Timing is absolutely everything. DO NOT ANTICIPATE anything. Time is MORE important than price.

Dow & the Future

Posted Dec 23, 2018 by Martin Armstrong

QUESTION: Mr. Armstrong; I understand at the WEC you told the audience the stock market would correct sharply into January/February. For those of us who could not afford to attend a WEC, are we to expect the slingshot you have been warning should take place?

Thank you;

HP

ANSWER: Yes. Timing is absolutely everything. DO NOT ANTICIPATE anything. Time is more important than price. But we also act on the reversals in conjunction with time. We have people already declaring this is a bear market. Many may not even be old enough to have traded a bear market. Let me explain one thing. We are NOT dealing with a bear market. We are dealing with a period where we must set up everything for what is to come. I have been warning that normally after an 8-year bull market, there is traditionally a correction.

The final prognosticate on time will arrive with this year’s closing. We need the year-end closings and the computer will then forecast what is to come between now and the end of this cycle wave in January 2020.

How we approach this will be critical. Nonetheless, we have a lot on the horizon. Besides BREXIT in March, we then have the May elections for the EU. The number of people who may be elected that are actually anti-EU is likely to rise. The European election will be as chaotic and we expect the Democrats to make the entire world economy unstable as they make a lot of noise in hopes of driving Trump from office in 2020.

The market will have to absorb a lot of political turmoil in 2019 and we are witnessing the rise of tensions on a grand scale.

We will have the 2019 Outlook Report out in January. We are trying to finalize the contracts for a European WEC in Rome during the first week of May. We will let everything know when that is confirmed.

TIME is more than Money – It is EVERYTHING

Posted Jan 12, 2018 by Martin Armstrong

TIME is more than just money; it’s absolutely everything and then some! Personal opinion just utterly fails because we are all human. Markets routinely do what the majority never expects. That is their function. They mutate like a virus always changing its genetic code to defeat medicine, or in this case, traders. This why most analysts have been wrong. They keep using 1929 as the ideal model and predicting the mother of all crashes to come. They have4 been calling for such a crash since the low of 2009. Every new high was going to be it.

Back on November 30th, 2017, I explained on the private blog: “We must respect that exceeding the November high now in December on a sustained basis, points to a January high. If we pull back, then January will be a low and then watch out for a sharp rally into March.”

TIME is the very fabric of the universe and probably the most misunderstood element of all. In physics, the relativity of simultaneity is the concept that baffles many. The question becomes, do two distant events actually take place simultaneously? Therefore, the question whether two spatially separated events occur at the same TIME is recognized to be far from absolute. It is “relative” depending on the observer’s reference frame. This becomes incredibly important in terms of forecasting the world markets. They tout the mother of all crashes is upon us based upon the events of 1929, 1974, 1987, 2000, and 2007. Yet are these spatially separated events in TIME relevant to the present?

To grasp what our model is really doing one must look at TIME and EVENTS more in the perspective of turning points correlated against everything else on the grid of TIME and PRICE – not specific events standing alone and viewed as singletons. Once you understand we are forecasting turning points on the TIME horizon, not specific events, you will begin to make a leap forward into a new world of understanding TIME and PRICE.

Specific events on the  TIME horizon become easy for forecast based upon the trend in motion relative to TIME and PRICE. When trends reach that TIME horizon event, then a specific high or low is easily ascertained. Right now, we are in the throes of a major breakout that is an inherent characteristic of Vertical Markets. The nature of such events that confound many are what we call the Cycle Inversion process. Normally, turning points unfold in opposite pairs. So a November high would traditionally be followed by a January low. Merely exceeding the November high on a closing basis during December identified the Cycle Inversion process and thus a continued rally into the next target in TIME being January 2018. Exceeding the November high warned we were (1) dealing with a Cycle Inversion, and (2) a Vertical Market that is going to be very difficult to trade for most people.

It is paramount that we understand how Vertical Markets function. This is why we have developed (1) TIMING Models, (2) Reversal System, and (3) our Energy Models. Only by bringing together all three models can we judge the future of any market without human bias. Then it must be correlated both in TIME and PRICE with everything else around it in the world forum to be able to ascertain the waves of CONTAGION that wipe out people emanating from external sources.

Stochastic is never a forecasting tool. Volatility is interlinked with TIME

Understanding Time & the Kondratieff Wave

Posted Jul 17, 2017 by Martin Armstrong

QUESTION: Dear Martin,

I am an reader of your blog and attendee of some of your conferences. I am quite impressed about the timing of your forecasting arrays. In particular,  May 1 you published the arrays for DJIA (attached) where you showed two clusters of volatility: the weeks of 15 May and 26 June. I was really stupefied when I witnessed two vicious drops in XIV (an ETF replicating the inverse of 60 days expected implied volatility of S&P 500) precisely in the weeks you indicated. The best model academia has come up with for modelling volatility is a Stochastic Volatility Model with Jumps, where returns of the underlying (index) are random, their volatility is random (mean reverting though) and infrequent jumps also occur randomly. In fewer words forecasting volatility is just impossible for academics, but not for you.

Do you see any more clusters coming in the summer? Are you going to give access to forecasting arrays through ask-Socrates soon?

Best regards.

---

ANSWER: Academics try to create models about things they do not comprehend.  Volatility comes in different flavors and stochastic is an interesting confirming tool, but never a forecasting tool. Volatility is interlinked with TIME, but it is simply deeply hidden within this complex fourth dimension. 

You cannot forecast volatility in any of its flavors without interfacing TIME in every other aspect of this dimension. Creating flat models like a stochastic take one aspect of a market and then attempts to extrapolate the future based upon this single tool only to fail. We have a stochastic model you can plot and the interesting thing is it is never consistent since sometimes it’s peaking in advance to a turn and at other times after the turn. They never forecast a flash crash or anything on that nature. This Fourth Dimension is extremely complex. Far beyond any one dimensional model can map.

Even those claiming to be using the K-Wave cannot make real forecasts. The basis of Kondratieff’s argument came from his empirical study of the economy’s performance of the USA, England, France, and Germany between 1790 and 1920. Kondratieff took the wholesale price levels, interest rates, production and consumption of coal, pig iron, and lead for each economy. He then sought to smooth the data using an averaging mathematical approach of nine years to eliminate the trend as well as shorter waves. Kondratieff thus arrived at his long-wave theory suggesting that the economic process was a process of continuous waves of boom and bust. Under Marxism, seizing control of all private assets was supposed to eliminate this boom and bust cycle. Kondratieff suggested that changes in technology, wars and revolutions, and the emerging of new countries as well as the surges in the production of gold was the cause of this business cycle. (see his 1935 English Translation not someone else’s commentary on his work)

Anyone claiming to be using the work of Kondratieff to forecast the business cycle is most likely creating a smoke-screen since we can even see from the chart, that his original wave varied greatly both in time duration 47 to 63 years, as well as intensity. Moreover, Kondratieff himself explained the cause was shifts in production, war, and great booms and busts in the discovery of gold. So the K-Wave offers no reliable method to forecast the economy, yet it stands as a testament to the existence of a complex business cycle.

Kondratieff was by no means the first to discover the business cycle. There were many others trying to investigate the complexity of the business cycle.

Nevertheless, Kondratieff explained that the cause was complex and not a single thing. Any attempt to create a one-dimensional model will fall flat on the drown.

The pro-version should be available by September. I am pushing the staff as hard as I can.

Six Dimensions - TIME v PRICE

TIME v PRICE

Posted on March 26, 2015 by Martin Armstrong

QUESTION: 

Dear Mr. Armstrong:

 

I hope you are doing well and congratulations for your successful work, research and forecasts!. I don´t understand, Why TIME is more important than PRICE?. For example, Why the PRICE of gold is not important?.

I look forward to hearing from you as soon as possible.

Sincerely,

 

J.E.M.V.

ANSWER: TIME governs everything for everything is connected in the Sixth Dimension by this complex element. Yet each and everything also has its TIME and PLACE which are the Fourth and Second Dimensions. Where gold bottoms in price is really irrelevant for no uptrend is possible until everything is aligned. Once the markets are all in alignment, then the trend changes for everything. The price of anything is secondary to the trend alignment and that is all about TIME.

Consequently, like in the Dow, we had three targets, 18,500, 23,000, and then the 37,000-40,000 level. PRICE is the second dimension only. But the TIME is unchangable for it is a unique property of everything. COMPLEX TIME is the sixth dimension – an alignment that requires everything to be in place where the world correlates. This is revealed through our tracking of global capital flows. It is also why you can try to create a model on a single market even with cycles, only to find that your best efforts will fail because all cycles must converge and distort to create the major alignments.

Interest rates- under all scenarios. Other dimensions.

Interest Rates – Dollars – October

Posted on March 26, 2015 by Martin Armstrong

Some have asked will the dollar has previously fallen with higher interest rates so why will the opposite unfold now? The answer to that question is rather important to grasp – YES and NO. Sometimes YES and sometimes higher interest rates reflects a weak currency but NO for higher interest can reflect also a strong currency. Now the perpetual critics will say oh you are zig-zagging so you can have it both ways.

What you have to understand is there is ABSOLUTELY no relationship that is EVER fixed. There will be times rising interest rates will support a currency and at other times they will rise because of capital flight as we have seen in Russia, Greece, Argentina, Brazil etc. This is a contango within a complex system – not some linear one-dimensional world where people expect a concrete relationship that never changes.

It does not matter what it is, there will NEVER be a constant. Look at the Silver/Gold Ratio. That has been a good one. The promoters always suck people in claiming it should be 16:1 so buy it now and make a fortune. Such nonsense cannot be supported ever for the fact expose it is fictional sales-bullshit. That ratio has been everywhere from 120:1 to 15:1 since 1560. Obviously, there is no constant.

When it comes to currency, we are dealing with a sort of share price based upon the performance of a nation. It becomes a matter of CONFIDENCE which is key. When CONFIDENCE is strong in one country, capital will flee to that currency causing a bubble in assets that a central bank will misunderstand and be compelled to raise rates to try to stop the bubble it thinks is domestic oriented. This will only subsidize foreign investment further. This is how real BUBBLES are produced. On the contrary, rates will also rise when CONFIDENCE collapses as the central bank is trying to support a currency. This will typically fail for they fear lower values and rates must rise enough to exceed the expectations of any decline  We saw this recently with rising rates also in Russia as the Ruble fell.

This is where our capital flow models come into play. They provide aconf view as to if the capital is moving in with rising rates or running for the hills. This is that fifth dimension of CONFIDENCE, which is the next dimension after the fourth – TIME. What you expect with fixed relationships is just an illusion. There are more dimension than just a flat model where Marx-Keynes assumed the power to eliminate the business cycle. The second dimension is realizing that there is height to market moves and thus there are peaks and lows in a boom and bust cycle wave. The third dimension is depth, understanding the flash crash unfolds based upon market depth.

Look at the performance of the dollar at the peak in rates during 1981. The peak in rates came at the 2nd quarter 1981. Note that the dollar declined and bottom two quarters before.  This marked the warning that a shift was coming. Indeed, gold peaked 5 quarters prior. The dollar rose as rates declined. Why? Because people realized that when rates started to fall, the trend shifted and it was time to lock in as much as you could.

I was giving lectures around Europe at the time. The number one question I use to get was would the USA move to a two-tier currency? The Eurodollar market was $1 trillion and so was the national debt. Europeans believed the US would create red dollars for external and these would be worth less than the domestic green dollar. So capital moved into domestic deposits causing the dollar to rise. The Eurodollar market crashed and the domestic dollar soared. Even domestically my Mother and her sister bought CDs at banks paying over 20% for 10 years and did not think twice.

Here we see a totally different pattern. The dollar rose with higher rates because this was World War I. Capital flees from the risk of geopolitical events regardless of interest rates. Again, the Fed was raising rates trying to stop the commodity bubble.

Then the dollar rose sharply during the 1931 Sovereign Debt Crisis. We are seeing this right now internally as well within Europe. As fear rises that the Euro will collapse, capital is shifting to Germany driving the bunds to historic highs and the DAX to highs.

So it is always a matter of CONFIDENCE which determines the capital flows. So will the dollar rise because of higher interest rates or fall? This time it will rise ONLY when the realization of a Sovereign Debt Crisis is unfolding and then if we end up with an escalating war in Ukraine. Both such events will send capital to the dollar. This is not about interest rates. This is about capital movement. Higher rates are immaterial at this moment in time. It is higher rates from the USA which will help to set in motion Sovereign Debt Crisis among nations that borrowed dollars since 2007. That is post-2015.75 – not now.