Bonds on Track For Bounce into July ’22; Stocks Reinforce Shifting Cycles.

Outlook 2022/2023 – A New Cycle Begins

05-26-22 –  The financial markets, and in particular the stock market, are far more than just a vehicle for speculation and investment.  They are a reflection of society, the economy and humanity at large.

There may be numerous reasons or arguments why that should not be the case, or why it is a sad reflection of society as a whole, but that is a different discussion.  If something is, it is.  You can argue ‘until you’re blue in the face’ that it should not be that way… but it still is.

You can also engage in a ‘chicken or the egg’ debate about whether the markets drive society or society drives the markets, but that is also another debate.  We are in a financially-driven society (free enterprise, capitalism, etc.) so the two are intimately intertwined.

On an individual level, you can usually assess what another person values most by identifying where they commit their most precious possessions – time and money/resources.  (The primary pair should probably be time and health… but there are so many ways that money has clouded the health debate, it is a moot point.)  They can say they value this or that, or him or her, but actions speak louder than words.  Look at where the time and resources are committed.

The point is the sterility of theory can never stand up to the infection of reality.  And we have to deal with reality… or the perception of reality.  So, it is important to ‘follow the money’.

A Crystal Ball… or a Reflecting Pool?

The stock market reflects so much about our (society’s) priorities & problems, hopes & dreams, fears & anxieties – so it is one of the best places to look for a snapshot of current & future concerns.

As a result, stock market cycles reflect far more than stock market movement or turns.  They reflect developing underlying shifts that are often not apparent until weeks or months after the markets have begun to factor them in.

That is why a few charts or diagrams of the past year could be so revealing for the coming years – like the simple HCP diagram on this page.  It was included in the Jan ‘22 INSIIDE Track and illustrated what had been warned about throughout the second half of 2021: Combined with the 3.25-Year Cycle peaking in early-2022, the 2-Year Cycle, the ~8-Month, ~4-Month & ~2-Month Cycles AND the fulfillment of multi-year upside targets in Nov ‘21, the stock market was poised for a decisive top and sell-off to begin 2022 – a type of ‘warning shot across the bow’.

Last month, the Decennial Cycle was discussed, concluding: The ‘2’ years have timed the ‘start of something’ repeatedly… and it appears 2022 is no different.  Are stocks starting something new?…

Bonds & Notes reached major support and set what could turn out to be 2 – 3 month lows.  Bonds provided a brief spike low that reached a trio of range-trading targets near 135-00/US – similar to what the Russell 2000 did at 1710/QR.

Since 2019, Bonds repeatedly found pivotal resistance and support around 155-00 & 165-00/US – spending ~8 months in that range in 2019/2020 and then another 10+ months in the same range in Feb – Dec ’21.  In 2020, after breaking above 165-00/US, Bonds surged to related targets at 175, 185 & ultimately 195-00 – a series of ~10-0/US ranges.

After breaking below 155-00/US in early-2022, Bonds dropped to – and blew through – their first downside range target at 145-00 and were targeting a drop to the second range target at 135-00/US.  A related sequence of ~20-point ranges – at 195, 175 and 155 – also projected a drop to 135-00/US.

Since late-2021, they had traded in a related (~15-0/US) range, first between 165-00 and 150-00/US.  After Bonds broke below 150-00, they rebounded to test that level of ‘support turned into resistance’ and were immediately repelled.  That projected a related ~15-00/US drop to ~135-00/USM.  As a result, three range-trading objectives aligned at ~135-00/USM.

Bonds spiked down to 134-30/USM and bottomed, fulfilling those range targets as Notes reached a similar level near 117-00/TY… The next 3 – 6 month peak is still expected in July ’22, in line with a ~1-year high-high-(high) Cycle Progression and the midpoint of the 4-Year Cycle Progression that helped time the July ’20 peak.

Longer-term investors and hedgers could have liquidated long positions in Bonds & Notes in 3Q ‘20 and sold intermediate rallies in 3Q/4Q ‘20 and added to short positions in Aug ‘21, in sync with trading strategies described in INSIIDE Track.  3 – 6 month traders can cover a portion of these short positions, anticipating a rebound into July ’22.”  TRADING INVOLVES SUBSTANTIAL RISK!

Bonds & Notes remain on track for a convincing decline into ~3Q ’22 (watch Oct ’22 when a 4-year low-low cycle matures)… and ultimately into 1Q ’23.  Equity markets are validating analysis for a 1 – 2 year peak in 2022 and a sharp decline beginning in early-Jan ‘22.  They fulfilled intermediate analysis for the next significant sell-off to take hold (also in precious metals) after intervening peaks on April 18 – 22, ’22.  Inflation cycles are also poised to keep pressure on Bonds (and consequently stocks) in 2022.

2021/2022 was expected to usher in a dramatic shift in multi-decade cycles (40-Year & 80-Year Cycles) – timing everything from now-validated War Cycles (late-2021 into late-2025), European Unification Cycles (2022 – 2025), Drought Cycles that peak in 2021/22 and shift to Deluge Cycles in 2022/23, Agriculture Cycles that time 80-Year shifts (beginning in 2022/23), Currency Wars (2021)… and Interest Rates.

Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.