Seasonal Weakness Is Almost Over
In this chart we combine 3 seasonal patterns into one: The Annual Seasonality Cycle, Every Post-Election Year and Every Year Ending in 1, as part of the Decennial Pattern.
As you can see, we're getting close to the end:
In this chart, we overlay the S&P500, which as you know is a cap-weighted Index being carried by a few mega-cap stocks.
Underneath the surface, stocks have followed this seasonal cycle pretty well.
Are we almost done with this correction and we're about to rip into the end of the year?
If Oil is going to be an indicator, it's certainly pointing to exactly that:
If we're using Crude Oil as a gauge for risk appetite, then yes, it's acting as a heads up that things might be about to get better for stocks.
Yesterday we discussed the option of buying new 6-month lows in structural bull markets. Is that what this is?
Meanwhile, Gold is still making new lows relative to nasdaq stocks, again. The Gold Fund $GLD has never in history been worth less relative to the $QQQ:
Does this mean buying opportunity for Gold, like the angry little gold buggers have been telling you this whole time?
Well it's now or never....
Are we near the end of this decade long basing period for Gold? And now the gold bugs will finally have their day?
Or is this a historic double top, and things are about to get much more depressing for the already depressed?
For me, I couldn't care less either way. Gold can go to $10,000 or zero. I'm good either way.
But if Gold does break out, I want to be a buyer.
My point here is why be in such a rush? Why not just wait for the market to confirm that it's in an uptrend vs still stuck in this decade long bear market?
I say wait. What's the rush?
It's funny, this week I was out in Napa for my first harvest. And when you put a bunch of traders in a house together with wine in the middle of no where, guess what we talk about?
Markets duh...
A good point that one of the gentlemen were making was that the Gold Bug Community and the Crypto Community agree on a lot of things. They agree on almost everything, except one thing: how to express their investment thesis.
The gold bugs have just given up. They want to hide in bunkers, load up on ammunition, and come out on the other side after Armageddon.
The Crypto Community decided not to give up, and instead build solutions and other options for investors and society in general.
I thought this was a fascinating concept, and it's hard for me to disagree.
Here's an interesting name that just came on my radar recently.
This is Hedera Hashgraph, the 41st largest crypto-currency by market cap, valued at $4.3 Billion. This is roughly the size of companies like Papa Johns, Nordstrom or Sonos.
For me, this looks like a massive base. If we're above 0.40 we want to be long this name. I don't see a reason to be long unless we're above those former highs. Below 0.40 and things get hairy. But above 0.40 and I'm all in.
Premium Members, make sure you check out todays' Saturday Morning Chartoons.
This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.
Make sure you scroll down to the bottom of the page to download the full deck and list of Trade Ideas.
Live Video Conference Call
Monday night is our next Live Conference Call.
We have a lot to talk about.
There's a ton of stuff happening underneath the surface in the Stock market, both in the U.S. and Internationally. Interest rates are signaling something is about to happen. Have you see what they've done the past couple of months?
Commodities are another one signaling something funky. You see Crude Oil and Base Metals holding up ok while Gold breaks down to new lows?
Monday is going to be one of the more important calls.
Make sure you give it a watch.
If you can't be there live, don't worry, we will post the Video and Slides on the Conference Call page immediately after the completion of the call.
See you then!
JC