Charts Updates

The big picture looks like this:


Source: Stockcharts




Source: J Lyons



Source: Moneymovesmarkets


US leading indicators remain mired negative.


Source: Dshort / ECRI


Screen Shot 2015-01-28 at 08.00.58Source: Factset





Source: Macromon


 Source: J Lyons


Screen Shot 2015-01-28 at 07.01.56

Source: Barrons



Source: SoberLook




 Source: Indexindicators




3 Exact Dates









22janu7 22janu5








Saturday Markets Update



17janu1 17janu2

 Source: Stockcharts


17janu5Source: FT


17janu3Source: DShort

Therefore, supports for the bull continuation have been significantly weakened.


17janu11Source: Sentimentrader


17janu6 17janu8 17janu9


Screen Shot 2015-01-17 at 06.38.41

Source: NOAA







Solar Models

Solar maxima generate speculation peaks. The latest smoothed solar maximum is likely to have been April 2014. The chief speculation target has been equities, particularly US equities. That mania is demonstrated in valuations, sentiment, allocations, leverage and more. A speculative mania has indeed been delivered at a sunspot maximum again.

The chart looks like this:


If we substitute the Dax for the SP500, the aligned peaking looks clearer:


But where is the subsequent collapse? It really has to occur within the window January to April 2015 to be both within acceptable range and normal seasonality, with the latter guided by the sun’s second tool, geomagnetism:


As things stand, the set-up is as compelling as it could be for this to occur. Global growth proxies, oil and copper, are collapsing. Bond yields are reaching for record lows and yield curves flattening. Volatility is in an uptrend. The US dollar has surged in a deflation wave. Earnings forecasts have been slashed on the moves in oil and the dollar. Plus, the key ingredients for a collapse remain in place, namely excess leverage, very lopsided sentiment and allocations, and a wide range of negative divergences.

Additionally, the real (actual) geomagnetic trend has intensified since August 2014. Here is the commodities index versus trend geomagnetism for the last 6 years. Note the geomagnetism is inverted as higher geomagnetism is negative for sentiment. We see geomagnetism has helped drag down commodities over the last several months.


However, when we look at equities, we see them levitating away from the model in an 18 month mania:


Combining equities with commodities we see the mania from another angle:


The similarities with 2000 are notable. Back in 1998-2000, we saw a similar pulling away from the geomagnetic model. Eventually stocks were dragged back to it, in a post-mania bear:


Note how the geomagnetic trend intensified downwards in the second half of 2000. This would have played a role in popping the uptrend in equities, as it tugged downwards on sentiment, and ought to play the same role now given the steepening over the last several months.

I maintain the parallels with 1937. Ultra low rates and QE, deflationary pressures, excessive valuation into the next solar maximum following the demographic peak. We should be heading for a major low in equities several years from now at the next solar minimum. Top chart from S. Tarassov.



Triple Confluence Peaks









A) SC20: 19 Dec 1968

B) SC21: 17 Jan 1980

C) SC22: 3 July 1989

D) SC23: 6 Jan 2000

E) SC24: 27 June 2014



5nov25Source: FiendBear


5nov24Source: Greshams-Law






Stocks:Dollar, Stocks:Treasuries, Junk Bonds and Junk Bonds:Treasuries




FTSE, CAC, DAX and Euro Stoxx indices10janu5







Macro Updates


Screen Shot 2015-01-08 at 06.33.09

Source: Trading Economics


8ja11Source: Don Draper


8ja124. Russian CDSs rocketing, warning of potential default:


Source: Charlie Bilello



Source: Charlie Bilello



Source: Charlie Bilello

7. Global manufacturing PMI dropping sharply since mid-2014:

8ja5Source: Markit

8. US factory orders annual growth now negative:

8ja3Source: Alhambra



Source: Chris Carolan



Source: Charlie Bilello8ja10

 Source: Phomax



Source: Andrew Thrasher8ja2

Source: Rory Handyside


Equities Bear Began July 2014

It’s becoming clearer with hindsight and this is what I see.

1. The bull market topping process in equities kicked off January 2014:

6ja7Source: Stockcharts

2. Speculation peaks with the solar maximum, which was April 2014, putting equities on borrowed time after that:

6ja9Source: NOAA

3. US stocks measured in USD and relative to bonds both peaked mid-year 2014, compare to previous major peaks here:

6ja1 6ja24. Multiple world stock indices peaked at the turn of July, most of the rest by September:

6ja4 6ja55. US stocks composite, breadth, volatility and oil all turned at the start of July:


6. The very last global indices peaked out at the end of 2014, with the peaks largely fitting the geomagnetic seasonal model (mid-year, end of year) and close to the new moons of June 27 and Dec 22:

30dec127. These final peaks were delivered on saturation in sentiment and allocations:


(AAII equity allocations in December reached their highest since June 2007 too).

8. The final push from mid-Oct to late Dec was purely multiple expansion as shown below, as falling oil and rising dollar both cut earnings forecasts.

Screen Shot 2015-01-06 at 07.28.50

Source: Yardeni

9. US leading indicators have dropped sharply since mid-year and echo previous major peaks:


Source: DShort

10. Ditto financial conditions:

6ja12Source: Charlie Bilello

Plus, the US yield curve has flattened more sharply in December, whilst German and Japanese bond yields have reached record lows.

11. Meanwhile sentiment and relative value in the precious metals sector mirrors the 2000 major reversal in gold:equities.


Source: Inflated Temper6ja10Source: Gold Trends

Therefore, in keeping with the geomagnetic model, equities should tumble from here to a low around March-time, whilst gold breaks upwards. However, this does not preclude further oscillations in the near term. Short term, we are reaching several oversold readings in equities plus we are now through the full moon.


Trin and put-call could produce a bounce here. Capitulative breadth hit 3 yesterday, so not yet at a reversal reading but perhaps getting there with some more selling today/tomorrow.

To sum up, I see the effective peak in equities as the start of July 2014 and any rips in stocks to be sold (whilst gold should rise). Stocks may get a short term bounce but we should finally see the major drop in equities as we head towards March. Earnings season begins 12 Jan and ought to be a sell due to the sharp downward revisions. Historically, major price drops were swift, lasting just 2-8 weeks, so we need to be alert for signs the allocations and leverage is starting to be disorderly unwound.







More Indicator Updates

1. Topping thrusts compared:

2ja1Source: Stockcharts


2. Skew:


Source: Dana Lyons


3. Put/Call:


Source: Dana Lyons

Mirrors previous topping processes.

4. Sornette Bubble:

Screen Shot 2015-01-02 at 07.15.30

Source: Financial Crisis Observatory

SP500 bubble end still showing as start of July.

5. Sunspots:

Screen Shot 2015-01-02 at 07.19.24

Source: Solen2ja6Source: SIDC




7. US Dollar still ripe for a reversal:

