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
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

Stock Market Melt-up, Then Down in 2014

Stock-Markets / Stock Markets 2014 Dec 24, 2013 - 10:51 AM GMT

By: Clif_Droke

Stock-Markets Market events such as crashes and panics are thought by economists to be random, unpredictable events. To the contrary, such events are nothing if not predictable and often arrive with recognizable regularity. A cursory examination of the last few decades will prove this to be conclusive.

Writing in Barron’s, Randall Forsyth pointed out that each cycle of 40-years plus “has been marked by blowups.” He cited the following debacles: Penn Central (1970), Herstatt Bank (1974), the Hunt Brothers (1980), the October 1987 crash, the S&L crash (1990), the mortgage securities and Mexican crises of 1994, the emerging-market debt crises of 1997-98, the dot-com crash of 2000, and the housing crash of 2007-08.


“Two things stand out” from these crises, writes Forsyth: “The calamities escalated in scale. And each came during or at the end of a tightening cycle by the Federal Reserve.”

Forsyth’s observation that financial crises have increased in magnitude since circa 1974 is a testament to the increasing strength of the “winter” phase of the Kress 120-year cycle. The periodic market crashes of each decade since the 1970s have progressively worsened due to this acceleration of deflationary pressure exerted by the long cycle.

The 120-year cycle is a composite cycle, which means it has multiple components. Arguably the most dominant of these components is the 40-year cycle. There are three such 40-year cycle bottoms within a complete 120-year cycle. Each previous 40-year cycle was accompanied by a significant market event or economic crisis. It would be highly irregular if 2014 didn’t witness a discernible setback of some sort with the 40-year cycle bottoming later next year.

Incredible as it may sound, we’re one of the lucky few generations that get to witness the momentous changes wrought by the 120-year cycle bottom. The discoverer and exponent of this cycle, Samuel J. Kress, called it the Revolutionary Cycle. This long-term cycle of inflation/deflation is always characterized by revolutionary changes, either social or economic in nature, and the last such generation to witness a revolutionary cycle bottom was in the 1890s. It was that generation that saw the revolutionary change in the U.S. away from an agrarian economy and towards an industrial one.

Financial and economic crises typically set the stage for social and political changes of a revolutionary character. It isn’t for naught that the 120-year cycle is known as the Revolutionary Cycle.

The late Mr. Kress fervently believed that the upcoming 120-year cycle bottom in late 2014 would witness the demise of free market capitalism and the beginnings of a full-fledged socialist political revolution in the U.S., and he wrote extensively concerning this. With the upcoming implantation of State-mandated universal health coverage – right on schedule in 2014 – it would seem that Mr. Kress’ prediction was on target.

The set-up for a market melt-down in 2014 as the 120-year cycle bottom draws closer is the developing “melt-up” in the weeks and months ahead. Pushed higher by a floodtide of share buybacks and concentrated institutional buying interest in a select few shares, the major indices have defied the bearish pronouncements of analysts and letter writers for most of 2013. With their backs to the wall, these erstwhile bears are slowly admitting defeat and have begrudgingly joined the ranks of the bulls. This trend will likely accelerate into 2014 before the market encounters turbulent waters later in the year.

When there is near unanimity of opinion about the stock market’s direction, the bulls will be faced with a serious challenge. A one-sided, bull-dominated stock market is a top-heavy one and is quite vulnerable to unexpectedly bad news. The bad news for 2014 could be an anticipated hike in the Fed funds rate, an economic slowdown in China or trouble in euro land. This is when the downside pressure of the long-term cycle bottoming will inflict maximum damage.

On the institutional front, Goldman Sachs analyst David Kostin is one of the very few dissenters from the super-bullish consensus among analysts making 2014 forecasts. He rightly points out that the market hasn’t suffered a serious decline in two years and is ripe for one in 2014. “We had a 40% rally in the past 18 months with no correction,” he recently told Barron’s. “It’s hard to identify why, but an increased probability of a correction next year is worth emphasizing.” Unlike most Wall Street institutions, Goldman tends to be on the leading edge of critical market junctures.



Also worth noting is the research by Ned Davis which shows that mid-term election years (i.e. the second year of a presidential term) show an average decline of 21% going back to 1934. “But,” adds Davis,” “after the low was hit in those years, the market, on average, gained 60% over two years. So a correction [in 2014] should be followed by a great buying opportunity.” This assessment jibes with the 120-year Kress cycle view which suggests a major bounce-back following the cycle’s bottom in late 2014.

For now the bulls still carry the day on Wall Street. Look for this state of affairs to reverse at some point in 2014 after the last of the bears have capitulated and joined the bulls. Indeed, the anticipated revolutionary changes produced by the upcoming 120-year cycle bottom may well begin with a revolutionary change in Wall Street’s sentiment profile.

High Probability Relative Strength Trading

Traders often ask what is the single best strategy to use for selecting stocks in bull and bear markets. Hands down, the best all-around strategy is a relative strength approach. With relative strength you can be assured that you're buying (or selling, depending on the market climate) the stocks that insiders are trading in. The powerful tool of relative strength allows you to see which stocks and ETFs the "smart money" pros are buying and selling before they make their next major move.

Find out how to incorporate a relative strength strategy in your trading system in my latest book, High Probability Relative Strength Analysis. In it you'll discover the best way to identify relative strength and profit from it while avoiding the volatility that comes with other systems of stock picking. Relative strength is probably the single most important, yet widely overlooked, strategies on Wall Street. This book explains to you in easy-to-understand terms all you need to know about it. The book is now available for sale at:

http://www.clifdroke.com/books/hprstrading.html

Order today to receive your autographed copy along with a free booklet on the best strategies for momentum trading. Also receive a FREE 1-month trial subscription to the Momentum Strategies Report newsletter.

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