MarketMap-2022 Issue #2
December 30, 2021
December 30, 2021
Both fiscal and monetary policy has always been able to “re-inflate” the economy and markets out of trouble. Throughout 2021 the consensus in this regard is they are painted into a corner.
There is your back story for your clients, but the catalysts remain unknown. It will not be a piece of known bad news.
Can math be stranger than fiction? Or is the following simply a coincidence, if coincidence can exist at all?
Gann among others called the 60-year cycle the master cycle. There are reasons for this, but I will leave that for the researchers among you and simply point out that tested empirically, it is a thing, the cycle happens.
Ok, basics. There are three types of cycles, I will focus on the variable type here, one that contracts/expands based on the 60-year cycle and its harmonic cycles.
Working forward from the great depression of 1847 plus 90 years (60+30) provides investors with a tradable peak in 1937 (March 10) followed by a bear market. Adding 60 years to 1937 gives you the memorable 1997 peak (Aug 6) and mini-crash. I know exactly where I was during that crash and made a small fortune. Next time we talk, ask I will tell you the story.
Moving forward with the next harmonic cycle of 30 years capital managers are at the major peak of 2007 followed by the WFC.
Check my math here but the next harmonic is 15 years plus 2007 and that takes the investment community to 2022, as in the coming year.
Now in the LinkedIn space, I posted a three-minute video of a 2 1/4 year cycle that is grounded in another first principle and it clearly shows that the cycle is projecting a CHANGE in the current time frame. If you have not reviewed it, I have included it here for your convenience.
At this point, I wanted to fine-tune the time windows for expected peaks, with this caveat: markets do not panic from the top tick. I will cover this in more detail in the special report “Nature of a Bear Market.” On the new high December 30, 2021, the clock is reset. Be that as it may, the market is in the time window at the close of the year for the ATH that will not be exceeded for the next 15 years +/- five.
I have inserted the first table of change dates – change of trend dates (COTs) to get us through the opening next week. There is a host of dates that run from 12/30/21 to 1/4/22 for a high pivot. The half-cycle – 15 days – among other methods suggests a low from 1/15/22 to 1/24/22.
I intimate above that there are no accidents in the market, everything happens for a reason. with that in mind, I wanted to provide the rationale behind the five charts used in the first issue of Market Maps.
The main chart was CT’s rendition of the decennial chart dominated by the 20/40 year cycle. Its high for the year 2022 fits with the table above 1/4/22/ I’ve been asked about the next high pivot being a higher high in the markets are not. It could be a lower high, as the methods of isolating change dates are about “time”, not the price level. However, the direction of the trend by the maps is predictive.
Also, from the get-go, do not think in terms of absolutes, these dates are not signals. they give us a time frame when to expect a COT. So, for example, if the market has rallied into a COT time window +/- and our volatility model says the uptrend is old and feeble and due for a change ( which TEM is saying at the close on Friday) and other TA sets up for a potential reversal, well there you have it. January 3 COT is not a sell signal stand alone. to conclude after the market high, it’s all bear into October.
The next chart in the gallery is based on Tidal Theory, which I learned from a scholar at Monash University. Like Gann’s 60 year cycle calling for a bear in 2022 along with decennial overlay forecasting a bear in 2022, his 56/9 year cycle (56 vertical and 9 on the horizontal) sequence 37 calls for a bear market in 2022. while is chart is telling about the overall trend, I am not giving much weight to the pivot dates.
Staying with his work, I have learned and tested what I call an Event-Based Cycle (EBC), that predicts long-term market direction, once a high pivot is confirmed to be in place. It is based on 300 years of history in his work. It will also have implications for outside world (non-market) events for the year. With that in mind a peak now, before January 10, has a fairly dramatic implication for 2022 and 2023.
The chart of the 56/9 sequence 38 is a bear market year as well with a peak that is in line with the January 4, peak suggested above. With a major COT in July. Again, the other work we’ve done gets more weight for COTs, and David’s tidal work supports a bear this year. Thus far a change of trend that may have started in the last hour Friday is our preferred outlook.
One of my pet peeves is the haven social media has created for know-nothings, especially on Twitter. And what we have all seen is the assertions that a current chart pattern is just like 1937. From my EWT days in the early 90’s I watched Bob use ’37 as a model for expectations. It has not changed today and of course 1929 and 1987. It just does not work that way, I have twin grandkids and man are they different.
In any event, the chart of 1932 ties into my 90/45/9 year cycles. I find it uncanny how that year’s Dow chart mimics the work outlined thus far with a COT in early January and a pivot in July.
Lastly, looking back 45 years the chart of 1977 was a bear year from open to close with a lower high COT in March.
More will be clear in the Nature of a Bear Market” brief, and this weekend Volatility Reports to assist in fine-tuning. But in the above table, you will find that inflation as reflected in the commodity-based averages and their components should begin to pick up again after the last month or so of corrections.
A good trader can stay 100% in 5 to ten-year bonds and use timing to short (hedge) for several weeks or a month or two per year and beat buy and hold plus Alpha. CT does provide both long and short trade ideas and has a 10 for 1 portfolio that takes only opportunities greater than 10 bucks for every 1 dollar or less risk.
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Great and Many Thanks,
Jack F. Cahn, CMT
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