Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Japan's "Helicopter Money" Play: Road to Hyperinflation or Cure Debt Deflation? - 27th July 16
Monetary Zika - The Insidious Nature of Credit Expansion - 27th July 16
Gold and Pork Bellies - 27th July 16
Silver Is Insurance Against The Worst Part Of This Depression - 27th July 16
Don’t Buy The SPX Hope Stock Market Rally! - 27th July 16
Bitcoin $650 Still in Play - 26th July 16
Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - 26th July 16
The Forex Markets Are Getting Exciting! - 26th July 16
Underpriced Silver Is the “Rip Van Winkle” Metal - 25th July 16
Declines in Multiple Market Indexes - 25th July 16
Retailers Are Doomed as Most Americans Are Too Poor to Shop - 25th July 16
Here’s One Currency That Could Go to Zero - 25th July 16
Stock Market Top is Expanding - 25th July 16
Silver Manipulation – Because They Needed the Eggs - 25th July 16
Silver Market COT Stuns: What's Going On Here? - 24th July 16
Gold Demand Remains Stable During Sector Weakness - 24th July 16
Sernova, Diabetes and Haemophilia - 24th July 16
Russia: Tensions, Turmoil, and Western Hubris - 24th July 16
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

Solar Sun Spot Activity and the Financial Markets 

Stock-Markets / Financial Markets 2011 Mar 30, 2011 - 10:13 AM GMT

By: John_Hampson

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleIn recent weeks we have seen surprisingly high solar activity, with sunspot readings over 100 on multiple days, shown below, red line.



Underlying Source: Jan Alvestad

To understand how high these readings are, the chart below forecasts average sunspots to peak under 100 at the height of the current solar cycle (which is named solar cycle 24).


Source: NOAA

So what are the implications of this sharp rise in sunspots? Well, I have annotated the first chart with two recent macro events.

Firstly, the Japanese Earthquake occured at a peak of solar activity. There is some historic correlation between solar activity and earthquakes, as shown below. Sunspots are the red line, earthquakes the black line.


As we are climbing up towards the peak of solar cycle 24, we may therefore see more incidences of earthquakes (also, note the longer term rising trend in quakes). In terms of impacts on the markets, much depends on how severe quakes are and whether they occur near centres of commerce or in remote areas. It is common though to experience multiple quakes in the same area once an initial event has increased the tectonic stress, so it may be prudent to hold back on seeing Japan as a current investment opportunity, in case further events follow. Otherwise, a little extra general caution in trading may be appropriate, if we should expect further earthquakes globally in the climb to the solar cycle peak but cannot predict where or when they might occur.

Secondly, esclation and spread of turmoil in the Middle East and North Africa also conicided with a peak in solar activity. Human mass excitability has been shown to correlate with peaks in solar activity, with A.L. Tchijevsky finding that 80% of the most siginificant historical human events occured within the years around the solar maximums, specifically "mass demonstration, riots, revolution, wars and resolution of most pressing demands". Again, as we approach the current cycle 24 peak we may therefore see more such activity, and in trading it may pay to be a little more cautious or to be a little more invested in a safe haven such as gold.

But rising sunspot implications don't stop there. Let's dive in a bit deeper.

--------------------------------------------------------------------------------

Cyclical planetary movement around the sun brings about cyclical swings in solar activity, with one solar cycle lasting an average of 11 years, sometimes as short as 9 years or as long as 13. Solar activity causes geomagnetic activity on Earth. There is a correlation between geomagnetism and depression and suicide in humans, and an increase in psychotic episodes in individuals who already suffer from unstable psychological states. Solar activity is also shown to make people more excitable, irritable and aggressive, and can affect melatonin synthesis, blood pressure, heart disease and light sensitivity.

Translated to the stock market, we see poorer average returns on days of significant geomagnetism. Increasing solar activity may therefore represent a headwind for the stocks bull.

Source: Robotti / Krivelyova

Translated to economics, we see a correlation of peaks in inflation with solar activity peaks and a correlation in recessions following solar cycle maximums, as shown in the next 2 charts.


Source both: Amanita.at

Combining these two charts with the solar cycle 24 forecast chart, we arrive at a prediction of inflation increasing into a peak around 2013 followed by a recession. Note that the 2013 peak is only a forecast and as solar cycles vary in length around an average it it possible that the recent escalation in sunspots in recent weeks could make for a steeper trend to peak a little earlier, we shall see. Either way, it might be prudent to be now invested in assets that do well in an inflationary environment as we trend up to the peak, such as precious metals and energy.

In fact, if we look back historically at the secular swings between hard assets and paper (or stocks) then we find that the last 3 peaks in commodities relative to stocks occured at solar cycle peaks, around 1918, 1948 and 1980. I have labelled these 1, 2 and 3 in the two charts below.

Source: Carl Moore


Source: Nowandthefuture

Every third solar cycle peak corresponded to a secular peak in tangible assets (such as gold and oil) in relation to paper assets, and the peak of solar cycle 24 will be the third since 1980, putting us on track for another relative peak in hard assets at the currently forecast cycle peak of 2013. Going further still, we can estimate the next commodities peak after that to be 3 further solar cycle peaks away at around 2046. Using secular averages, we could therefore estimate a secular commodities bull to occur from around 2030 to the mid 2040s, and working back, a secular stocks bull from around 2014 to 2030.

--------------------------------------------------------------------------------
In summary, the recent escalation in solar activity and the predicted trend to a solar cycle peak currently around 2013 suggests increased earthquakes, increased human excitability in the form of action and conflict, increasing inflation and rising relative returns in hard assets until a relative peak at the solar maximum, giving way to a new economic recession.

Specifically, the solar peak around 2013 should coincide with extremes for the Dow-gold and Dow-oil ratios and consumer price inflation, before a recession emerges in which commodities fall harder than stocks and in so doing the two asset classes begin their relative secular inversion.

John Hampson

www.amalgamator.co.uk

John Hampson, UK / Self-taught full-time trading at the global macro level / Future Studies
www.amalgamator.co.uk / Forecasting By Amalgamation / Site launch 1st Feb 2011

© 2011 Copyright John Hampson - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Roy
01 Apr 11, 02:03
Solar Cycle 24

As a very keen Amateur radio operator for the last 40 years The arrival of cycle 24 has been fantastic where normally a signal on 28mhz will only travel 100kms the last few weeks Ive been able to talk to both the US and Europe from Australia.

There is no doubt we understand very little about the suns solar winds influence on our planet other than the obvious disruption to communications and power grids.

http://www.solarham.com/

De VK5


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife