Monday, November 29, 2010

Toppy Commodities?

There are several cycle concepts such as magnitude, period and phase along with commonality, summation, variation and proportionality. I tend to focus on cyclic magnitude, summation and commonality. Cycle magnitude is the distance above or below the zero line (……….0) or – from peak to trough. the greater the distance above or below the zero line the more reliable the signal. Cycle Commonality is the tendency for most securities to have linked peaks and troughs and cyclic opposition is a condition of one or more issues with opposing peaks and troughs.

Cyclic Opposition is clearly at work in our US Dollar & the DBA Commodity chart with the US Dollar is currently generating an intermediate cycle “buy” signal and the DBA posting an intermediate “sell” signal. The longer end of the bond yields are also working higher which could cool the current bullish stampede into commodities. Now do know the banks would like to see an up-tick in rates so they can lend high and borrow cheap and that is why I reduced my gold exposure and moved into the BMO equal weight bank (ZEB) ETF

1 comment:

Piazzi said...

Great as usual, Mr. Carrigan!

The reason many other cycle practitioners fail and fail again is, IMHO, they spend too much time on phasing and periodicity and too little time on shape and posture

and almost no time on inter-market relationships

same problem with many EWavers

that and bias, of course

Thanks again for these nuggets

Let us know if you arrange a seminar in Ottawa