Trading and Analysis

Analysis and conjecture must ultimately be filtered by trading signals.


21 MAC/21 MARC

21 MAC/21 MARC

Gold & Silver Surge After Bullish 21 MAC & 21 MARC Signals!

6-15-19 – On June 11, after surging above and closing above its weekly 21 High MAC on June 7, Gold pulled back and tested that same channel – setting its intraday low at 1323.6/GCQ.  The weekly 21 High MAC for June 10 – 14 was 1323.7/GCQ!At the same time, Gold was testing and holding weekly support, daily trend support and daily extreme downside targets – creating a powerful synergy of bullish indicators that signaled a low.  Gold’s 1 – 2 year outlook – from its Aug. ’18 bottom – was already anticipating a rally up to 1445.0/GC and ultimately to 1525.0/GC and a 6 – 9 month advance into 3Q ’19 .  It was entering the time when accelerated advances are so common in precious metals (see 90/10 Rule of Cycles).  

So, this weekly 21 MAC test was another affirmation of this overall outlook and ushered in a more bullish phase of Gold’s uptrend.  But, why was that test and reversal (higher) so significant?  

(And, how did Silver reinforce that on June 17, with the daily 21 MAC, signaling its time to enter an accelerated advance… on its way to ~18.500/SI??)  

In order to understand that, a trader must first understand how these indicators function and what to expect from their interplay – with each other and with current price action….

The 21 MAC & 21 MARC (Part I)

One of the premier ways to utilize the 21 MARC & 21 MAC together is to look for times when an abrupt transition is most likely.  How is that accomplished?  Simple… by looking at what transpired 21 days or weeks or months ago…

Let’s assume that the action for the next 3 days is going to be sideways (as the majority of market movement is; the convincing trends only consume a minority of time; see 90/10 Rule of Cycles).  One might assume, then, that the direction of the daily 21 MAC will also be sideways.  In most situations, that would be incorrect.

That is due to how an average is calculated.  Each time a new data point is added – in this case, a new day – an old data point is removed.  In this case, that means the high & low from 21 days ago is removed from the calculation of the daily 21 High & 21 Low MAC.

If the high & low of 21 days ago were significantly lower than the high & low of today (and each of the next 3 days, in this example), then the corresponding daily 21 High & 21 Low MAC would increase.  The old (lower/lesser) data point is removed and the current (higher/greater) data point is added in.

If that occurs for the next 3 days, the daily 21 High & 21 Low MAC would continue to increase (ascend) even though the actual price action of these 3 days was sideways.  The market action is giving the average a chance to catch up.  There are multiple ways to utilize this knowledge in day-to-day market action & analysis…

1 – One of those is to be able to anticipate when daily 21 High & 21 Low MACs are about to move significantly higher or lower EVEN IF CURRENT PRICE ACTION IS SIDEWAYS.  Depending on the proximity – of the daily 21 High & 21 Low MAC to current price action – that could have diverse effects.

For instance, if a market has undergone a sharp advance and then consolidates, it will often wait until the daily 21 High MAC approaches the current lows before resuming that uptrend.

In that case, price action is preventing a break into the channel (created by the daily 21 High & 21 Low MAC).  It has waited for the channel to (almost) catch up from below – or for the daily 21 High MAC to touch the current daily low(s) – but then catapults to the next plateau before a daily close can enter the channel (by occurring at or below the daily 21 High MAC).

For those struggling with this concept, let’s take a real-life scenario (for some)… in a slightly different realm.  Let’s say you were hit hard, financially speaking, with the 2008/2009 economic downturn (or any other financial challenge).  Let’s imagine you lost your job and quickly fell behind on your mortgage, car payment and other credit obligations…

In this hypothetical scenario, the first ‘black mark’ on your credit history occurred in January 2009, when you missed your car payment.  In Feb. ’09, two payments were missed (retail credit cards).  In March ’09, you tried to catch up on those payments but missed your mortgage… knowing that you had a little leeway before serious penalties would ever kick in.

In April ’09, things got worse and you missed multiple obligations.  The same thing happened in May, June & July 2009.

Fortunately, in June 2009 you found a new job and began to bring in new income.  It may not have been higher than your previous income, but it was certainly more than no income at all.

By August & Sept. 2009, in this fictitious illustration, your situation leveled out and you began to make critical payments… but still delayed others.  In Oct. – Dec. ’09, you caught up with remaining payments even as you were scrimping to come up with any additional funds for various unforeseen expenses.  2010 saw your situation stabilize, but your credit history and credit score had taken an enormous hit throughout 2009.

For the sake of argument, let’s say these credit ‘black marks’ remain on your record for 3 years (36 months) from the time they appeared**.  It is only in the 37th month, after a specific missed payment, that those black marks begin to come off your record… and your credit score begins to move higher as a result.  Take note of that last sentence

[**Credit delinquencies usually impact a credit score longer than 3 years.  This is just hypothetical for the point of this illustration.]

If everything else remained the status quo – meaning you made all current payments and missed no others – your credit score would begin to move higher 37 months AFTER a black mark went on to your record.

So, life goes on and your new job remains stable and you even get a raise.  You are really wanting to upgrade your car, but already found out that your credit score was too low to qualify for any decent credit (since the black marks are still on your credit report)… without having to pay astronomical interest rates and sign away your first born as collateral.

You patiently wait.  BUT, you know – or at least you should soon figure out – that beginning in February 2012, your credit score will begin to bump up… as the glitch of Jan. 2009 (37 months earlier) comes off your credit history.  In March & April 2012, more black marks are removed and your credit score bumps up a bit more.

If you are the least bit savvy, you have already figured out that May – August 2012 will be the best months for your credit score (if nothing else changes).

Is that because you will suddenly receive an influx of money and be showered with new credit offers?  NO!

It is because the black marks of April – July 2009 will progressively disappear during that period… 37 months after they were created.

So, just like anticipating when a 21 MAC is about to move significantly higher (barring a sharp drop in CURRENT prices) – due to the fact that much lower data points (from 21 days or weeks or months ago) are about to be removed from the MAC calculation – you are able to identify when your credit score is about to move significantly higher (barring a new round of missed payments) – due to the fact that damaging data points (from 36 months ago) are about to be removed from the credit score calculation.

This is a CRITICAL – and very beneficial – principle to learn, accept & internalize if you are going to make the most from the use of these tools – the 21 MAC, 21 AMAC & 21 MARC.  

It provided a powerful combination of confirming signals in Bitcoin – in mid-Feb. & late-March ’19 – right after a second multi-month buy signal was generated in mid-March.  The 21 MAC then remained bullish until Bitcoin reached its 3 – 6 month & 6 – 12 month upside target in late-June, when published trading signals prompted exiting of long positions..

So, how does this help trading and what does this mean for current market action in markets like Gold & Silver?And what has the weekly 21 MAC been setting up in the Dollar Index for 3Q/4Q ’19??

And why are the daily & weekly 21 MACs & MARCs intensifying the focus on Aug. ’19 in equity markets (when a sharp plunge is projected)???

Learn more about these intriguing applications of an often-overlooking trading tool in other installments of ‘INSIIDE Track Trading Tools’ and in Eric Hadik’s Tech Tip Reference Library.


A polygraph machine drawing lines on graph paper.

Trading Intro

Our approach to trading - and what we believe is the best way to approach trading - is as a business. Just as building a successful business demands a disciplined, steady approach, so too does building a successful trading program.

Looking for excitement, 'rolling the dice' & trying to 'win the lottery' are NOT healthy approaches to trading and will usually end in financial ruin (even if there is some fun and excitement along the way).

Instead, a trader should take a steady and selective approach to trading.

This means:

  • Taking one's time when choosing and/or waiting on a trade (but acting with decisiveness & conviction once a decision has been made).
  • Trying to build an account one successful trade at a time and..
  • Being selective in the choice of trades.

A successful business usually grows one new product at a time. And no business tries to offer every product and take advantage of every deal and cater to everypotential customer's needs or desires.

Instead, the most successful businesses recognize their own strengths (and weaknesses) and stay focused on their target market.

A business that specializes in the construction of massive sports stadiums should not worry if the local custom-home builder is having a better quarter than they are. Construction demand is cyclical, sports stadiums are a specialty item and the payoff for one stadium contract can supersede many quarters - or years - of home building. And, the more homes in an area, the better the chances for a new stadium.

They need to remain focused on their strengths and do their best to ignore conflicting or contradicting influences... and the lure of fast-money somewhere else (the proverbial 'greener grass'). They may experience slow or ‘down' periods, but this is all part of a developing business... and a developing trading program.

In the same way, if you are most comfortable with trading the markets on a 1-4 week or 2-3 month basis, who cares if Joe X is scalping 12 ticks out of Bonds 3-4 times per week from his office overlooking the CBT trading floor. (And what you don't know is that he might be losing 30 ticks on the days that don't work out for him.) One profitable position trade can make up for missing 30--40 scalping opportunities... and involves a lot less stress and energy.

There will be days when you see a 20 tick rally followed by a 25 tick decline and then a 15 tick rebound in Bonds... and you swear to yourself that you saw it coming and could have grabbed at least 10 ticks out of each of these swings.

If that is not your trading style - and you have no intention of making it your style - then it DOES NOT MATTER 'what could have been'!!!

If you allow yourself to be distracted or seduced by that 'greener grass', you will always find yourself a day late and many dollars short, perpetually chasing the latest 'hot' market. (This principle applies to all aspects of life.) Remember:

Performance is Best Judged at the Finish Line!

Another important principle - that goes against common logic - is that the most successful trading programs often produce a higher number of losing trades versus winning trades. It is the size of each trade (large winners and small losers) - and the combined return - that matters.

Perhaps the best parallel to illustrate this is the one sometimes used when discussing trading: Baseball.

First and foremost, all the players in the Baseball Hall of Fame generated 'outs' (losses) 6-7 times out of every 10 at bats. A career .300 hitter only 'succeeded' (winning trades) on 3 out of every 10 plate appearances.

It is what he was able to accomplish with those 3 hits that makes all the difference in the world.

And, another key difference is that these hitters were able to squeeze out that extra 1 hit out of every 20 at bats. That is all that separates a mediocre, run-of-the-mill .250 hitter from a hall-of-fame bound .300 hitter... 1 extra hit out of every 20 at bats.

It is also what separates a successful and profitable trader from a break-even trader.

So, even though a trading system may take more losers than winners, it is critical to make sure you take advantage of every possible trade AND to get the most out of every winner. This is why I cringe when I hear someone carelessly throw around the highly deceptive adage:

"No one ever went broke taking a winner."

[See Axioms of Trading in Eric Hadik's Tech Tip Reference Library for a detailed explanation on why this adage is so dangerous.]

But, there is still one more important 'baseball' parallel to trading...

It has to do with those 3 times (out of every 10) that these players did get on base. In most cases, good hitters do not swing at the first pitch. They watch several pitches while getting a feel for that particular pitcher's style of pitching and also the objective that the pitcher and catcher have for that particular 'at bat'. Ultimately, this batter will probably swing at less than ½ of the pitches, often as little as 1-2 out of every 6-8 pitches.

When the player does decide to swing at a pitch, he tries to do it decisively and with conviction. (There are those times when he 'checks' his swing or takes a very 'defensive' swing when the initial 'look' of the pitch has fooled him. This, too, has its parallel in trading but is the exception and not the rule.)

Each market is similar in that reversals and signals (potential trades) are like pitches.

They are influenced by cycles ('when' the signals are being generated), just as pitches are often governed by 'when' the pitch is being delivered. Is this pitched being delivered:

  • With 2 outs or no outs
  • Before a dangerous home-run hitter or at the bottom of the batting order
  • During a period when the game is tied or when one team is 10 runs ahead of the other
  • When the pitcher is fresh - in the 2nd or 3rd inning - or when his speed and accuracy are beginning to falter in the 7th or 8th innings?

The same is true with potential trades ('pitches'). Are they developing:

  • As a new trend is just developing or after a long trend is showing signs of exhaustion?
  • In the beginning of a new cycle or at the culmination of an existing one?
  • With or against the underlying weekly or monthly trend? (In many cases, new daily trade signals are generated before the underlying weekly trend has completely reversed. This ushers in a couple different rules for confirmation.)

This helps determine some initial expectations, as well as perceived risk and potential reward. Although, just as in baseball, don't get so 'married' to one expectation that you fail to recognize when things have changed. Once a signal is taken and a trade is entered (swinging at a pitch), additional expectations can be built.

And, if the ball is in play when the hitter reaches first base - or a trade is still intact once the first objective is reached - other decisions need to be made (Try for second base or hold up on first? Tighten up trailing stops or take profits?).

I could take this analogy farther but I hope I have conveyed my point (and, believe it or not, I am not particularly obsessed with baseball so I don't want to lose you in this illustration)...

Successful Trading is a Steady & Selective Process that Requires
PatienceDecisiveness and Persistence.

If you are able to grasp and internalize this concept, you will be in a much better position to benefit from what we offer to our readers.


A dartboard with a single red dart in the center.

Our Seven Step Approach to Trading

At INSIIDE Track Trading, we view trading (and all market analysis) with the same multi-stepped or multi-tiered approach. It is not enough for cycles or Elliott Wave or a single technical signal to lead to a conclusive decision & trading strategy. Instead, it is the synergy of multiple steps AND multiple signals or events (within some of those steps) that ultimately leads to a firm decision and resulting trading strategy.

Principles (Foundation of All Successful Endeavors)

As in any pyramid, the bedrock layers must be strong, solid and spread wider than those at the top. It is the foundation from which the entire trading edifice rises. In another perspective, that bottom layer is the core around which everything else surrounds. In trading, this begins with the foundational principles of any successful endeavor. One of the most important is that which was already referenced in the preceding paragraph - Synergy. The whole is greater than the sum of its parts. A cord of three strands is not easily broken.

Do NOT, however, confuse principles with platitudes. This is not referring to those ‘feel good’ - often pithy - sayings about trading or life in general. It does not refer to positive mental attitude or self-esteem psychology. Instead, it refers to time-tested, historically-proven principles that ultimately yield success in business as well as in trading/investing. Several of these can be found in the Axioms of Trading, contained in Eric Hadik’s Tech Tip Reference Library.

Money Management & Proper Risk Control

Ultimately, trading is a business… or at least it should be treated that way. If you are in it for the thrill of the chase and love to treat trading like a lottery or roulette wheel, we cannot help you. INSIIDE Track Trading approaches trading as a business and a long-term one at that. With that in mind, one of the most important factors is that of risk control & proper money management. This can take on several forms…

One of those involves ‘risk points’* or ‘stop losses’* on any trade. While these risk points* do not have to be placed in the market, a trader needs to recognize - right from the outset - where their decision would be considered wrong if a market turns against them. This is where technical analysis outshines a fundamental analysis approach, since it should provide clearly defined levels where a signal is negated or where a perceived trend is reversed.

Another aspect of proper money management involves the amount risked* (proportionate to entire account or amount of risk capital) on any given trade or trade campaign. INSIIDE Track Trading takes a fairly conservative approach, believing that risking* 3--5% of risk capital - on a particular trade - should be the maximum. That allows plenty of room for the inevitable drawdown or series of losing trades (and, yes, there will be losing trades!).

[*All of these references to ‘risk’ or ‘risk points’ involve the perceived risk going into a trade. If a trader enters a long position in market ‘A’ at 100 and concludes his/her risk point is at 95, there is no guarantee that an order to exit at 95 will be filled at 95. However, for these discussions, that risk point - at 95 - is the focus. Trading involves substantial risk and fast or illiquid markets can greatly magnify the actual risk or loss in a trade… which is another reason that only small percentages of overall risk capital should be committed to individual trades or campaigns.]

Cycles/Timing (Timing is Everything!)

While the two primary foundational levels of this pyramid involve the business aspects of trading, the remaining tiers shift the focus to actual market analysis & trading. Here again, it begins with the broader components and steadily narrows the focus to the most specific. And this is where cycles - and other forms of market timing - come into play.

It might surprise readers to see that there are still 4 additional layers above/beyond Cycles. While many of the discussions, articles & interviews on this site (and related sites like www.40YearCycle.com) are primarily based on cycles, that is ONLY a starting point when it comes to trading. Cycles provide the backdrop or foundation (a higher-level of foundation) for all of the ensuing aspects of trading. They provide the ‘when’ for anticipated market action and/or reversals.

Timing is Everything! … but you still need to know what you are timing. It might be easy to identify when is a good or necessary time to buy a house, but that is only the starting point. A buyer then needs to pinpoint the general location, then a specific location, then the desired property & related specifications, and then the actual target house. Even then, there is still the aspect of price that needs to be dealt with.

Similarly, cycles start the process… but there is a LOT more that follows.

Structure (Waves, Trends)

Whereas ‘Cycles’ identify the when of trading, ‘Structure’ begins to identify the where of trading. This does not necessarily imply the where of a specific price level (that will come next)… but rather the ‘where’ within an overall trend or wave structure. A market has to be at the right position in a trend - primed to reverse or to accelerate in that trend - before a corresponding trade is advisable.

This is a key way of determining if a (previous) trend has fully matured or if a base (or top) has fully traced out and is ‘ripe’ for a big and sustained move. There are several ways of recognizing this, including a working knowledge of Elliott Wave. There are also key indicators - in our arsenal - that helped distinguish this.

Resistance/Support

Once the timing and the structure are mature - and positioned for the anticipated move (a reversal, a breakout, an accelerated trend, etc. - depending on the indicators used and trading strategy employed) - then price takes center stage.

In a general sense, price plays three critical roles:

  • 1 - Determines where related tops & bottoms are more likely (resistance/support).
  • 2 - Creates the corresponding entry (and ultimately, exit) signals (trigger signals).
  • 3 - Validates & reinforces those original signals (confirm, confirm, confirm!).

Here again, the specifics of each of these depends on the strategy being employed. Some traders prefer to pick bottoms & tops. There are some benefits to that, but also some serious drawbacks (see Eric Hadik’s Tech Tip Reference Library for a more expansive discussion).

Other traders like to trade breakouts - when a market has violated an established trading range and typically accelerates in a new or reenergized trend. Here again, one needs to understand the pros and cons to see if this style of trading is most suited to their mindset, risk tolerance and overall trading acumen.

While INSIIDE Track Trading integrates both of these approaches, the majority of trading strategies (system trades) are based on a third approach that combines the stronger points of each of these preceding ones… while trying to cull out some of their respective drawbacks. This approach could best be described as STTW ‘Seeking the Third (‘3’) Wave’.

That approach combines more subjective analyses - including Cycles, Elliott Wave & Gann - while honing them with more objective indicators, in a search for the most dynamic move in each trend. That is the wave in which a market will move the fastest & farthest… in the least amount of time.

Trigger Signals

Once a market has fulfilled - or begun to fulfill - the timing & structure for a new trading opportunity, and is testing AND holding corroborating support or resistance, a trigger signal must be activated in order to validate - or bring to fruition - what appears*** to be developing.

[***After 30+ years of intimate involvement with the markets, one thing is certain - ‘looks can be deceiving’. That is why various forms of subjective analysis - like Elliott Wave and even cycles - are used as a backdrop, BUT MUST BE VALIDATED AND SPECIFIED! It is also why our publications attempt to place the role of charts back into proper perspective.

It is more important to understand the numbers that go into creating a chart - just as it is more important for a doctor to understand all the components of a body, organ or blood BEFORE reading a related chart. Too many traders amuse AND deceive themselves by pulling up a chart and starting to draw an overwhelming amount of lines, channels, perceived wave structures, etc. on that chart… without truly understanding the numbers at work, in a comprehensive manner. More on that in our publications.]

One of the primary signals that INSIIDE Track uses is a 2 Close Reversal, once the daily trend (or related period, i.e. hour, week, month, etc.) pattern is in the proper position. However, there are others that have also proven themselves to be effective within specific context.

Confirm!

All signals require confirmation - the act of a market moving in the anticipated direction and either breaking through successive levels of resistance or support OR triggering additional signals, based on corresponding indicators.

Depending on the location of the initial signal (with or against larger-degree trends, early or late in developing trend, etc.), this confirmation is different. In addition, the frequency & placement of ensuing confirmation signals is determined by the type of trade being taken. In other words, a trade needs to be repeatedly & consistently ‘confirmed’ - by subsequent price action - which is also when & where trailing stops are usually adjusted (reigned in).

This is also where it is of paramount importance that a trader knows his/her objectives, level of patience & risk tolerance. These vary greatly between traders. And, the vehicle being traded (from the high-leverage extreme of futures to a less-leveraged vehicle like stocks or ETFs) is equally a critical factor.

There are many nuances of these rules that could come into play, depending on one’s objectives. Although this might appear complicated, on the surface, it becomes more simplified in practice. The primary layers - Principles & Money Management - should be internalized (once they are ascertained) and become the ground rules for every trading decision.

The secondary layers - Cycles & Structure - come into play when surveying the charts. Finally, the ultimate filter (PRICE ACTION) takes center stage and governs the final three layers (Resistance/Support, Trigger Signals, Confirmation Points). And, while that is unfolding, other markets can continually be monitored for appropriate Cycles & Structure to fall in place.


A sheet of paper lists several business transactions.

A Trading Perspective

The key to successful trading lies not in specific indicators, but rather in when, how, and where they are used. Indicators are nothing more than tools... and no single tool will accomplish every task you encounter.

You have probably encountered many approaches to trading and a plethora of indicators. Most innovations are nothing more than a twist on an old indicator. Many old indicators are also nothing new -- just a different way to describe a ubiquitous principle. This is why a master like W.D. Gann frequently quoted Solomon from almost 3,000 years prior: "There is nothing new under the sun."

True discovery usually lies in re-discovery. Many revolutionary discoveries are made by simply ‘tweek’-ing an old invention, or approaching a problem from a different angle. There is still a great deal to be learned from some of the oldest and best-known technical price patterns... like the key-reversal.

Key Point - The basic key reversal pattern.

BasikKey.jpg (2785 bytes)

Some readers may be convinced that a key-reversal is an over-rated and unreliable price pattern. In its original state, and by itself, this may be true. More likely, however, is that traders expect too much from this signal, have no means of filtering it, and do not understand when its application is complete.

This is what is explained in the following 3 examples of my Tech Tips. This is just one of nearly two dozen examples of how useless indicators have received a breath of new life into them or how over 25 years of trading and research spurred the development of new tools. But back to the example of key reversals…

key-reversal is any price tick which contains a new high (above the previous tick’s high) and lower close... or a new low and higher close (see illustration) [NOTE: For the purpose of the remaining discussion, a down-ward daily reversal from a prevailing uptrend -- a new daily high and lower close -- will be assumed in all examples. The principles discussed apply to all reversals, and all time frames, whether up or down.]

key-reversal is not intended to signal a major turning point. It only indicates that short-term momentum has changed. If it is not quickly confirmed, a key reversal becomes powerless! A key-reversal does reveal some important considerations. The fact that the prevailing trend initially followed through from the previous period (causing the new high or low), but then was able to reverse and close in the opposite direction -- says something significant about the prevailing sentiment.

The question is how long will this new sentiment dominate? This question begins to address the biggest problem that most traders have with indicators... overrating their effectiveness and applicability. The secret to consistent profits lies in knowing when to use (or when not to use) an indicator -- and for how long

Based on 25+ years of experience and observation, it has become obvious that most reversal patterns are only applicable for the next 1-3 periods.

If the pattern in question is a daily key reversal, it should have an impact for the ensuing 1-3 days... and no more. If the pattern is a weekly key reversal, it is applicable for the following 1-3 weeks... and no more.

This does not mean that the new trend (spurred by the key reversal) will terminate after three periods. Nor does it mean that a key reversal can not occur at a major top or bottom. What it does mean is that a secondary indicator must confirm by the end of that period -- in order to prolong the current move. If this occurs, then the new signal will spur an additional 1-3 periods of movement, or more.

Trading any given trend is like a road trip which begins in familiar territory with frequent stops and starts. As the trip (trend) progresses, the goal is to get to the freeway (main trend) and experience some ‘clear-sailing’. Ultimately, the freeway/main trend is exited and the stops and starts begin again until the final destiny (major top or bottom) is reached.

In the same way that a driver does not assume that every turn in city traffic is going to lead to clear sailing, a trader should not assume that every reversal is the final high or low. Only two (out of literally dozens, or even hundreds) can be THE top and THE bottom.

What does this mean? It should demonstrate how and where reversal patterns fit into an overall trading strategy... and into an overall trend. They are not indicators of the overall trend, whether or not it is a new or existing trend. They are indicative of very small trends within a larger period of consolidation. Eventually, one of these will place you on the on-ramp to a break-away move... but only one!

So, do not trade a key reversal (in any of the following forms) as if it is the main trend... and do not drive on city streets as if they are the freeway. Harsh monetary penalties are reserved for both of these infractions. With that groundwork laid, it is time to discuss the three most effective types of key reversals. They are:

  1. Double-Key Reversal
  2. Turn-Key Reversal
  3. 2-Close Reversal

An hourglass sits on a rock on the beach in front of a golden sunset over the water.

40-Year Cycle

2013–2016 Sets the Stage for 2017–2021, a Momentous Convergence of Long-Term Cycles… including 17-Year, 40-Year, 70-Year, 100-Year & 200-Year Cycles!

One of the most consistent is the 40-Year Cycle.  Stocks, Bonds, Gold & Dollar Bubbles & Crashes; Inflation & Deflation; Climate Change (Droughts, Floods, Freezes, etc.); Earthquakes & Volcanoes; War & Peace; (National) Profit & Loss… They ALL swing in tandem with the 40-Year Cycle!

Thank you for visiting 40YearCycle.com… 

For the past 3 decades, much has been written (in our publications) about this impending period in history – beginning in 2011–2013, transitioning in 2014–2017 and expected to accelerate in 2018–2021.  It is the culmination and convergence of dozens of momentous cycles – many of which are leading to similar conclusions.

As detailed since 1999, the year of 2011 represented a kind of initial culmination – when inflationary pressures (reflected in commodities, gold, silver, copper, etc.), geopolitical tensions (particularly in the Middle East), and even earth disturbance cycles (earthquakes, volcanoes, tsunamis, etc.) would complete an initial crescendo – accelerating into diverse peaks in 2011 – even as stocks and the U.S. Dollar exited bearish cycles and could see some surprise advances into the second half of the 2010’s.

A Dramatic Climate Change

Those factors are expected to usher in a double-whammy of ‘Climate Change’.  One involves a serious change of climate in investing (paper vs. hard assets, etc.) while the other involves the kind of natural climate change that has occurred at 40-year intervals for hundreds of years.

A perfect example involves U.S. drought in the 1850’s & 1890’s, droughts & crop failures in the mid-1890’s, the mid-1930’s (Dust Bowl, etc.) and the mid-1970’s (California drought, freezes & heat waves, etc.)… all of which factor into expectations for the late-2010’s.  [These prior periods also included devastating droughts/famines in China, Australia, India, UK and other nations.  In most cases, the ‘7’ year is when trouble began to accelerate… AKA ‘when the stuff hits the fan’.]

However, another form of climate change – brought about by volcanic eruptions – has also adhered to the 40-Year Cycle.  And 2015–2019 represents the next phase of that 40-Year Cycle – which includes events like the 1815 eruption of Tambora and the ensuing ‘Year Without a Summer’ in 1816.  Volcanic activity is expected to enter a more volatile period in 2014/2015… and then intensify in 2017–2019.

‘Climate Change’ takes many forms and is expected to take on a very ‘ugly form’ in a few years – beginning in/around 2015–2017.

Gold, Dollar & Stock Swings to Accelerate

As also detailed throughout the 2000’s, that 2011 crescendo was expected to simply time the first of a series of accelerating and ascending ‘crescendos’ – each one superseding the previous one like progressive mountain peaks that lead to the ultimate summit.

In order to better understand the purpose of this site (which ONLY represents a single cog in a much larger cyclic ‘gear’), it is important to comprehend the significance of the 40-Year Cycle and what it signifies…

For starters, the number 40 has long-since been associated with ‘testing’ or ‘preparation’.  

The Bible – and other historical documents – describe a myriad of 40-day & 40-year periods that immediately preceded a Major shift or transition (or, as the Bible sometimes describes it, a ‘judgment’).  Modern medicine corroborates that.  So, too, do ancient burial practices.

Many religious traditions – like the period of Lent – reinforce this cycle of 40 (40-day period, leading into Easter).  But, so too do natural & physical practices.  For instance, the average time for a bone to heal is approximately 40 days (‘preparation’ for returning to normal use).  40 days is considered the longest that a human can fast before the body begins to turn on itself.

Or, you can go all the way back to the ancient Egyptians and discover that they embalmed their dead for 40 days before burial (another form of ‘preparation’).  Hasn’t the world marveled at the preservation of Egyptian mummies for centuries?

On a much larger scale, scientists have discovered that the Sun oscillates on a 40-Year Cycle – sometimes referred to as the ‘Great Conveyor Belt’.  It governs the movement & swings of sunspots & solar storms – which have an unmistakable impact on Earth, including our climate & geomagnetic swings.

Stock Market Cycles… & Gold/Dollar Cycles

A 40-day cycle is also one of the most common shorter-term cycles in the stock market.  And, a 40-Year Cycle – as I have described & documented for the past two decades – has also governed financial markets.  It is a much larger-degree manifestation of the same cycle… a higher-level evolution of that Cycle of 40.  This site describes many examples of that.

A perfect example of that took place very recently when Gold was forecast to set a Major peak in August 2011 – EXACTLY 40 years from the Nixon Shock of August 1971.  That is when the U.S. removed the ability for international holders to convert their Dollars into Gold… and when the Dollar – in terms of Gold – began a decade-long plummet that ultimately saw Gold increase over 20-fold, based on its relationship to the U.S. Dollar.

That 40-Year bull market – in Gold – culminated in August 2011!

As described leading into that time frame, I was expecting a dramatic shift in the Dollar/Gold relationship (and projecting a Major reversal down in Gold) after August 2011… just as a dramatic shift had taken place 40 years earlier.  A 40-Year Cycle was reaching fruition and ushering in a momentous transition in the relationship between Gold & the U.S. Dollar.

Guess what?

Gold rallied into August 2011.  It set its highest monthly close in August 2011.  And then Gold reversed lower in Sept. 2011.  It has declined ever since!

Cycles & Synergy & Stock Market Bubbles

Keep in mind, however, that it was NOT just the 40-Year Cycle that projected that Major top in Gold (& Silver).  Instead, it was the synergy of that 40-Year Cycle and MANY other cycles, indicators & price targets – all coming together at the same time.  (And, those cycles hold some surprising possibilities for the late-2010’s.)

Similarly, that synergy of factors projected a sharp decline – in Gold & Silver – into late-2013 and ultimately into late-2015.  And, it projects the culmination of a 40-Year Cycle of ‘Stock-flation’ in late-2014/early-2015 (40 years from when an inflationary advance in equity prices began – in late-1974/early-1975) – after which a multi-year topping process should unfold.  That immediately precedes a potentially volatile period in 2015–2016 – until related cycles (like the 17-Year Cycle) begin to turn bearish in 2017.

There are other applications of the 40-Year Cycle that reveal some VERY intriguing possibilities for Gold, Silver & the U.S. Dollar – between late-2015 and late-2018.  2016 is projected to be ‘The Golden Year’, when Gold & Silver are forecast to see a 3–6 month advance that signals the start (early phase) of a new multi-year advance.

Following that, a 40-Year Cycle finale (with respect to the Gold/Dollar relationship) will come into play in 2020/2021 – 40 years from the Gold & Silver peaks of 1980.  However, there are likely to be some confounding surprises at the culmination of BOTH of those cycles (leading into late-2018 and leading into 2021) – when much larger, overarching cycles take precedence.  Gold-bugs AND fiat aficionados could both be shocked!  

Earthquakes & Market Quakes; Climate Change & Revolution

There is a lot more to this discussion.  For example, earthquake cycles projected similar upheaval – first in 2010 & 2011 and then in 2017–2021.  Volcano cycles concur!  So do Solar Cycles – that possess an intriguing correlation to the 40-Year Cycle.  …And many related topics.

And, as detailed throughout this site, the 40-Year Cycle has had a dramatic impact on the development and evolution of nations (like America) & empires…

The period of 1773-1781 (Tea Act to Revolutionary WarContinental currency, etc.), 1813–1821 (Battle over 2nd Bank of United StatesPanic of 1819), 1853–1861 (Silver & Gold suspension, Panic of 1857Civil War), 1893–1901 (Billion Dollar Congress, Gold Standard battle, Panic of 1893, Depression), 1933–1941 (Gold & Silver banned & confiscated, 2ndcollapse of stocks, Pearl Harbor & WW II), 1973–1981 (Oil Weapon, Collapse of Bretton Woods, Dollar decoupled from Gold & Dollar crash, 1973–1974 Stock Crash, etc.) has powerfully validated this 40-Year Cycle throughout the ENTIRE life of America.

So, what does 2013–2021 – the next phase of this 40-Year Cycle – hold in store? 

Many clues have already been revealed… but many more are still to come.  And, brings us back ‘full-cycle’ to the purpose of this site – to educate, inform & enlighten investors… and to prepare them for a volatile period in 2013–2021.  2013–2017 was projected to be the ‘action’ part of this long-term cycle, while 2017–2021 is forecast to be the ‘reaction’… when the markets begin to reveal what has been developing beneath the surface (or at least out of view from the masses).  2017 is the oft-volatile transition year – when the battle should really intensify…  So, stay tuned.

And, with regard to any analysis that refers to the markets or investing, it is important to remember:

Futures Trading & Speculative Investments Do Involve Substantial Risk

2013–2021 should be a transformational period – in the markets, in our nation and in the world.  2017–2021 should be the acceleration & intensification period within this broader cycle.  I wish you the best in all your market & personal endeavors.  Thank you for your interest in our services & publications.

Gratefully,

Eric

Eric S. Hadik – President
INSIIDE Track Trading


A digital stock exchange panel lists several stocks along with related metrics.

Trading with Cycles

As this site attempts to convey, there is an undeniable cyclicality to life… and to the markets… and to the economy… and to droughts & floods… and to geopolitical struggles… and to earthquakes & volcanoes… and to manias & crashes, etc.  There is a time – and a cycle – to everything.

What does the 3rd chapter of the book of Ecclesiastes say (later popularized in 1965 by The Byrds)?  …To everything there is a season and a time

Cycles measure time.  As such, they also measure time between related events and ‘seasons’ in life.

That brings up another perfect example of cycles: Seasons… (also known as ‘climate change’ – 4 times per solar year).  The seasons of the year provide a textbook archetype of many of the larger seasons in life (fractals)… all of which are cyclical.

But that is not the point of this discussion…

Trading Cycles

Many of the visitors to this site have one primary objective – learning about trading with cycles.  With respect to that pursuit, I have some good news & some not completely good news.  First, the not completely good news:

I do not believe that trading with cycles – on their own – is a prudent approach to the markets.

In order to understand why, please see ‘Cycles Intro’.

HOWEVER… (now for the good news), there are several trading tools – that when integrated with cycle analysis – provide a more effective approach to trading/investing.  It is the synergy of these complementary approaches that enhances the use of cycles… and makes them viable.

The majority of those tools are technical (chart-based analysis) and provide much clearer and more easily defined signals and risk points for trading and investing.

Setting the Stage

In contrast, cycles provide a foundation on which to construct a successful approach to trading.  They are the backdrop.  They set the stage.

They are like viewing a Map App before a road-trip begins (or just viewing a map or road atlas, for those not fully in the digital/tech age).  The approximate timing & distance are identified – often with great precision – but the specific nuances, landmarks, detours, freeway entries & exits, etc. are not recognized until the ‘driving directions’ part of the app is activated and the driving has begun.

Although a user might not see it, that is when a host of other indicators kick in – attempting to pinpoint every twist & turn in a journey (or trend)… which brings me back to the focus on technical analysis…

There are many specific tools that can be used to enhance the effectiveness of cycle analysis and to take it to a practical level.  We use a proprietary combination of indicators – most of which are revealed to our subscribers – in order to achieve this goal (see Tech Tip Reference Library for specific indicators, including their calculation, illustration and implementation).

Bottom Line

Cycles are an extremely valuable tool for timing overall events… but they should be viewed as a tool, with specific uses.  Other tools are usually necessary to complete each task… and other indicators are necessary to effectively trade the markets.

In the case of my approach to trading, I use specific ‘setup’ signals, ‘trigger’ signals & ‘confirmation’ signals – in that sequence – to help validate cycles and take them to a practical level.  These are explained in various sections & pages on this site and at www.insiidetrack.com.

And, with regard to any analysis that refers to the markets or investing, it is important to remember:

   Futures Trading & Speculative Investments Do Involve Substantial Risk!


An old-fashioned roman numeral clock with the hour hand lying between 9 and 10.

Cycles Intro

In order to prevent a misunderstanding of cycles – or at least our approach to cycle analysis – it is good to start out with a quick summation of what cycles are NOT...

They are NOT perfect.

They are NOT an investment or trading strategy, in and of themselves.

They are NOT a stand-alone tool.

They are NOT the Holy Grail.

Rather, they are a foundation… a foundation on which a better understanding of our world can be based... a foundation on which a better understanding of the markets and market movement can be based... and a foundation from which a successful speculative or investment strategy can be erected.

What cycles ARE... is a measuring and projection of time assuming (as has been proven time & time again) that “history repeats itself”. However, do not expect history to repeat itself in the same fashion, at the same place, and in the same degree, as it did originally.

If it did, it would indicate that all of life is simply revolving in a circle.Instead, life (the markets, etc.) should be viewed as a spiral–constantly revolving in a circular pattern BUT never returning to exactly the same spot from which it came.It is progressing – forward & upward – even as it revolves in a type of circuit.

So, in reality, history replicates or resembles itself. It mimics or mirrors past events... but does not provide an exact repetition of those events.And since this can often occur very surreptitiously, it is critical to know WHEN to expect those replications. That is where cycles come into play.

The question is often posed: Why rely on cycles? The same could be asked of clocks & calendars: Why use them? And, the answer is the same… The reason for applying cycle analysis is to have a gauge of when certain events can be anticipated… even if the exact event is not known.In the case of market analysis, the reason for applying cycle analysis is to utilize a time-tested approach to timing shifts in mass psychology & market movement.

For those that are skeptical toward this approach, stop and think about some of the very logical reasons this is true.The most profound is human nature... and human longevity.For the last 3,000+ years, the average human life has been about 70 years. With that in mind, all one needs to recognize is how often ‘the apple doesn’t fall far from the tree’ or – when viewing the less desirable attributes in a life –'the sins of the father passed down to the son...'.

Within a family, many patterns – some more destructive than others – are repeated (replicated, but not an exact repeat) at regular intervals… usually when the offspring reach a similar age to when the offending act or behavior was first triggered by the parent(s). A similar 'cycle' occurs in societies, with mass psychology and behavior recurring at regular intervals – in ensuing generations. It is cyclical!There are many other logical reasons why cycles are a normal, natural recurring phenomenon (discussed in corresponding articles).But, their application is equally important...

Over the past two decades, this approach has been validated repeatedly with analysis published in 1999–2001 (anticipating war cycles and a 'surprise attack on America’s shores' for late-2001), in 2007 (describing the 17-Year &34-Year Cycleof market crashes that was projecting a 1-3 year/35-50% drop in stocks beginning in October 2007) and in 2009–2011 (forecasting major earthquakes in Chile, Japan & N. America for the precise periods in which they ultimately occurred).

In the past decade, cycle analysis pinpointed a Major cycle high in Gold & Silver for 2011 and a subsequent low in late-2015.   All of these cited analyses were published for thousands or tens of thousands of readers well BEFORE the fact. And all of this corroborates uncanny & unprecedented cycles coming into play in 2018 - 2021 in the markets, the Middle East & the Earth!

There is a lot more to this discussion. For now, the important thing to recognize is that an overwhelming convergence of diverse cycles – ranging from those impacting the markets & societies, geopolitics and war, gold vs. fiat currency, to those governing crop production, food crises, earth disturbances and many more esoteric realms – occurs in 2018 - 2021.

The articles & analysis on this site barely scratch the surface of all that is coming together in the next several years… and how prudent individuals can and should prepare for this.That is not to advocate a 'Chicken Little' approach, but rather to encourage the type of action that one might take if a hurricane or major snow storm were bearing down on that individual’s residence & livelihood.

Readers often take one of two approaches – either making prudent choices & preparations for what could occur (based on numerous corroborating signs & precursor events) OR sticking their head in the sand and repeating to themselves 'I don't see any potential threat down here'.The choice is up to you.In either case, this should only be viewed as a starting point. There is much, MUCH more to consider.

With that said, I sincerely thank you for visiting this site and I genuinely hope that it is educational and beneficial to you... and to your understanding of the markets and the world in which they – and we – exist. I welcome any and all constructive comments although I cannot personally respond to most of them. If they do warrant a response, someone will be sure to get back to you as soon as possible.

And, for any analysis that refers to the markets or investing, it is important to remember:

Futures Trading & Speculative Investments Do Involve Substantial Risk

I wish you the best in all your market & personal endeavors.


Hadik's Cycle Progression

Hadik’s Cycle Progression

Think of cycles as unfolding in the following 8-count explanation of Hadik’s Cycle Progression™…

  1. Low-Low (0 — (2) wave low)
  2. Low-Low ( (2) — 2 of (2) low
  3. Low-High (2 low — (3) high)
  4. High-High (3) high — (5) high)
  5. High-High (5) high — B high)
  6. High-High (B high — 2 of C high)
  7. High-Low (2 of C high — 3 of C low)
  8. Low-Low (3 of C low — 5 of C low)

At this point, the sequence begins anew (C wave = 0).

The problem that most cycle analysts and cycle programs have is that they are constantly searching ONLY the lows or ONLY the highs for a consistent cycle. The futility of this exercise forces most novice “cyclists” to give up in desperation. Cycles are a dynamic entity — they keep progressing and changing (direction–not amplitude). This disguise is what throws most cycle observers off track and forces most technicians to conclude that cycles are ambiguous, inconsistent and worthless.

This single point–and the grasping of it… or lack thereof… is the largest determinant in how traders view cycles. Those looking for a ‘static world’ scenario become quickly disillusioned with the apparent imperfect nature of cycles. Those understanding the true nature of cycles will have a much easier time grasping them… and using them effectively.

Additional details & diagrams can be found in Eric Hadik’s Tech Tip Reference Library