Anatomy of the Stock Market Cycle

My wife sends me 4 leaf clover pics all the time.  She spots them from a mile away.  It takes me a while to spot a 4 leaf clover if I am looking for one though.  I have traveled in cars with hunter types of people who can spot a turkey or a coyote hundreds of yards away, yet I never noticed it.  Their eyes were trained to spot the wildlife.

Look at this ES futures chart and think about what it is you see?  it takes years of trading for your eyes to begin recognizing opportunities on a chart.  I am still learning myself and will probably keep getting better at it the rest of my life. 

Trading is never 100%, but if you do not have an expectation why would you take a trade in the first place?  Trading cycles allows you to see opportunities and to set expectations.

The easiest cycle to trade is the stock market.  Stock indices tend to continue to move higher over time.  The Fed helps prop up the market which creates a lot of stability.  Except for the occasional financial crisis or pandemic, stocks have done well over the last 80 years.  Stocks are where we need to devote most of our time and resources to really make a lot of money over time.  

Below is the same ES futures chart the way I see it today.  This diagram shows what my eyes see when I look at a chart.  This chart shows how the stock cycle was used to get us into the position where we find ourselves now and how we will use the cycles to exit and perhaps re-enter again later.  Heads up..... it could be mid summer before we buy stocks again.

Gold is about half way through an 8 year cycle.  The Bank of America estimates gold could reach 3000 over the next 18 months and I tend to agree.  A 1200 point gain on a gold futures contract would be worth $120,000.  Once the price of gold breaks above the $1923.7 all time high, gold will not have any resistance.  Once gold enters this phase I think silver will do a lot of catching up to gold.

Metals are kind of the wild west of trading but over time do have dependable cycles.  The metals sector is sometimes manipulated by bullion banks and hedge funds.  The Fed has no reason to inject money into gold since governments around the world have fiat currency and not gold backed currency any longer.  

Agriculture commodities do have cycles but they are nearly impossible to track in real time due to all the forces in play that create volatility.  Seems like there is a USDA report, or a weather report, or something going on in South America that creates unforeseen volatility.  Last weeks dive in crude oil for instance destroyed ethanol demand which directly impacts corn.  There are just too many working parts for cycles to be useful with ag commodities.​