead to what could be the most decisive cycle – in 2016.
2016 is the culmination of almost every 40-Year Cycle, dating back to 1776 and flowing through to 1976 (when the Jamaica Accord officially de-linked the Dollar from Gold) and is the likely time for Gold to enter a new bull market. It may set its lowest low in 2015, but the real bull market is likely to be triggered in 2016…
The Golden Year
In light of a myriad of diverse and/or related cycles, 2016 should be viewed as the ‘Golden Year’. That is when so many cycles culminate and/or transition (often the most volatile period in a cycle).
If you look back at the recurring 40-Year Cycle, you should notice that the ‘6th’ year is when the stuff really hit the fan. Following the Boston Tea Party of 1773, it was the American Revolution in 1776 that cast the die for the ensuing 200+ years. It was the first major battle in what would eventually morph into a move toward a global monetary monopoly.
The next major battle was a more insidious one, ultimately lost in 1816 when the Second National Bank (Bank of the United States) was chartered.
Since this would ultimately lead to a control of the currency and a rejection of Gold & Silver, it was a pivotal and devastating battle that resulted in almost 200 years of the ‘papers’ battling the metals and the fiats battling the hards. 1816 was the loss of a major battle for Gold & Silver…
In the 1850’s, the US was again fighting the battle against Gold & Silver, reducing the weight of Silver in coins and effectively devaluing the currency. This resulted in 1857, in the suspension of acceptance of payment in Silver. Another battle lost by Gold & Silver…
1896 was the political battle over Gold’s place in backing the US Dollar. William Jennings Bryan built his campaign around his goal and his pledge to end the Gold Standard. He lost. Gold won an important battle, when it looked like the integrity of the currency was down for the count…
However, Franklin Roosevelt took up William Jennings Bryan’s cause but wisely waited until after being elected to show/play his hand. In 1933–1934, he banned the private holding of real money (Gold & Silver) and confiscated the citizens’ real wealth…
The banking battle against Gold had been won (in 1816).
The political/practical battle against Gold & Silver was won (in 1856).
And now, after a lone victory for Gold in 1896, the psychological/emotional battle against Gold & Silver was won in 1936.
All that was left was to encode this into US & international law… exactly 40 years later.
Along came 1973, when a replacement was found for Gold… Oil (and the three ‘D’s – debt, debt & debt).
1973–1975 saw the phased-in agreement to price oil in US Dollars – effectively backing the US Dollar with oil – since a new backer was needed before the old one could be completely annihilated.
So just in case anyone missed the intention of this Oil/Dollar agreement, along came the Jamaica Accord in 1976 – an international agreement, delinking Gold from the US Dollar…
From a timing perspective, 3–6 month swings are likely to remain in force with Gold & Silver expected to turn back down in 3Q 2014, set an important low in 4Q 2014, set another descending high in 1Q 2015 and – if those intervening cycles corroborate – set a 3–5 year low in 3Q 2015…
With respect to Gold, the focus should be on 3Q 2014 and 2Q/3Q 2015 – as far as timing – and ~1130.0–1155.0/GC & 14.650/SI as far as price (targets that have been detailed since 2011). If those 3–5 year downside targets are hit before 2Q 2015, it would usher in the possibility for a drop to 1033–1045.0/GC – where other important wave, retracement & projection levels align.”
Gold and Silver did vacillate throughout 2014 & 2015 with Gold dropping to 1133/GC in Nov ‘14 and breaking below 1130/GC in mid-2015 – projecting a spike down to 1033 – 1045/GC.
It reached and bottomed at 1046.2/GC in late-2015 and then ushered in 2016 – what was forecast to be The Golden Year and trigger the first leg of a 5 – 6 year advance and the largest rally in several years.
East Meets West?
One of the overriding factors in these currency wars – and the primary objective to unseat the US Dollar as global currency kingpin – is the role that China has played and will play in this ’battle’. Some times, their role is the result of direct and intentional actions. Other times, it is more of an indirect role.
That indirect role was seen in the second half of 2015 – ushering in 2016 – 2021, the primary focus of the 40-Year Cycle – and could be recurring in the second half of 2021, a near-perfect bookend around that 40YC of Currency Wars time period.
In June 2015, Chinese stocks peaked and began to roll over to the downside. Global stocks noticed but did not react too sharply. Some US stocks and indexes (including the DJIA) peaked in May/June ’15 and were going through a topping process (like 2021?).
July ‘15 saw additional selling in the Chinese stocks and mounting losses in global equities. However, not all US indexes were impacted. The S+P 500 created a double-top as the Nasdaq-100 spiked to higher highs during the final third of July (specifically, in the 1-week period between July 20 – July 27).
Then August ‘15 arrived…
Chinese stocks plummeted; global stocks plummeted; US stocks plummeted… with the Nasdaq-100 losing about 20% in a 5-week period.
In 2021, there are some noticeable similarities (and some sharp contrasts as well).
Chinese stocks sold off in June ‘21 and accelerated lower in July ‘21.
US stocks were mixed with the DJTA peaking in May ‘21 and initially selling off into intermediate cycle lows on July 19. From there, stocks briefly bounced allowing the Nasdaq-100 to spike to a new high – during the same, precise 7-day period in which it did in 2015 (July 20 – 27). Hmmm.
Could August ‘21 resemble Aug. ‘15? (Keep in mind a 6-Year Cycle is also a higher-magnitude multiple of the uncanny 2-Year Cycle in stocks!)
There are other factors corroborating this. Hong Kong’s Hang-Seng Index provided a textbook rebound peak on June 28/29 near 29,400 and was projected to undergo a sharp 3 – 5 week plunge during the month of July (leading into early-Aug.)
Here’s what the July ‘21 INSIIDE Track stated, warning about an impending sell-off in Chinese and Asian equity markets that could resemble July ‘15:
“China’s Shanghai Composite Index remains in corrective mode after peaking in Feb. ’21 while fulfilling a ~13-month low (Dec. ’18) – high (Jan. ’20) – high (Feb. ‘21) Cycle Progression… setting up for another sell-off in July/Aug ‘21 – based on cycles, weekly trend action and weekly 21 MAC.
This is exhibiting eerie similarities to mid-2015 when Chinese equities led a sharp correction in global stocks – with Aug ‘15 timing an accelerated decline (when the DJIA and others finally joined in). That overall drop stretched into year-end ‘15 with a spike low in early’16.
The SSE Index saw similar sell-offs in 2018 and 2012 – creating a 3-year cycle that has timed significant sell-offs in the second half of each of those years (some stretching into the first quarter of the ensuing year – 2013, ‘16, ‘19 & 2022?)…
Hong Kong’s Hang Seng Index remains on track to move lower into Aug./Sept. ’21 – when monthly cycles converge. Weekly cycles first converge in early-Aug ’21, so a sharp 3 – 5 week sell-off is becoming more likely as the month of July begins. This index just tested its now-declining weekly 21 High MAC (~29,400) and should reverse lower from there and enter a ’C’ wave decline – with ~26,000 as its primary downside target. ”
So far, the Hang Seng has plunged 15% in a few weeks as the SSE lost about 10%. Déjà vu?
11-Year Cycle & Earth Disturbances
As discussed recently, these market shifts could be magnified by solar cycles – a very natural and consistent event – and resulting tectonic shifts. The June ‘21 INSIIDE Track revisited analysis projecting a spike in earthquake intensity and/or swarms in 2021/2022 – another form of instability. To reiterate:
5-28-21 – “That ~11-Year Sunspot Cycle is closely linked to a 10 – 11-Year Cycle of Earth Disturbances that pegged major quakes in 2010 – 2011 and was expected to recur in 2021 – 2022 (with related volcano cycles overlapping both of those periods of time and stretching an unstable period into 2024).”
Alaska was just struck with an 8.2 quake – one of the largest in recent years. This comes 11 years after the devastating Haiti, Chile, New Zealand & Japan earthquakes of 2010 – 2011. It is also occurring almost exactly 1 year from a similar (7.8) quake near the same location – in July ’20. Are Cycles Real?…
Stock Indexes are creating another round of divergence at what is expected to be a 3 – 6 month (or longer) peak. All of the indexes fulfilled the 1 – 2 year outlook from 2020 that forecast a major advance from March ‘20 (when multi-year cycles bottomed) into May/June ‘21.
They also fulfilled 6 – 12 month outlooks from Nov ‘20 when equities fulfilled projections for a Sept/Oct correction and corroborated the overall outlook for surges into May/June ‘21.
To begin 2021, stock indexes added another level of affirmation – setting decisive (higher) lows in early-March while fulfilling intermediate downside objectives and holding intermediate support – projecting a subsequent 2 – 3 month rally into May/June ‘21.
Most of the indexes fulfilled that cycle peak – topping in May/June ‘21 and triggering 15 – 30% corrections in a diverse array of sectors and stocks. Those stocks and indexes – with the DJTA and Russell 2000 in the lead – were projected to initially bottom during the week of July 19 – 23, with July 19 forecast to create a blow-off low in a majority of stocks.
During that time frame, many completed multi-month declines, as airline (AAL, DAL, LUV & UAL) and other transportation stocks dropped 25 – 30%, key energy stocks dropped 20 – 30% (BP, MRO, APA, SLB, HAL, etc.), many metals stocks dropped ~20% (with some, like AEM, NEM, etc. stretching those losses into July 23 cycle lows).
Financial stocks took a hit with key bank stocks like C & BAC down 15 – 20% during this period. And one of the primary ‘proxy stocks’ – that was cited in reference to a July sell-off (NFLX) – dropped almost 10% from July 15 – July 23.
Price action validated the potential for a July 19 blow-off low with many indexes spiking right to their weekly HLS (extreme downside target) and rising weekly 21 MAC support as the Russell 2000 retested 5+-month lows and held, while fulfilling a ~6-week low-high-high-high-(low) Cycle Progression (which was part of the evidence cited when the Weekly Re-Lay projected that July 19 blow-off spike low)…
At the risk of sounding like a broken record, those remaining strong indexes are like the final cars of the train – on an old wooden roller-coaster – reaching and ultimately passing the summit, before an accelerated decline. While the others (those that already passed the summit) will do some slow descending, they cannot accelerate lower until all the ’cars’ are in sync.
Looking out beyond Sept. ‘21, another multi-month high is still expected in Jan./Feb. ‘22 – 8 months from the May/June ‘21 cycle high in most stocks – reinforcing the overall 16-Month Cycle as well as the uncanny 2-Year Cycle…
Bonds & Notes are slowly validating the overall outlook for 2020 – 2023 in which interest rates have been forecast to slowly rise in response to developing inflation and other factors. That stems from a major, multi-year cycle peak in Bonds/Notes – and low in interest rates – projected for July 2020.
They have initially fulfilled ongoing analysis for a 3 – 6 month advance into July/Aug ’21 – when they are expected to set a secondary peak. That would perpetuate an ~11-month low (Oct ’18) – high (Sept ’19) – high (Aug ’20) – high (July ’21) Cycle Progression.
The primary peak in July ’20 perpetuated an uncanny 4-Year Cycle that timed multi-year highs in July ‘12 & July ‘16 and preceding lows in mid-2004 and mid-2008. The next phase of that 4-Year Cycle comes into play in ~July 2024 and should time another multi-year (secondary) high.
In between those two major cycle highs, Bonds & Notes were/are expected to decline for 2 – 3 years and then rebound into mid-2024. That means that interest rates could slowly rise (and Bonds fall) in 2021 and 2022, possibly extending into 2023.
Longer-term investors and hedgers could have been liquidating long positions in Bonds & Notes and selling on intermediate rallies in 3Q/4Q ‘20… and could have just begun adding to short positions.” TRADING INVOLVES SUBSTANTIAL RISK!
Bonds & Notes have fulfilled projections for a rally from March ‘21 into July/Aug ’21 – when a secondary (lower) high is expected. This is the second selling opportunity (first was in 3Q ’20) and should lead to a new and sharper decline into ~3Q ’22. They fulfilled analysis for a multi-year peak in ~July ’20 (AND projections for the top of a final, wave v of 5 of V advance) and should drop into at least 3Q ’22 (1/2 of 4-Year Cycle; with Oct ’22 representing a 4-year low-low cycle). Ultimately, this decline could stretch into 2Q ’23.
Many factors were projecting an initial surge in inflation into 2021… and are portending a second surge into 2022… coinciding with multiple natural and geopolitical cycles. Overlapping this, many stock indexes were projected to peak in May/June ’21. A future peak (Jan/Feb ’22) could reinforce that a major top is forming. Chinese stocks are leading the way, having peaked in early-2021 and entering what should be a multi-year decline. They are expected to set an initial low in Aug ’21 and then bounce.
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.