"Yearly cycle low is close and may have formed a double bottom yesterday".
With commodities now moving down into their three year cycle low I’m hearing more and more talk about deflation. This is complete nonsense.
As most of you probably know, I have been expecting the CRB to form a major three year cycle low sometime next summer. However I’m now starting to see some things that might indicate that major cycle bottom is going to occur earlier than I expected.
So far my 2014 expectations are playing out pretty much as planned, with a few adjustments. With the threat of war in the Ukraine I think the final bubble phase in stocks is now off the table.
For stocks it still remains to be seen whether or not they have one more surge higher into a final top.
We've had so many calls for a crash over the last year that you just know the bears are salivating right now thinking they are finally going to get their wish.
My overarching driver for the Great Inflation scenario is that the dollar would have some kind of crisis, or semi-crisis late this year as it drops down into its major three year cycle low. All other stock and commodity movements will be driven by this impending currency crisis.
Opportunities are found at bear market bottoms. For those emotionally capable of going against the herd, buying a bear market bottom is where the really big money is made.
The Fed has now manufactured a parabolic move in the stock market. This parabola is much more aggressive (and thus even more unsustainable) than witnessed at either the 2000 or 2007 stock market tops.
My best guess continues to be that stocks will extend this consolidation on Friday and then deliver one more push higher into the FOMC meeting next week.
It's been a great run over the last two months but it may be time to tighten stops on mining stocks.