Sell in May and Go Away? – 15 June 2013 1


Sometimes there seems to be so much to say about what is happening in the markets, and sometimes … well, there isn’t really. This is one of the latter times. Stock markets have been thrashing about a bit as they come to terms with the fact that the dominant cycle that has been driving them upwards has turned down, and the Euro and British Pound are showing early signs of a potential new dominant cycle (although it is too soon to tell yet). But none of this is really a surprise, and so today’s post will be short and sweet!

S&P 500

The S&P 500 spent the week tracking along the 20-day FLD, lessening the chances that the new trough formed this week was of more than 20-day magnitude. It would seem that we have further to go down before the next 80-day cycle trough. 

Tracking along the FLD

Nasdaq

The Nasdaq also made a lower trough this week, but the interaction with the 20-day FLD prior to and following that trough does not make it likely that the bull has resumed. 

The 50-day puzzle persists

Euro/US Dollar

The Euro has been heading up strongly since the 40-day cycle trough on 17 May 2013, and it is possible that we are seeing the early signs of a strong dominant cycle of at least 20-week magnitude, but we can only confirm that when we see how deep the move is into the 80-day cycle trough expected in the next week or two.

Stronger than expected

Gold

I’ve been expecting a disappointing 40-week cycle peak for some time, but I haven’t explained what the consequences of that will be. The 40-week cycle peak will almost certainly prove to be a subtle peak, perhaps even a straddled peak. If it is straddled then we would expect a symmetrical move up on the other side. If it turns out to be merely a subtle peak then the move will not be symmetrical, but there will be a turn up into the 18-month cycle peak expected early next year. And so either way I am anticipating some bullishness in Gold in the medium term. Take a look at John’s posts about Gold for another perspective on an upcoming bullish move in the precious metals. 

A subtle peak

30 Year US Bonds

Bonds have been falling in a straight line, making it very hard to identify cycle peaks or troughs. They should muster some kind of a rally into mid-July for the 80-day cycle peak.

Picking up again?

Crude Oil

The solution to last week’s 50-day puzzle seems most likely to have been a late 40-day cycle trough in Crude Oil, as shown here:

A late 40-day cycle trough

US Dollar Index

The current 40-day cycle has turned nastily bearish in the US Dollar. We should see a bit of a bounce out of the 40-day cycle now, but the Dollar is only likely to regain its true strength after forming the 20-week cycle trough  in late July.

Turned bearish

I won’t be publishing a post next week (I have discovered the great advantage of living in the Northern Hemisphere – summer holidays!) but I will be back soon. I am planning to change the style of posts to this blog, and will be posting when I have something of interest to say, and as the whim takes me, as opposed to the current regular weekly format. Let me know what you think.

In the meantime profitable trading!


About David Hickson

I have been trading for over 20 years, but only had any success after discovering Hurst's cyclic principles. Unable to find any software to speed up the analysis process I created Sentient Trader software, which now pretty much does all the analysis for me. I am a film maker and a TV director, but nowadays I mostly provide consultation services to professional traders and fund managers, helping them to integrate Hurst analysis into their trading. I'm South African and live with my family in Italy.


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