Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Implications for Stock Market - Nadeem_Walayat
2.Odds of Winning Walkers Crisps Spell & Go olidays K, C and D Letters - Sami_Walayat
3.Massive Silver Price Rally During The Coming US Dollar Collapse - Hubert_Moolman
4.Pope Francis Calls For Worldwide Communist Government - Jeff_Berwick
5.EU Referendum Opinion Polls Neck and Neck Despite Operation Fear, Support BrExit Campaign - Nadeem_Walayat
6.David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - Mike Gleason
7.British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - Nadeem_Walayat
8.Gold Price Possible $200 Rally - Bob_Loukas
9.The Federal Reserve is Not Going To Raise Interest Rates and Destroy Gold - Michael_Swanson
10.Silver Miners’ Q1’ 2016 Fundamentals - Zeal_LLC
Free Silver
Last 7 days
David Cameron Questioned on Out of Control Immigration at TEN TIMES Conservative Election Pledges - 30th May 16
Bitcoin Price Skyrockets And Is Now Up More Than 100% This Jubilee Year - 30th May 16
This Is Not The America My Parents Immigrated To In 1957 - 30th May 16
“Debt, Not The Economy, Reaches Escape Velocity” With Graham Mehl - 29th May 16
EU Referendum, Black Vote LEAVE or REMAIN? Which is Worse for Racism for Britain's Ethnic Minorities? - 29th May 16
Billionaire Gross: Jubilee Debt Relief as Prelude to New Global Economic Order - 29th May 16
Wargaming North Korea - Assessing the Threat - 29th May 16
EU REMAIN Population Forecasts - England 4.1 million Explosion, London Migration Crisis - 28th May 16
A Guide to the Trump-Sanders Debate - 28th May 16
Gold And Silver – At Significant Support. New “Story” Developing - 28th May 16
The Next Systemic Lehman Event - New Scheiss Dollar & Gold Trade Standard - 27th May 16
Energy and Debt Crisis Point to Much Higher Silver, Metals Prices - 27th May 16
Gold Junior Stocks Q1 2016 Fundamentals - 27th May 16
These Crisis Markets Are Primed to Deliver Big Gains, Platinum Never Cheaper! - 27th May 16
Operation Black Vote BrExit Warning for the Wrong EU Referendum - 27th May 16
UK Immigration Crisis Hits New Extreme, Catastrophic ONS Migration Stats Ahead of EU Referendum - 27th May 16
Many of the World’s Best Investors Made Their Fortunes This Way…And You Can Too - 27th May 16
The Ugly Truth About Stock Market Manipulation and Gold Prices - 27th May 16
Gold Price Looking Vulnerable While Gold Stocks Correct - 27th May 16
The 5 Fatal Flaws of Trading - 27th May 16
The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why - 27th May 16
A New Golden Bull or Has the Market Gone Too Far Too Fast? - 27th May 16
It Feels Like Inflation - 26th May 16
Negative Interest Rates Set to Propel the Dow Jones to the Stratosphere? - 26th May 16
S&P Significant Low has Occurred – Not Likely! - 26th May 16
Statistics for Funeral Planning in UK Grave - 26th May 16
Think Beyond Oil And Gold: Interview With Mike 'Mish' Shedlock - 26th May 16
Hard Times and False Mainstream Media Narratives - 26th May 16
Will The Swiss Guarantee 75,000 CHF For Every Family? - 26th May 16
Is There A Stocks Bear Market in Progress? - 26th May 16
Billionaires Are Wrong on Gold - 26th May 16
How NOT to Invest in the Gold Market - 26th May 16
The Black Swan Spotter...Which Saw the Oil-Crash coming; now says the “Invisible Hand” will push Brent to $85 by Christmas - 26th May 16
U.S. Household Debt Still Below 2008 Peak - 25th May 16
Brexit: Wrong Discussion, Wrong People, Wrong Arguments - 25th May 16
SPX is at Strong Resistance - 25th May 16
US Dollar, Back From the Grave? - 25th May 16
Gold : Just the Facts Ma’am - 25th May 16
The Worst Urban Crisis in History Could be Upon Us - 24th May 16
Death Crosses Across The Board Are IRREFUTABLE Stock Market Sell Signals - 24th May 16
Bitcoin Trading Alert: Bitcoin Price Stays below $450 - 24th May 16
Stock Market Crash Death Cross Doom Prevails - 23rd May 16
Did AMAT Chirp? Implications for the Economy and Gold - 23rd May 16
Stocks Extended Their Rebound On Friday - Will They Continue Higher? - 23rd May 16
UK Treasury Propaganda Warns of 3.6% Brexit Recession, the £64 Billion Question? - 23rd May 16
Stock Market Support Breached, But Not Broken! - 23rd May 16
George Osborne Warns of 18% Cheaper House Prices - BrExit for First Time Buyers - 22nd May 16
Gold Bull-Phase I Continues to Confound (The Trek to “Known Values”) - 22nd May 16 r
Avoiding a War in Space - 22nd May 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why 95% of Traders Fail

Commodities Bear Market Elliott Wave Analysis

Commodities / Commodities Trading May 20, 2013 - 10:24 AM GMT

By: EWI

Commodities

We have written about the commodity market over the years, and have been generally bearish for quite some time. The typical commodity bull market lasts about 13 years, followed by about a 21 year bear market. This is the 34-year cycle. Commodity bull markets usually begin near the beginning of stock market Secular inflation/deflation cycles. Then end just before these cycles end. During the stock market Secular growth cycles commodities remain in a longer term bear market.


Some historical examples:

1929-1949 Secular deflationary cycle … commodity bull market 1933-1946.

1966-1982 Secular inflationary cycle … commodity bull market 1968-1980.

2000-2016? Secular deflationary cycle … commodity bull market 1999-2011.

In years past the CRB index was used to determine the overall trend of commodities. In recent years this has been replaced by the world consumption oriented GTX index. Notice the bull market in the GTX started in 1999, but ended in 2008. Other sectors within this index, there are five, started/ended at different times. The barometer we use to determine the beginning/end of the commodity bull/bear markets is Gold.

As you can observe from the above chart, the consumption bull market started in 1999, completed five waves up into 2008, and the long term trend has been down since 2008. Keep in mind the GTX is about 70% weighted in Energy.

Other sectors, such as Industrial metals, Agriculture, and Precious metals started about the same time but topped in 2011. Livestock, the fifth sector, recently peaked in 2013.

Now that commodities are in a longer term bear market, this is what lies ahead for this asset class. The best example of a commodity bear market is the historical price activity in the CRB index. Notice the sharp decline from the 1980 peak was an ABC down, which lasted about 6 years. Then the index went into a trading range for the next 15 years before the next Cyclical bull market began.

When we review the historical chart of Gold, using the same time period, we observe a slight difference in time, but the same general pattern. Gold declined sharply, in an ABC pattern, for 5 years. Then entered a trading range for the next 14 years, before it put in that double bottom in 1999-2001.

If we dissect the 1980 bear market in Gold, we observe a two year decline of about $575 to form Primary A. Then a one year $225 rally for Primary B. This is followed by another two year decline. But this time it is only $240, to a slightly lower low, to form Primary C.

When we compare this activity to the current market, we find the bull market peak in 2011. Then a $600 two year decline that may have formed Primary A. If this comparison is correct, Gold should rally back to around $1545 by early next year to complete Primary B. Then the next two year Primary C decline should begin.

Keep in mind, commodities in general are quite volatile. Gold, in fact, has started to trade like Crude since it entered a bear market. One, two, three percent swings are possible in a single day.

The last chart of note is Natural Gas. While we do not have much historical data we already notice a pattern. Nat Gas bottomed in 1992, then went into a choppy 13 year bull market until it had a blow off peak in 2005. Since that peak it has had a lengthy 7 year ABC decline into 2012. This fits with Gold’s 5 year ABC, and the CRB’s 6 year ABC in the 1980′s bear market.

This comparison would suggest Nat Gas is now in an X wave rally, which starts the trading range of its longer term bear market. Therefore, just under $2.00 would be the base price for decades to come. This chart also suggests Nat Gas will likely be the first commodity to end its bear market. Possibly as much as 6 to 8 years ahead of the other commodities. With lots of supply coming on line in the next few years. An earlier bottom in Nat Gas would fit quite nicely with the demand/economic growth curve of the expected stock market Cycle wave [3]: approximately 2016-2034. The pieces, if we dare look that far out, seem to fit.

CHARTS: http://stockcharts.com/...

http://caldaroew.spaces.live.com

After about 40 years of investing in the markets one learns that the markets are constantly changing, not only in price, but in what drives the markets. In the 1960s, the Nifty Fifty were the leaders of the stock market. In the 1970s, stock selection using Technical Analysis was important, as the market stayed with a trading range for the entire decade. In the 1980s, the market finally broke out of it doldrums, as the DOW broke through 1100 in 1982, and launched the greatest bull market on record. 

Sharing is an important aspect of a life. Over 100 people have joined our group, from all walks of life, covering twenty three countries across the globe. It's been the most fun I have ever had in the market. Sharing uncommon knowledge, with investors. In hope of aiding them in finding their financial independence.

Copyright © 2013 Tony Caldaro - 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.

Tony Caldaro Archive

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


Post Comment

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

Catching a Falling Financial Knife