The Reversal System defines four sub-levels within each major time level

Fractal nature of trading

Posted Nov 25, 2016 by Martin Armstrong

QUESTION: Marty; you said at the cocktail party that there are four level of time within each major level of time from daily to yearly. You said that trading results depend upon how you use the model for it is not a one dimensional model so people trying to compare trading results are usually lost. I have seen people who try to bash you and it becomes so obvious that they are mad because they have been wrong and just blame you. I looked at your track record from Deutsche Bank when you managed the hedge fund for them. You had the lowest drawdown of anyone probably in history. There is proof you have done what others cannot do. Can you explain a bit more how you see into the world connections and markets?

Thank you for a wonderful conference. You also put on such a first class even with unlimited food and drinks. They are better than any wedding or bat mitzvah I have ever been invited to. You have to spend hundreds of dollars per head per day. Your staff were very professional and your daughter ran the show. She can stand up before the crowd with no fear just like you. Hope you are grooming her to replace you.

LF

ANSWER: Yes absolutely everything is connected. Once you see it, it might be a bit like Neo in the Matrix and you cannot go backwards. You certainly cannot be a hedge fund manager unless you think dynamically and see the connections. If you cannot do that, do not try to manage money.

You must understand that markets are fractal. So each level daily to yearly is the first step in carving up time. Time is totally arbitrary. I can start a week on Tuesday or make it 8 days instead of 7. Each slice of time will reveal the trend. We can produce a Yearly Bearish Reversal every day of the week by recalculating a year to end that day. There is so much we can do but it requires tremendous computer power.

The Reversal System defines four sub-levels within each major time level. So it depends on how you wish to use them. You can use them all and you will get one result with greater trading activity. The lower chart just use the long-term. This reduces the trading activity and produces a different net return of 4780 compared to 34850.

Now, you can take these results and add in the Weekly Reversals, then Monthly, Quarterly, and Yearly. We will be adding these option to the Trader Pro version. This way you can tailor the model to your particular desire. It is by no means quantifiable as a single one-dimension tool.

Then the model can be used for speculation or hedging. A hedging model is either long or short. It does not add to positions as the trend unfolds. The Reversals are definitive numbers, but they are separate and distinct from TIME. Reversals do not tell us WHEN they will be elected. That is where the cycles come into play. In the case of gold, we had the Monthly Bullish Reversal 1362 and ONLY exceeding that would it change the direction of gold. I wrote on February 11th, 2016: “The Monthly Bullish stands up at 1362. That is what we need to elect to suggest that a change in trend is possible. Otherwise, be cautious. We are looking at all markets pushing to their extremes. This is the prelude to the chaos coming in 2017.”

If you are going to change trend, that takes place ONLY at the Monthly level. This is why I have stated countless times you must define where you are right and and where you are wrong. I did that – 1362. You cannot get more black and white than that. I warned that the Quarterly Bullish Reversal was 1347. On August 2nd, I wrote on the Private Blog:

“We still need to get a monthly closing above 1362 to suggest that the 2015 low would potentially hold. We would also need to close September above 1347 and year-end above the 2015 high technically. These targets must be met to imply gold will hold.”

Gold crashed to avoid also the Quarterly Bullish Reversal at 1347 on September 30th. Meanwhile, the angle of the market points to new record lows. I have been warning that we face a major dollar rally. Only such a rally will break the back of the world economy. A lower dollar will bailout the Emerging Markets where a high dollar will create sovereign defaults around the globe.

Opinions are something we all have. But TIMING comes first and then the NUMBERS. This is very black and white. The people who are so desperate to also prove me wrong rage against my opinion. That’s fine. I really do not care because they are absolute fools. They attack me like everyone else and fail to comprehend this is not about my opinion. Neither the Reversals nor the Cycles are based upon my subjective opinion. The model was correct it forecasting both Trump and BREXIT. That was not my personal opinion or desire.

As long as idiots try to attack me personally, they are revealing that they are linear thinkers, more suited to work for government, and are incapable of seeing the world around them as interconnected and dynamic. They are the same type of people who fought against the idea that the world was round because how could you stand upside down on a ball? They lacked to understanding of gravity and burned Bruno alive at the stake for daring to say that the earth revolved around the sun.

In this instance, they do not comprehend the global economy and how we are all connected. Leonardo da Vinci also said: “Learn how to see. Realize that everything connects to everything else.” 

As along as they continue to rail against me, don’t worry, we will always have fools to trade against. We need them on the other side. I have no desire of convincing them otherwise. As long as they attack me, it proves they are not capable of learning how to see the world in which they live.

What India Did – Other Countries Will Do – BEWARE

Eliminating Cash – The NEW AGE of Economics

Posted Nov 18, 2016 by Martin Armstrong

This is the boldest move by any government in recent times. Both the old 500 Rs and 1000 Rs notes have been “probabilistically devalued” meaning that anyone holding large number of notes, the value just has been significantly lowered by approximately 10 to 20% overnight. If you now try to deposit the cash, the money is devalued so in other words you were just taxed up to 90%. This is all claimed to attack the underground economy or black money and corruption.

To understand this bold attempt, let us assume that the ECM €100 and €500 notes are demonetized overnight. The government can ensure that this money is deposited or converted in banks and thus it then becomes your obligation to prove you paid your taxes. They will compare the sum with an individual’s income tax obligations.

The other tax India has imposed is highly dangerous and is known as the wealth tax, but that was abolished, and replaced with a new tax on wealthy individuals. Broadly speaking, the wealth tax was determined by your nationality, residential status and location of the asset. If you were an Indian national and resident as per Indian tax laws, you would have to pay wealth tax in India, even on global assets. With the new regulations coming by September 2017 whereby the G20 nations will be sharing information, any assets you have offshore will be reported back to your home country anyway. If you did not report mere ownership of assets, that generates fines, seizure, and taxes, the G20 regulations may fill the gap.

The intent of the law was to wealth tax assets that do not generate an income. What you would have on deposit in a bank would be exempt since that generates interest, which is taxable. However, in case of some assets that do not generate income such as gold, jewelry, watches, a second property that you own, you will have to pay a wealth tax. You could avoid the wealth tax by generating an income from it, meaning by renting it out for at least 300 days in a financial year.

The repercussions of not filing wealth tax return or filing an incorrect return was harsh. The provisions of regular assessment that apply to income tax also applied to wealth tax. Interest at 1% per month is payable for failure to pay wealth tax on due date. There were also provisions to impose a penalty and/or prosecute an individual for not filing wealth tax returns. Therefore, under this approach, any tangible asset became taxable just to possess it on an annual basis.

The wealth tax was replaced by an additional 2% surcharge on income for individuals and a 7% tax on business.

The Collapse of Socialism/Marxism

Posted Nov 17, 2016 by Martin Armstrong

QUESTION: Mr. Armstrong; Your conference was exactly as you have said. A fantastic networking event. It was like a college reunion of like minded people coming together from around the world. At the cocktail party, you said 2015 was simply the 26 year “differential peak” in western governments. I didn’t get a chance to ask you about that. Could you please explain that a bit more.

Thank you so much. I will be there in Hong Kong

FD

ANSWER: Every society has its own cycle. Following Tiananmen Square in June 1989, rapid reforms began in China. On May 4, 1989, a student declaration was read on Tiananmen Square, calling on the government to guarantee constitutional freedoms, free press, and to fight corruption and accelerated economic and political reforms. On May 13, the students announce a hunger strike, using the huge armada of foreign media representatives to gain global attention. The Shenzhen Stock Exchange (SSE) opened on December 1, 1989, while the Shanghai exchange opened November 26, 1990 after a 41-year hiatus. Between 1990 and 2004, China began the process of restructuring and/or closing state-owned enterprises that accelerated in 1992 under Deng Xiaoping’s market reforms to establish a “socialist market economy.” By November 2001, after years of negotiations, China became a member of the World Trade Organization and its rise has been spectacular ever since.

The youth rose up in union and led the movement at Tiananmen Square. Do not underestimate the fact that we are witnessing an uprising of youth in the United States who have been brainwashed by the Democrats and do not understand who is even on their side. Revolutions emerge from the youth.

Simply, 2015.75 was the PEAK IN WESTERN GOVERNMENT. This was the 26-year differential between East and West. Hillary lost due to her manipulation of the Republicans, but in the process, she seriously damaged the foundation of the American economy and social structure. Her defeat in 2016 was precisely on target of 23 years from when Bill was inaugurated. But it was also 112 years (half of a 224-year cycle) from the 1904 elections when socialism first took the White House.

Therefore, 1989 was the Eastern peak, and 26 years later, we have established the peak in the West (2015.75). The phase differential between East and West has been on target. We have begun the decline, and the youth uprising is very, very, very disturbing.

The United States will most likely break apart by 2036

The Termination of Cash Approaching Rapidly

Posted Nov 24, 2016 by Martin Armstrong

The hunt for money is intensifying with the aid of banks no less. India was the balloon. They simply cancelled the currency with no notice and imposed a 90% tax on anyone holding the high denomination notes. This is how the world governments operate. The first bail-in was done in Cyprus. We were even contacted by members of the government trying to push back against the EU. We provided the solution, but the government did what the EU wanted because this was a test. If they got away with it in Cyprus, then the “bail-in” would become a contagion. The politicians lied, as usual, and said that policy would NEVER be applied in Europe. It is now standard around the world. We warned, Cyprus, then Greece – who would be next.

Now following India, Citibank is refusing to accept ANY cash in some of its branches in Australia. Banks support eliminating cash for that means they eliminate bank runs. Government benefits for they can simply seize your money without any notice whatsoever. The ONLY way to get off the grid for serious money is to run into equities. The only way to hedge broker risk is to take delivery of the share certificates and do not leave them in street name.

Meanwhile, the father of NEGATIVE interest rates and the great supporter of bankers, the establishment, socialism, and anti-democratic process is Larry Summers. He wrote in the left-wing newspaper Washington Post that it is time to kill the $100 bill. The Washington Post endorsed Hillary and had the audacity to write: “The Democratic nominee is not the lesser of two evils. She is a choice Americans can be proud of. (Adriana Usero, Julio Negron/The Washington Post)”(see hillary-clinton-for-president-the-washington-post) This endorsement demonstrated how biased the Washington Post really is and how they are conspiring against the people of the United States for the establishment no less the left-wing that supports a deeply rooted Marxist agenda. This is why they published this piece by Larry Summers.

I am becoming deeply concerned that the United States is headed into its version of a communist revolution under the label “progressive” and the bankers, who Larry Summers has always supported, will be used as the scapegoat for Wall Street and the “rich” who have to be stripped of their liberty and their money for the “good of the people” as they always say. The United States does not look like it will be a country we can recognize by 2032 if we can even make it past 2024. The United States will most likely break apart by 2036. There are separatist movements rising in many areas from Vermont and Texas to California, who reasons they voted for Hillary not Trump justifying their departure.

The entire purpose of eliminating cash is to strip us of our assets, liberty, and to prevent bank runs. The youth, who have been brainwashed by Bernie Sanders and people like Elizabeth Warren, will turn against the older generation and enslave them if at all possible. This threatens our future with outright civil war. They will not be satisfied until they destroy the freedom of their opposition. It is starting to appear that 2036 is our date with destiny.