Saturday, December 12, 2015

2015.12.11 DJIA Cycle Model Chart

2015.12.11 DJIA Cycle Model Chart

















The DJIA cycle model continues to suggest downward pressure on the index, predicting a DJIA index of 15500 by the end of 2015.  Previous iterations of the model are shown below and on the blog.



2015.10.08 DJIA Cycle Model Chart












2015.06.12 DJIA Cycle Model Chart


Sunday, December 6, 2015

2015.12.04 Gold Cycle Model Chart

2015.12.04 Gold Cycle Model Chart


















The gold cycle model suggests robust pressure for higher prices in the index going forwards. In fact, it suggests we may be at the cusp of a secular rise in gold prices, if the model is correct. The model has plenty of error, and the phase extension over the past few months has been disappointing because we are approaching the point where further divergences will likely not be tolerated by the model structure, and the result will be non-convergence on a model run. The model has reached these high levels of divergence on only four other occasions since 1968.  A friend of mine who has a full time job in the commodity markets tells me that the gold COT figures are quite astounding in terms of the number of speculator short positions at the present time. Historically these extreme positions by speculators always resolve to the upside.  Remembering that all models are wrong but some are useful, a short position in gold at this time would seem to be, on a historical cycle basis, a very very risky trade.  All previous iterations of the model can be found on the blog.