Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
WESTERN DIGITAL WDC Stock Trend Analysis - CHIA! - Risk 1 - 23rd Jun 21
AMC Is the Best-Performing Stock in America: Don’t Buy It - 23rd Jun 21
Stock Market Calling the Fed‘s Bluff - 23rd Jun 21
Could Bitcoin Price CRASH Target A Bottom Below $7500? - 23rd Jun 21
Bitcoin and cryptos: Your 'long-term investment'? - 23rd Jun 21
Unlocking The Next Stage Of The Hydrogen Boom - 23rd Jun 21
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Inflation, Stock Market sentiment and the Kress Cycles

Stock-Markets / Stock Market Sentiment Jul 07, 2009 - 01:23 AM GMT

By: Clif_Droke

Stock-Markets

Best Financial Markets Analysis ArticleDespite a 40% market recovery and an abatement of the credit crisis, a climate of high fear abounds among market participants. Investor sentiment polls continue to show an excess of bears over bulls as few believe that a recovery can be sustained.


If anything, fear has been increasing the last few weeks as the stock market has stalled out in a lateral trading range. While the benchmark S&P 500 Index has come up significantly from its March low, the cumulative AAII investor sentiment index continues to make lower lows as investor psychology continues to divergence against the market’s interim recovery.



Investors it seems have developed a tendency to “just say no” when it comes to believing in a recovery. Until they can see it, taste it, feel it, they simply don’t believe it can happen. The immediate “cause” of this ingrained negative sentiment is obvious enough: the media inflames emotions by hyping “bad news” stories concerning the employment outlook, personal consumption, etc. Most market participants are so finely tuned into mainstream news that they are easily swayed by the negativity and emotionalism of the leading stories of the day.

But where does the negative bias of the news media originate from? And why has the inveterate optimism of the ‘80s and ‘90s been replaced by a perpetual pessimism since 2001? The answer can be found in the all-encompassing influence of the Kress Cycles.

The 120-year Master Kress series is the keystone to long-term financial market planning and economic analysis. Its influence extends to virtually every endeavor in a capitalist economy and its impact on the mass psyche can’t be underestimated. The 120-year series subdivides into the smaller components which govern long-term market and economic trends. These include the 10-year, 12-year, 20-year, 30-year 40-year and 60-year cycles among those of shorter duration.

Two of the most dominant cycles in the 120-year series are the 30-year and 40-year cycles. Together they form the dominant long-term trend (30-year) and bias (40-year) for the financial markets. They also form the composite investor psychological bias and set the tone for how news is interpreted.

The 30-year cycle bottom in 1984 combined with the rising 40-year cycle helped create the “go-go” atmosphere and mass optimism of that era. When the 30-year cycle peaked in late 1999 it marked the end of the “feel good” era of the ‘80s and ‘90s and the start of the current “bad news” era. The 30-year trend cycle being in decline now is exacerbated by the fact that the 40-year bias cycle is also in decline. To see the effects of the 30-year and 40-year cycles in history, consider the following select dates:


1894:120-year cycle bottoms. Major industrial depression/market crash. End of U.S. agricultural era; start of industrial era.

1914: 40-year cycle peaks. First World War begins.

1934: 40-year cycle bottoms. U.S. economy, stock market recovers from lowest levels of Depression.

1939: 30-year cycle peaks. Stock market peak; World War II era begins.

1969: 30-year cycle peak. Major stock market/economic peak.

1974: 40-year cycle bottoms. End of major recession period; birth of long-term bull market.

1984: 30-year cycle bottoms. Start of runaway phase of ‘80s bull market/productivity.

1999: 30-year cycle peaks. End of long-term bull market; start of turbulent 2000s.


The “Age of Turbulence” that Alan Greenspan wrote about is a creation of the Kress Cycles, among other influences. The 30-yar and 40-year cycles are no longer supportive of America’s multi-decade economic expansion. The final “hard down” phase for any cycle regardless of duration is roughly the last 10 percent of the cycle’s length. The “hard down” phase of the 40-year cycle is equal to four years, i.e. 2011, 2012, 2013 and 2014 represent the final part of the current 40-year cycle. The last three years of the current 30-year cycle, viz. 2012, 2013, 2014 will encompass its “hard down” phase.

In the interim years between 1999 when the 30-year cycle peaked and 2014 when the 120-year series will complete itself, there have been and will continue to be contra-cyclical influences. For instance, the 12-year cycle bottomed in 2002, ending a vicious bear market in tech stocks. The 10-year cycle bottom in 2004 created an additional lift for stocks and the economy in the subsequent years. The 12-year cycle peak/6-year cycle bottom of last year added to the downward pressure of the credit crisis. The peaking 10-year cycle this year, coupled with the newly rising 6-year cycle, has facilitated the year-to-date recovery.

The market will no longer have the benefit of the rising 10-year cycle beyond this year. That will mean that money supply regulators will have only one major cycle left to work with, viz. the Kress 6-year cycle is still in its ascending phase until 2011, when it peaks. Is it possible for the economy to recovery, albeit haltingly and in limited fashion, until the “final curtain call” of 2011? History answers in the affirmative. The last time the U.S. faced a Kress cycle configuration identical to the current one was in 1889-1891, which answers to the forthcoming 2009-2011 period.

The last time the 120-year series bottomed was in 1894, with the final “hard down” phase of the 30-year and 40-year cycles occurring in the 1892-1894 period. Despite massive deflationary pressures at that time, the stock market as measured by the Axe-Houghton index made its final peak at the end of 1891, just in time for the “hard down” phase of the 30-year/40-year cycles to make their crushing effect known on prices.

The feds could theoretically repeat the 1889-1891 experience but only at the expense of constant and vigorous pumping of the money supply. But wouldn’t this create hyper-inflation as many seem to believe? Not likely, according to the Kress Cycles. The long-term inflation/deflation cycle of the Kress series is the 60-year cycle, which last peaked in 1984 and is now in its final “hard down” phase as of 2009. A subset of the 60-year inflation cycle are the 6-year and 12-year cycles. The final 12-year cycle of the current 120-year series peaked last year (which in turn facilitated the sharp collapse of the oil price/commodity price level last year). The final 6-year cycle in the 120-year series is up until 2011, as previously discussed. From now until 2011 there is the possibility of some mild and periodic flare-ups of inflationary pressures but nothing like what we witnessed in the 2002-2008 period.

Since last summer, long-term deflation will be the dominant theme from now until 2014. The challenge facing monetary system regulators is no longer one of maintaining economic growth without creating inflation, but one of maintaining financial market and economic buoyancy against the ever-increasing pressure of hyper-deflation.

By Clif Droke
www.clifdroke.com

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit www.clifdroke.com

Clif Droke Archive

© 2005-2019 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