Interest Rates: Stocks Plunge into late-March ’20 Cycle Low; Bonds Prep for Major Peak (July ’20?).
Outlook 2020/2021: The Truth Will Set You Free…
03-31-20 – “Mr. President, it is natural to man to indulge in the illusions of hope. We are apt to shut our eyes against a painful truth, and listen to the song of that siren till she transforms us into beasts.
Is this the part of wise men, engaged in a great and arduous struggle for liberty? Are we disposed to be of the number of those who, having eyes, see not, and, having ears, hear not, the things which so nearly concern their temporal salvation?
For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst, and to provide for it.”
— Patrick Henry – March 23, 1775
For the past year, much of INSIIDE Track’s focus has been on the extremely challenging time that was expected to begin in late-2019. That outlook was based on a myriad of factors, including:
— Geopolitical (projected to intensify in Nov. ‘19 – late-’20 and impact all kinds of markets)…
— Geophysical (watch April/May ‘20)…
— Solar-related (Solar Cycle 24 was heading into its low point with Solar Cycle 25 expected to bottom in late-2019 – a transition that historically times dramatic global challenges, most recently in 2008/09)…
— Gold-related (forecast to surge from May ‘19 into March ‘20 as part of an overall multi-year bull market; often an omen of instability)…
— Interest rate-related (rates projected to drop from late-’19 into June/July ‘20, based on to-be-determined negative economic forces)…
— Energy-related (Crude projected to drop to new multi-year lows based on its monthly trend pattern while Natural Gas was projected to decline into 1Q ‘20 before a multi-year bottom was/is likely)…
— Stock market-related (Stock Panic Cycles and ‘Global-Shaping Events’ were forecast to emerge in late-2019 – mid-2020 – repeating a cycle that times a recurring series of stock market panics, crashes and crises over the past 160 years ; see accompanying analysis from March 2019 INSIIDE Track).
Market Omens
As always, I look to the markets – specifically to the technical & cyclical patterns in the markets – to give clarity and more specific timing to these broader cycles. If some form of higher-magnitude sell-off was poised to impact equity markets, coinciding with Stock Panic Cycles, what would that look like?
First and foremost, it should be a synergistic signal – a large convergence or collision of negative cycles and signals triggered at the same time.
That is why so much emphasis was placed on the ‘ominous 4-Shadow Signal’ and ‘Perfect Storm’ of multi-week/multi-month sell signals generated in stocks and stock indexes in late-Jan – mid-Feb. ‘20 – all of which were projecting a ‘much higher-magnitude sell-off’ than what had been seen in recent years.
The stock market had seen a multi-year sequence of diminishing corrections and was poised for a shock to the system at the same time the 40-Year Cycle, 2-Year Cycle and ~11-Year Cycle of Global-Shaping Events and Stock Panics converged…
Corresponding analysis, and updates through the remainder of Feb. ‘20, reiterated this warning and explained how the 40-Year Cycle & 2-Year Cycle – along with many corroborating indicators and the ~11-Week Cycle in the DJTA – were all forecasting a higher-magnitude sell-off from mid-Feb. into late-March (March 23 – 27). All of that was overlaid on the uncanny ~11-Year Cycle of Stock Panics…
The ~11-Year Cycle…
This uncanny, and eerie, 11-Year Cycle has been a primary focus over the past year as the transition into Solar Cycle 25 (which arrived in Dec. ‘19) was expected to fire the starting pistol on all these other cyclical events. In order to place this in proper context, it is important to reiterate the uncanny nature of this cycle – described throughout 2019.
With regard to next phase of Stock Panic Cycles and Cycles of Global-Shaping Events, 2020 was primed to repeat the pattern that already timed:
— Civil War (and its inflationary impact).
— Panic of 1873.
— Depression of 1882 – 1885.
— Panic of 1907
— World War I
— Stock market crash and entry into Great Depression in 1929 – 1930.
— Culmination of Great Depression; Entry into World War II
— Stock Crash of 1987
— Asian Financial & Russian Ruble Crises of 1997/98 (leading to stock panic of 2000 – 2002).
— Global Financial meltdown of 2008 – 2009.
— Projected Stock Panic for 2020.
— Projected Global-Shaping Event for 2020.
The China Syndrome
Those same cycles (11-Year & 40-Year Cycles) also applied to China, as detailed throughout 2019, which is why the speculation – also included in that late-Feb. 2019 analysis – was that the economic/equity ‘earthquake’ would come out of China. It was expected to culminate in mid-2020 (the same time that interest rate analysis reaches fruition)…
There is little doubt that this latest fulfillment of the 11-Year Cycle of Stock Panics came out of China… and could easily lead to the fulfillment of the other possibilities cited in that Feb. 2019 analysis. There is also little doubt that this is another ‘Global-Shaping Event’ – that arrived right on schedule.
Disease Cycles
Events of the past 3 – 4 months have revived the interest in a series of articles written in 2006, 2009/10 & 2014 – focused on Disease (& Viral) Cycles that were forecast for 2009/2010 and then for 2019/2020. Several of those articles cited the correlation between Disease & War Cycles (conjuring up the old correlation of war and pestilence).
They also reiterated the 17-Year Cycle and how that was projecting an overlapping cycle focused on 2019 – 2021. That ~17-Year Cycle dates back to the Spanish Flu of 1918 – 1920 (102 years from 1918, or 6 phases of the ~17-Year Cycle, projected 2020 for a major outbreak) and to the 1830’s trio of pandemics, including the following series of outbreaks:
1918 – 1920 – Spanish Flu pandemic
1936 – 1937 – Influenza epidemic (not as severe and ‘off’ by 1 year)
1951 – 1952 – Liverpool Flu outbreak (Liverpool, England, Canada)
1968 – 1969 – Hong Kong Flu
1985 – 1986 – Taiwan Flu (Influenza B) outbreak
2002 – 2004 – SARS
2019 – 2021 – Projected Flu/viral outbreak
As is always the case, it is the synergy of all these cycles (10-Year, ~11-Year, 17-Year, 100-Year) that made 2019 – 2021 such a focal point for so many reasons…
Stocks precisely fulfilled the overall expectations for the 2-Year Cycle AND the 40-Year Cycle – as well as multiple indicators and some uncanny weekly cycles in the DJTA – all of which forecast a sharp sell-off during the second half of Feb. ‘20 and lasting into March 23 – 27.
Reinforcing that, the Transports fulfilled corroborating monthly cycles that forecast a multi-month drop after the fulfilment of 8-Month & 16-Month Cycles peaking in late-Jan. ’20.
Fortifying that outlook, the Transports fulfilled an uncanny 11 – 12 week high-high-high-high-low-low-low-low-high-(high) Cycle Progression that projected a multi-month peak and subsequent 7 – 8 week decline following a Jan. 17 – 24, ’20 cycle peak.
Those cycles were quickly validated by a series of intermediate sell signals in the first half of February, repeatedly described as a Perfect Storm of stock sell signals in Weekly Re-Lay publications. Leading the way was what was described (in early-Feb.) as a foreboding and ‘ominous warning sign’ of an impending sell-off.
That 4-Shadow Sell Signal was described in the 2/05/20 Weekly Re-Lay Alert and projected a final rally into Feb. 12 – 17 (the exact same thing the 2-Year Cycle AND the 40-Year Cycle were forecasting) before an overall drop into late-March ‘20. Subsequent updates reiterated that and warned of a much larger sell-off to follow…
The 2-Year Cycle and 40-Year Cycle honed that analysis and projected declines into March 23 – 27, the precise time that the DJIA bottomed in 2018 and 1980 (2 years & 40 years earlier)…
On Feb. 12/13, 1980, the DJIA peaked and then dropped 20 – 30%, to new multi-year lows, into March 23 – 27, ‘80.
On Feb. 12/13, 2020, the DJIA peaked and then dropped 20 – 30%, to new multi-year lows, into March 23 – 27, ‘20 – fulfilling the 40-Year Cycle…
Bonds & Notes are powerfully confirming the 6 – 12 month outlook – for a 6 – 8 month uptrend from cycle lows in Nov. ‘19 into cycle highs in mid-2020 – and the multi-year outlook that has also been projecting a major peak in June/July ‘20.
From a wave perspective, they signaled a 4th wave low in Dec. ‘19 and were projected to see a wave ‘5’ advance encompass the first half of the year – ultimately peaking in mid-2020 – the fulfillment of a textbook, 4-year low-low-low-low-high-high-(high) Cycle Progression that last timed peaks in mid-’12 and mid-’16 and next peaks in mid-’20.
At the beginning of the year, this seemed counter-intuitive (as several readers expressed) with the stock market and economy rolling along and seemingly picking up steam. However, the cycles kept warning of something that would trigger a slowdown and it appears Covid-19 has now done this – to a greater extent than ever imagined.
The mid-2020 cycle peak could be providing another important timing clue for the economic outlook – identifying when it should begin to shift.”
Bonds & Notes remain focused on July ’20 for a major, multi-year peak (and corresponding bottom in interest rates). They fulfilled analysis for a multi-month low in Nov 2019, and have entered what is perceived to be a final, wave 5 of V advance into a multi-year peak in July ’20.
Longer-term cycles had been projecting a ‘Global-Shaping Event’ (with focus on China) and Stock Market Panic in early-2020 (see March 2019 INSIIDE Track for details)… likely spurring this final drop in interest rates. In sync with numerous cycles, this sharp stock sell-off should be complete before the end of 1Q ’20… how long before that has an impact on interest rates? Stocks fulfilled ongoing analysis for a plunge into March 23 – 27 and have set a pivotal bottom. What next?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.