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 Cycle of 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.
21 MAC/21 MARC
Featured
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.
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.
Hadik's Cycle Progression
Featured
Think of cycles as unfolding in the following 8-count explanation of Hadik’s Cycle Progression™…
- Low-Low (0 — (2) wave low)
- Low-Low ( (2) — 2 of (2) low
- Low-High (2 low — (3) high)
- High-High (3) high — (5) high)
- High-High (5) high — B high)
- High-High (B high — 2 of C high)
- High-Low (2 of C high — 3 of C low)
- 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
2 Close Reversal
Featured
The 2 Close Reversal is a type of key reversal. The primary difference is the confirmation point provided by the second close prior.
A key reversal (Figures 1 + 2) is the most basic of reversal patterns and involves a market trading higher than the previous day’s high (intraday) and then closing below the close of the previous day OR trading below the low of the previous day’s low (intraday) and then closing above the close of the previous day.
This is such a diluted pattern that a confirmation point is necessary to validate a reversal. This is where the 2 Close Reversal comes into play.
The 2 Close Reversal (Figures 3 + 4) adheres to the same rules as the key reversal, but requires a close below both the previous day’s close and the close of 2 days prior – after trading above the previous day’s high – or above both of those closes after trading below the previous day’s low.
This pattern is important when judging the validity of an outside-day reversal. Most outside- day reversals (a high above the previous day’s high AND a low below the previous day’s low) are more significant than a plain key reversal. This gives them a higher probability factor, right from the start.
However, when a market gaps higher on the day preceding a reversal — and then provides an outside-day reversal on the ensuing day – the 2 Close Reversalbecomes very important. (Figures 5+6 show an unconfirmed outside-day reversal; Figures 7+8 show a 2 Close Reversal outside-day.)
At this point, it coincides with gap rules and true-range theories, requiring the outside-day to close below the ‘2nd Close’ prior to validate the reversal. By doing so, it closes the gap created by the day preceding the reversal. By textbook gap rules, this would invalidate that gap and remove the support thought to exist there – resulting in the reversal having a better chance of following through. (The inverse applies to a gap lower and subsequent reversal higher.)
Additional details & diagrams can be found in Eric Hadik’s Tech Tip Reference Library