Gold, Oil & Middle East Cycles
Gold, Oil & Middle East Cycles:
Sept./Oct. ’17 = Upward Shift…
Usher in 2018 – 2021 Period.
07/29/17 INSIIDE Track:
“Outlook 2017-2018
Middle East Cycles
07-29-17 – The months of August & September have the potential to see a resurgence of global challenges. I use the term ’challenges’ to prevent hyperbole, but there are multiple cycles – in and out of the markets – with negative connotations for 3Q 2017…
Gold, Oil & Middle East
There is another cycle, actually a trio of converging cycles, that overlaps the Decennial Danger Period. One of those is in Crude Oil and has been discussed since late-2015. A brief synopsis of the outlook has been that Crude would plummet from mid-2014 (a consistent 3-year cycle high) into early-2016 – when Cru-Ca-Ble cycles bottomed.
[In 2015, Cru-Ca-Ble was the term coined for the corresponding and highly correlated Crude, Canadian Dollar & Russian Ruble markets – all projected to plummet into 1Q 2016, at which time a multi-year low was forecast. The projected scenario was to see a 12–18 month bottoming process with Crude not expected to mount a sustained advance until after Sept. 2017.]
All three oil-related markets did plummet from mid-2014 into late-2015 and all three did bottom in 1Q 2016 – in the month of January. Since then, all three have been tracing out a bottoming pattern – remaining above those Jan. ‘16 lows but not mounting any significant advances beyond normal 2–3 month intermediate rallies.
At the same time, Gold was forecast to see a Major, multi-year low in late-2015 and then enter the ‘Golden Year’ in 2016. So that this is not misunderstood – or misconstrued to support a ‘gold is going to the moon’ mentality – it is important to review exactly how that was described back then…
2016 was projected to be the year in which Gold experienced the largest & longest advance in at least 3–4 years – providing a revealing 4-Shadow Signal and confirming that a multi-year bottom was in place. That advance was projected to last at least 6 months and take precious metals higher into mid-2016. After that, a serious setback was forecast to take metals lower into late-2016 (the first two phases of a bottom).
That would be the ‘2’ wave of a much larger 5-wave advance (with two more advances & one more intervening correction to follow the late-2016 bottom). Similar to what was described for Crude, the Loon & the Ruble, metals would need to undergo a lengthy bottoming process (1–2 years) even as Gold was expected to be confirming that a multi-year low was already intact (late-2015) and showing signs of a future accelerated advance to follow.
Markets rarely switch from damaging downtrend to euphoric uptrend in a 1 or 2 month period. That shift can often take 1–2 years to unfold (like 1999–2002), even though higher lows are steadily forming during that 12–24 month period.
The accelerated, parabolic rallies – when they emerge – are often much closer to the end of an overall cycle since 80-90% of the overall price advance can often occur in the final 10-20% of the up cycle. That is usually in the ‘3rd’ wave advance, but can sometimes wait until the ‘5th’ wave. Until then, it is a normal and healthy period of accumulation when prior bears are slowly losing their confidence and previously-burned bulls are cautiously sticking their toe back into the water.
Gold was projected to mimic its 2016 pattern (convincing rally for ~60% of a related cycle & sizeable sell-off for the remaining 40%) in 2017, albeit on a slightly smaller scale. So, instead of a 6–7 month advance, it should only rally for 4–5 months. And instead of a subsequent 5-month decline, it should only correct for 2–4 months (see the January ‘17 INSIIDE Track for related discussion).
If that unfolded as expected, Gold should be setting its next ascending low in 3Q 2017 (late-2016 low was higher than late-2015 low and 3Q 2017 low should be higher than late-2016 low) and then beginning to enter a series of more convincing advances in late-2017–late-2018 (and potentially stretching out for a few additional years)… first subtle but then growing in intensity as that period unfolds.
H.A.M.C.
Most veteran readers are, by now, intimately familiar with Hadik’s Axiom of Market Correlation. Instead of quoting it (this, and many other axioms and trading indicators can be found in Eric Hadik’s Tech Tip Reference Library), I will simply paraphrase it and focus on the applicable aspect of it…
Simply put, alleged ’correlated’ markets only trade in tandem during extreme or accelerated phases of the lead market. When the Dollar is trading in a 2 or 3 month trading range, swinging back & forth on a 3–5 day basis, the correlation to Gold is almost non-existent.
However, if the Dollar is dropping to new 5–10 year lows (or vice-versa) and accelerating to the downside, Gold is far more likely to take notice and move sharply in the opposite direction since the accepted ‘correlation’ is in inverse one. (Even this is a spurious correlation since the Dollar could be dropping on deflationary fears and a slowing US economy… weighing on metals as well. It all depends on the driving force of current price action.)
This principle also applies to the perceived correlation between Gold & Crude and/or between geopolitical upheaval and Gold & Crude. When ‘routine’ struggles & skirmishes are unfolding, each market tends to focus more on its individual fundamentals – trading in diverse directions.
However, if/when more extreme geopolitical upheaval occurs – particularly in the Middle East – Gold & Crude tend to sit up and pay attention. The reason for discussing this is to preface an ongoing discussion that involves the other third of this and the continued focus on Sept./Oct. 2017…
Israel/Jerusalem Cycles
Continuing a discussion that has gone on for two decades, 2017–2018 marks a momentous shift in cycles governing Jerusalem, Israel and by association, the Middle East. (Several related Middle East, Islamic & Turkish cycles also collide in 2019.)
Similar to Sept. 2000–Sept. 2001, the Jewish Year of 5761, the period of Sept. 2017–Sept. 2018 (5778) is expected to time seismic shifts – one 17-Year Cycle later. In the corresponding tables, I am synopsizing several of the most significant cycles that contribute to this analysis. However, they are just the tip of the iceberg. And this time, they have multiple market cycles appearing to corroborate them. Let the challenges begin! ”
Middle East cycles corroborating outlook for Gold & Crude. Unleaded Gas & Heating Oil already confirmed that (at least) a likely 6–12 month bottom is in place (June 2017) and a multi-month advance is underway. That rally should resume after a 2–4 week period of consolidation – by early-Sept. – reaffirming the focus on Sept./Oct. 2017 to usher in a bullish period in oil markets & a tumultuous period in the Middle East. The first phase (for energy markets) could last into early-2018.
See Jan – Mar. 2017 INSIIDE Tracks for analysis pertaining to Saudi Arabia, Turkey & Israel as well as other key Middle East nations.
See Weekly Re-Lay & INSIIDE Track for additional analysis and/or trading strategies.