(June, 2002)

My viewpoint over the last many months has been and still is, that longer-term the stock market will go down, the US dollar will go down, gold will go up, excessive debt will be discounted or liquidated, and the US Treasury will continue to aggressively expand the money supply until banana trees grow in Washington DC ("..no problem, MON"). As a result of this extreme monetary growth and a depreciating US dollar, inflation will heat up to a white hot blast that will scorch the US financial system and stress-out its citizenry. ..more armchair analysis is documented and detailed in the archived files at the top of this page.

The commentary and analysis below dates from mid-2000 to mid-2001. It has some educational value for those who are interested in studying "Speed and Harmonic Research". The analysis shows the predicted topping out of the economy, the stock market and the US dollar, with their projected declines and when to expect the "bottoming out" process. Constructive feedback is always appreciated.

POSTED: MID-2001
THIS COMMENTARY AND ANALYSIS HERE WILL LIKELY STAND ON IT'S OWN INTO LATE 2002 OR INTO 2003. I WILL UPDATE FROM TIME TO TIME. THE PREMISE IS, EXTREMELY HEAVILY DEBT LEVELS IN ALL AREAS OF SOCIETY WILL LIMIT ANY ECONOMIC IMPROVEMENT UNTIL THAT EXCESSIVE DEBT IS WORKED OFF OR LIQUIDATED. ..IT'S ALWAYS BEEN THAT WAY.

This comes from previous commentaries:

The sharp deviation over the last three years between aggressive spending and weakening income, must return to a more normal relationship, ..before we can expect to return to the "growth mode". It will take time!! ..probably a couple of years, to straighten this mess out.

DEBT TO INCOME @ 100%!! ..NO WONDER PEOPLE ARE $$STRESSED OUT$$. And, Greenspan wants everybody to go out and spend, spend, spend. ..Maybe, he needs to retire.

Notice the sharp declines or the peaks to troughs in the chart below, they take about two years to complete. In the last 20 years, consumers have become uncomfortable with their installment debt relative to their disposable income when this ratio reached the upper teens. Now, with that ratio in the low 20's, we should expect at least a typical two year retrenchment in spending to bring this ratio back into the "comfort zone" of 15 to 16%.

Here is another perspective on consumer credit. It shows a cyclic pattern of building debt ..then a slowing of credit growth to generally zero growth during recessionary periods. Because of the global crisises in 1998 and Y2K fears in 1999, the U.S. money supply was expanded dramatically, which in turn, overheated the U.S. economy and stopped the decline in consumer credit growth. I think consumers are presently in a state of CREDIT EXHAUSTION!!

Outstanding consumer credit: 1970 = $1.28 trillion, 1980 = $3.49 trillion, 1990 = $7.81 trillion, 2000 = $14.1 trillion. An interesting growth pattern!! That is about $51,000.00 of debt for every man, woman, and child in America.

Personal Consumption Expenditures - Consumers started to slow their rate of spending in early 2000. The chart below shows that significant and sharp delines in spending growth usually ends in negative growth during a recession, ..this time will likely be no exception.

The length and depth of the current economic decline will be prolonged by the lack of personal savings. Consumer spending makes up two-thirds of the GDP, and as personal savings increase ..spending will decline! It will take considerable time (probably a couple of years) to re-build savings, and to return the rate of savings back to the 6 to 8% growth area.

Money supply growth since the mid-1970's has been dramanic, but it's accelerated growth since January 1995 ($3.503 trillion) to the present ($5.166 trillion) is unsustainable. This has a very inflationary potential and is a big negative for the U.S. dollar. If there is a shift towards hards assets and out of dollars, ..we would likely see extreme volitility ..which is bad for all financial markets.

Our thurst for imports the last several years has been financed by foreign money, ..which makes us vulnerable to their decision to hold US dollars, ..or to sell them! The chart below, indicates a very heavy dependance on US consumers to sustain foreign economic growth. And, with the growing retrenchment by US consumers, there will likely be a decline in global trade, ..and lessening demand for dollars, since much of the global trade is based in dollars. ..It smells like a US dollar decline is coming!

-The International Monetary Fund recently warned, "the widening of the U.S. current account deficit could shake investors faith in the economy, triggering a withdrawal of investment that could endanger global markets... financial shocks can propagate across institutions and markets in new and surprising ways."
-The Bank of International Settlement in it's 2000 Annual Report stated, "Looking further ahead, the biggest policy challenge could be coping with a sudden reversal in the fortunes of the dollar."

Central Banks currently have 77% of their official reserves in US Treasury securities, which of course, are dollar demoninated. Central Bankers can be very aggressive sellers of these securities, if they feel a need to diversify more. ..They will look out for their own country's self-interest (this occurred in the 1970's, when they reduced their US Treasury securities exposure significantly). The chart below indicates ..diversification may be on their minds!! This could be quite bearish for the US dollar ..once the flight-to-quality subsides.

commentary is coming - (06/21)

STOCKS, T-BONDS, AND THE CRB INDEX

S&P 500 (nearest futures) - (06/08) After a Spring rally the stock market is once again showing weakness. There is a minor cycle low due between 06/14/01 and 07/19/01, but the next important (50wk to 60wk) cycle low is not due until 12/06/01 to 02/14/02. The major (4.0yr to 4.5yr) cycle low is projected for 10/07/02 to 04/07/03, and it's this low, that will likely anticipate the next economic upturn. Currently, the stock market has a very limited upside potential, too much debt on all levels, declining earnings, economic uncertainty, share overvaluations, excess oversupply of new issues, burnt investors sidelined, ..and the beat goes on! Downward economic momentum is continuing. The S & P 500 has breaken down through its longer-term uptrend line off the 1995 lows. April 2001 lows have broken down through previous longer-term cycle lows ..indicating we in a major bear market! The Feds have given the patient all the treatments ..but to no avail. I think we're on our way to 923 to 986, hopefully it will take a while (6mo to 12mo?).

S & P 500 Daily Continuation Chart - (06/19) The S & P 500 is moving closer to the retracement window based on the 1998-2000 bull run (see the spreadsheet below for details). I think before bear market is completed the S&P 500 will have to correct from the 1994 low to the 2000 high by moving into the 968 area in the winter of 2002.

S P 500 Longer-Term Retracement Model - (04/18)

The Decade Pattern of Stock Prices
This chart comes from bubblebucks.com. If you include the price action of the 1990's, the pattern was repeated once again. Project this pattern into the decade of 2000 to 2010, and it would indicate stock prices should decline into 2002 and remain weak into 2003. Also, I recall reading that the year a new President takes office, the stock market is usually weak, and in the second year in office, it reaches it's weakest point. That tends to support the decade pattern below.

Average Capital Gains to Dow by Calendar Year 1910-1989
This graph comes from bubblebucks.com. The 1990's are not included ..although it would seem to be a similar pattern.
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Armchair Economic Commentary updated - (06/08)
The key to the current economic slow-down is too much debt ..personal, ..corporate, ..and government. In the past, it has taken about 18 to 24 months to bring debt levels down to more comfortable levels (perhaps by late 2002). The decennial (decade) chart above, also points to a low in the stock market during a simlar time frame ..the mid-2002 to mid-2003. The "Presidential Election" pattern indicates an economic low during the second year of a new president's term (mid-2002). The important 4 year to 4.5 year stock market cycle last bottomed 10/08/98, it is next due to bottom between 10/07/02 and 04/07/03. A complete retracement of the S&P 500 index move from 1998 to 2000 would bring the S&P 500 index down to 923.32 on 07/27/02 (equal delta target) ..986.48 is a 50% retracement of the 1994 to 2000 bull run and 07/30/02 is a 33.3% retracement date of that model (33.3% in price = 1168.05). To bring price-to-earnings ratios back down to historical standards the Nasdaq would need to be at about 1200, the S&P 500 at about 800, and the Dow at 7,000. My best feel for this, ..is a low in stock prices and public confidence in the November/(congressional elections)/December 2002 period. Riding the back of this public pessimism, the US Dollar Index could decline sharply, reaching a low between November 2002 and March 2003, ..perhaps in the 92.00 to 96.00 price area ..maybe lower.

The markets are now being driven by fear of loss. ...Cash is king! As always, the opportunities lay at our feet ..it's our job ..to step back and to see what they are telling us to do.

Bridge Commodity Index (CRB) (Cash Index) - (03/16) There are seventeen commodities which are components of the CRB Index, the sub groups are weighed as follows: grains 17.56%, meats 11.76%, softs 29.41%, metals 23.53%, and energy 17.65%. Look at the strong uptrend in the CRB chart below, from late February into mid May. In most years, there is bottoming price action or uptrends in these sub groups. This year is different!! The stock market fears and the flight-to-quality into the US dollar is forcing liquidation in export and industrial commodities.

Bridge Commodity Index (CRB) (nearest futures) - (03/16)

30 year Treasury Bonds (June futures) - (03/16) The pick-up in demand for borrowing starts taking hold by the end of February. As you can see by the chart below, T-Bond prices (the inverse of bond yields) start trending lower into the mid May period. This year with the Federal Reserve forcing interest rates lower ..the topping out of June T-Bond prices will probably be deferred into April/May (?). Let a top develop first ..before thinking of shorting it.

30yr. Treasury Bonds (nearest futures) - (04/10) It looks like T-bonds will sell-off to the 1/2X momentum line in the area of 100.00, then probably consolidate. The next hard sell-off in the stock market, perhaps in a few weeks, will probably turn the T-bonds back up. The double top is obvious and could portend a somewhat deeper break (97.00). The next important date for a potential turn period is 05/02/01.

...You can contact Hal Swanson at 1-800-652-2367 or halswanson@yahoo.com ..if you have questions.

Updated 12/08/00
The markets are in a liquidating mode ..and the intensity of the declines are increasing. On top of politicial uncertainty ..there is growing economic weakness ..and the mood of the U.S. public is turning more negative. It will take some time to repair the damage being done. By all measurements and social patterns that I follow, it will probably take 24 to 36 months (excessive debt must be buried) for a guarded, but better confidence level to return to the markets ..and to begin the slow process of re-building both the credit and equity markets.
The length and depth of the recession will, as always, depend on decisions made by the Federal Reserve and our Washington leadership. (side note) I remember when Ronald Reagan was elected President in November 1980 ..the Commodity Research Bureau Index made its historic high on November 20, 1980 and never looked back. A President in control is vital for healthy markets. ..Keep praying for strong cabinet choices ..it seems to be working. ..Our foes will test us!

Wall Street with its bloated overhead, is talking up a stock market rally after the election mess is resolved. The Treasury, Federal Reserve, and the President in waiting, all want the U.S. dollar to remain strong ..I expect a heavy public relations effort to re-inflate stocks and the dollar. An extended secondary rally (when it occurs) will set-up an excellent sell opportunity for both markets. As the dollar experiences a cyclic downturn, we should see global demand for U.S. commodities improve ..and higher prices on all those cheap items we enjoy from overseas.

NY Gold (June 30 minute bars) - (05/28/02)

NY Gold (June 30 minute bars) - (05/22/02)

NY Silver (Daily continuation) - (05/29/02)

NY Silver (Weekly continuation) - (05/30/02)

US Dollar Index (June daily) - (05/22/02)

NY Sugar #11 (July 30 minute bars) - (05/20/02)

NY CRUDE OIL (daily continuation) - (05/14/02) The market is moving towards the retracement window ..watch the 28.72 area (29.70 to 30.00 basis June) for potentially strong resistance to develop. Seasonal top is coming.

SWISS FRANC (June daily) - (05/14/02) Look for a correction in the area of .6120 (05/21/02) to .6062 (05/27/02). High oil prices and the recovering US stock market are negatives for the Euro/Swiss franc. This could change towards the end of the May/early June.

SWISS FRANC (daily continuation) - (05/14/02) Longer-term, the major up-turn seems established. Look for support around the .6105 area ..for an area to buy into.

NY SUGAR #11 (daily continuation) - (05/14/02) The bottom appears in place, support is at 5.65 and the next upside objective is 6.47 on 06-17-02 (25%) ..then 7.02 on 07/09/02 (33.3%). Add to longs on breaks into support.

S & P 500 (daily continuation) - (05/13/02) Watch the following resistance areas on the way up, 1078.42 (25%), 1089.33 (33.3%), 1095.76 (38.2%), the retracement window is 1111.26 (05/30/02) to 1126.76 (06/03/02), and major resistance at 1144.21. Expect to hear more about the stock market looking for a recovery 6 months to a year out. The mutual funds will buy it ..then, it will turn lower again.

NY UNLEADED GASOLINE (daily continuation) - (05/09/02) Today is an important cycle turning date (+/- one day) where unleaded gas could turn up on this negative looking chart or accelerate to the downside, ..we'll find out shortly! Crude oil had a big up day yesterday and that could be enough to turn unleaded gas higher back to the 85.15 area.

NY CRUDE OIL (daily continuation) - (05/09/02) Crude Oil is moving towards the retracement window, the price action could become more volitile ..with a chance of moving to the 28.72 area, ..the next key price and date is 26.50 on 05/17/02 (50%).

US DOLLAR INDEX (daily continuation) - (05/08/02)

US DOLLAR INDEX (June daily) - (05/08/02)

S & P 500 (daily continuation) - (05/06/02) The market is heading down ..back ..towards it's longer-term down trend "speed" line. Still very negative, I expect to see 1002 to be hit around 05/15/02. (05/13/02) A sharp counter-seasonal rally is turning the market back up. Watch for major resistance at 1144.21 on 06/03/02 "if" it gets up there.

NY CRUDE OIL (daily continuation) - (05/06/02) Crude oil is moving towards the longer-term retracement window ..the next important date and time is 26.50 05/17/02. Watch for a change in price patterns as it moves into the retracement window. Seasonally, crude oil is beginning to move into a topping area.

NY GOLD (daily continuation) - (05/06/02) Gold is attempting to accelerate to the upside. The upside objective is in the area of 324.50 to 330.20.

NY GOLD (daily continuation) - (05/06/02) Watch 05/10/02 there could be resistance and price consolidation then.

AUSTRALIAN DOLLAR (June daily) - (05/02/02) Here is a low risk entry ..a (hopefully) short-term reaction ..creating a short-term buy opportunity. It's bouncing off the channel support line.

NY SUGAR #11 (July daily) - (05/02/02) A major turn may be underway, ..there is a convergence of moving averages, an obvious double bottom, and a loss of downward momentum. I bought it ..and continue to buy the October 6 cent calls. A weaker US dollar should bring buying into the US ..and be supportive.

NASDAQ FUTURES (daily continuation) - (05/02/02) The Nasdaq still looks sick ..look for support/volatility in the area of 1173.67 area ..the ideal swing objective date is 05/22/02. An intermediate/major low may occur there, ..this would be a counter-seasonal bottom.

US DOLLAR INDEX (daily continuation) - (04/29/02) The Dollar Index has now moved into a likely intermediate support area ..I expect some sideways movement and/or upward reaction before heading lower again. It looks like a major dollar top is behind us. A potential intermediate low could come on 05/07/02 ..it's had good timing for cycle turns in the past.

SWISS FRANC (weekly continuation) - (04/29/02) A major low is in place for the Swiss franc, and the weekly chart indicates the next objective is .6385 (01/24/03) 25%. Longer-term, the retracement window projects .7270 (08/20/04) 50% to .7687 (05/13/05) 61.8% as the major target area.

NY UNLEADED GASOLINE (daily continuation) - (04/26/02) The price is now in the retracement window. The next important prices and times are .8517 (04/30/02) 61.8%, .8777 (05/09/02) 66.6%, ..and, if all hell breaks loose, then 1.0595 (07/23/02) 100%. The market is still in a very bullish mode, ..wait for a top to form ..trade from the long side until then! The stock market is putting us into a recessionary mode ..not good for longer-term energy prices. Good luck to all of us!

NY GOLD (daily continuation) - (04/22/02) It should be an interesting week for gold. The upside swing objective is 324.40 on ideally 05/17/02, ..with the next resistance at 311.40. If the gold market sells off here, then support comes in at 292.80, and 284.10. I think it's going higher with a weaker US dollar, ..it should be interesting.

NY SILVER (daily continuation) - (04/22/02) This market is losing upside momentum and needs to come alive again. I am running out patience, it needs to move up soon (a day or two)! Upside resistance is at 4.66, then 4.75, with an ideal upward objective of 4.98 (50%) to 5.21 (61.8). Downside support comes in at 4.50, then 4.40 and 4.26. In a perceived inflationary environment silver trades like a precious metal, ..in a perceived recessionary environment silver is just a base metal. Which do you think? I'm still holding December silver 4.75 & 5.00 options.

S & P 500 (daily continuation) - (04/10/02) This chart has several negative characteristics and appears headed lower. I'm only a seller.

Bridge Commodity Index (CRB) (weekly continuation) - (03/01/02) "Move'n on up"! The CRB Index is now starting to move up through important moving averages, ..a major bottom in place? ..I think so.
The major 30 year generational cycle low in the Commodity Research Bureau Index has likely bottomed on October 24, 2001. The previous cycle low occurred on October 08, 1971. If this is true, then we are likely to see a low momentum rise that accelerates into a "blow-off" type high into 2004/05. The turmoil in the US dollar, rising inflationary expectations, global weather concerns, and finally a loss of public confidence, were the major fundamentals for the rise in commodity prices during the 1970's ..a similar pattern could be slowly emerging now. A US dollar decline will be the first sign of this generational cycle turning higher!!

A potential for a major "crisis of confidence" is on the horizon, ..while the optimists are trying to push up daisys into the springtime. The usual seasonal expansion of the economy is underway, some inventory re-building is occurring with rising interest rates riding on it's back (a drop-off in real estate re-financing is also expected). We are beginning to see the fall-out of a grossly over-leveraged economy, ..with the sad corporate and consumer tales only now surfacing. The financial disaster at Enron, Global Crossing, K-Mart and the "funny numbers" coming out of other companies will continue to drop public confidence in owning stocks. The emerging stock market rally should be used to lighten up on stock positions ..if you own them!

The Yield Curve A Year Forward vs GDP Growth - This is one of the best leading indicators to anticipating economic change. It shows a bottoming out of the GDP in the last quarter of 2001. How strong will the recovery be? It's depends on balance sheets ..which don't look good!

The long anticipated economic recovery will probably be very weak, ..with consumers debt at record highs and personal savings at record lows, ..who can afford the "malls"? What creates a "real" recovery is a period of 18 to 36 months of austerity!!! A time when debt levels are paid down, ..and the demand for goods and services is building up.
Sorry, but there is no free lunch, we are going into a period of belt-tightening, so dig out the pasta and put away the steak knifes (or work smarter). No dubious scheme(s) can change this process (it's like the law of gravity) the excesses must be worked off with time. This is a long-term cycle of optimism to pessimism, which turns rather slowly, ..it will probably take a few years ..before optimism is again the dominate public mood.

The Whitehouse is now projecting a 2002 deficit of $106 billion, a remarkable revision from the year ago estimate for a surplus of $231 billion. Perhaps, we should have public hearings on government accounting practices.

Government Spending - Increased govenment spending will likely start pushing interest rates higher. ..And, that gorilla has a growing appetite!! ..Guns & Butter.

The "topping out" in the U.S. dollar is in the works. Japan needs alot of cash to avoid a banking collapse, and will likely turn sellers of their US treasury securities as 2002 progresses (February 12, 1973, Japan went off fixed exchange rates and broke the back of the Bretton Woods agreement ..I was long Japanese yen that day). Also, the other major negative fundamentals for the US dollar are: a huge trade deficit with US dependance on foreign investors, over-indebted US consumers with little personal savings, weak corporate balance sheets, over-valued P/E's and narrow profit margins, and a trade weighted US dollar so expensive, that it has put US manufacturing into a severe recession. I expect to see a major cyclical down turn in the US dollar starting between now and springtime. It could have a downside profit potential of $10,000 to $20,000 per contract over the next 12 months on a risk of couple of thousand invested. The current precious metals rally could be anticipating this.

US DOLLAR INDEX (daily continuation) - (04/10/02) The dollar looks set-up for the next leg down. Support comes in at 116.38 (61.8%), then 115.28 (50%). The next important date coming up is 05/07/02. I'm only a seller.

NY CRUDE OIL (daily continuation) - (04/10/02) Crude oil topped out exactly on it's cycle turning date (04/04/02). The sharp decline that is now occurring should find support in the area of 24.25 to24.75 with a possible extreme decline to 23.37. I am looking for a buy opportunity ..but need some sort of support first. Seasonally, there should be one more strong rally into at least mid-May.

NY CRUDE OIL (May daily) - (04/10/02) Crude oil is dropping at 4 times the speed of the last uptrend, at that velocity the next target is 23.78 on 04/12/02. I'm looking for support in that area.

NY UNLEADED GASOLINE (daily continuation) - (04/10/02)

NY GOLD (daily continuation) - (04/10/02)

NY Crude Oil (daily continuation) - (04/03/02) Tomorrow is an important date look for potential topping action, the price has now moved into the natural upward retracement price area. For more detailed analysis look at the 03/18/02 chart below.

NY Crude Oil (daily continuation) - (03/18/02) The projected upside retracement window is 26.45 (05/17/02) to 28.66 (06/27/02), notice the series of price swings on the left side of the chart, ..I think we'll see the same kind of swings on the right side too. There is also some resistance at 26.13 and a "filling the gap" in that area.

NY Unleaded Gasoline (daily continuation) - (04/04/02) Today was an important cyclic turning point in unleaded gas, ..and, it has now moved into the retracement window. Look for support in the area of .7862 with a probable pocket of stops below .7770, which could be a wash-out low into mid-April. I'm looking for wide choppy price action with resistance against recent highs (.8670 & .8685). The next important time frames will be 04/30/02, then 05/09/02 (which could fit into a seasonal high). I only am trading energies from the long side, ..madness in the Middle East keeps me from shorting it!

Chicago Soybeans (July daily) - (03/18/02) A possible short-term high is in place. I am looking for support in the area of 4.48 to 4.54, once a small base develops I'd be a buyer.

The Australian dollar looks like a long-term buy. I have started to buy June Aussie dollars at .5175, stop at .5120 risking $550 plus com. + fees. The near-term objective is .5600 ($5312.50 per contract).

NY Gold (daily continuation) - (03/09/02)

I like the recent price action in silver, ..And, at $4.50 per oz. silver is simply just dirt cheap!

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US Dollar Index - (03/07/02) Looks like a major top is in place ..at the very least a significant correction.

US Dollar Index (daily continuation) - (02/21/02) The price action is finding some support in the current area. Shorter-term swing measurement projects an objective of 122.88 on 03/19/02, and the intermediate-term trending model, which has lost upward momentum, projects an objective of 125.09 on 03/21/02. A long-term important date is 03/11/03 (61.8%). Watch for a close below 118.30, then 118.00, to signal a major price breakdown.

EuroCurrency (daily continuation) - (02/21/02) The EuroFx is starting turn lower ..if it follows the projected swing measurement, then the downside objective would be .8469 on 03/11/02. I am not shorting it. Wait to buy.

Swiss Franc (weekly continuation) - (02/19/02) I am currently long (bought) .6100 March calls ..a lack of liquidity keeps me from going further out to June. Buying silver and gold is also a play against the US dollar.

NY Silver (weekly continuation) - (02/19/02) The low that occurred on November 23,2001 at 4.015 was probably the major 30 and 60 year cycle low in silver!! The previous 30 year low was on November 03, 1971, and the 60 year low was on November 27, 1941. These are generational cycles which could signal a slow shift out of paper assets and the U.S. Dollar into more tangible assets. On the chart below, we can see that silver had a 4X AV rise (red line) off the November 23, 2001 low ..this is an important footprint in my retracement model, which usually signals a change in direction. Also, the downward sell-off from this early rally stopped exactly on the 1X AV line, which, adds validity to the model. The upside objective is 5.756 (10/10/03) to 6.167 (03/19/04), this tends to mirror the pattern in the CRB Index. There is also, a very real possibility of hitting 5.756 on 11/02/02 (2X Average Velocity). I am buying December 5.00 silver calls aggressively!!

NY Silver (December daily) - (02/19/02) The upward momentum is quite strong and is well above the average velocity of the last trending move, the next important test is to stay above 4.57 on 02/21/02 (support is at 4.47) ..if it does, then the next objective is at 4.73 on 03/04/02, and then, the final objective is 4.88 on 03/13/02 for this swing move target.

NY Gold (daily continuation) - (02/19/02) Looks a little overbought ..this will be a good test of support. Sideways price action would be positive here, ..or more of a rally would work too. Silver trades better.

For those of you interested in the stock market (or have a vested interest) the link below goes to the CrossCurrents website ..I have followed them for the last few years and they offer the strongest stock market analysis on the web that I've come across. You will need to copy and paste the link into your address window.
http://www.cross-currents.net

30year US Treasury Bonds (daily continuation ) - (01/16/02) Flight-to-quality developing? A hard sell-off in the stock market could push March T-bonds to 106.21 on 01/24/02 ..or move into the "retracement window" between 105.31 (02/05/02) and 107.17 (02/12/02).

Bridge Commodity Index (CRB) (15 year seasonal) - This chart comes from Moore Research Center, Inc. (www.mrci.com). There are seventeen commodities which are components of the CRB Index, the sub groups are weighed as follows: grains 17.56%, meats 11.76%, softs 29.41%, metals 23.53%, and energy 17.65%. Look at the strong uptrend in the CRB chart below, from late February into mid May. In most years, this seasonal takes prices substantially higher ..this year appears to be no different ..so far.

Let's talk about the "February Effect". This is a pronounced sell-off that occurs seasonally primarily in grains and the energy markets. This seasonal price decline could set-up for a great buying opportunity in the deferred contracts of crude oil (and cheap bull spreads), and possibly purchases in sugar, cotton, and wheat. Also, I'm interested in the short side of summer lean hogs, and shorting feeder cattle. A declining US dollar would support exportable commodities.

Bridge Commodity Index (CRB) (Monthly) - (01/11/02)

NY Crude Oil (daily continuation) - (02/11/02)

NY Crude Oil (daily continuation) - (02/11/02)

NY Crude Oil (daily continuation) - (02/11/02)

NY Unleaded Gasoline (daily continuation) - (02/09/02)

NY Unleaded Gasoline (daily continuation) - (02/11/02)

Fact: The estimated average annual oil taxes (1996-2000) collected by "G7" governments was $270 billion. While the estimated average annual of OPEC oil revenue was $170 billion.

Feeder Cattle (April daily) - (02/11/02) Feeders are crossing down through the 1/2 average velocity line at the 61.8% upward retracement level ..looks like short to me! ..use a stop-loss at 85.40.

Feeder Cattle (April daily) - (02/26/02)

Lean Hogs (April daily) - (01/30/02)

U.S. Dollar Index (Weekly continuation) - (01/11/02) There are several observations to note on the chart below. First, the Dollar is in a very strong up-trend. Second, resistance has appeared in the 119.00 to 120.50 area over the last year. Third, over the same period, the Dollar has been losing upward momentum. Fourth, a potential "head-and-shoulder" price pattern could be forming, ..which means a major cyclic down turn could develop. Fifth, There is a convergence of moving averages in the current area, which often occurs just before a significant move takes place (up or down). I'm talking myself into shorting it!

U.S. Dollar Index (Daily continuation) - (01-26-02) This chart below is a longer-term swing measurement of the dollar index with it's associated harmonics. An upward break-out occured this week, ..and the Dollar has returned to the projected path (1X AV LINE) on the longer-term trending model. The next significant point is 121.25 on 02-04-02 and then, the swing objective of 125.09 on 03/21/02. The most likely reversal point in the trending model is in the area of the mid-point 118.52 on 12/17/02, and this week's break-out was well above that. ..In the past 30 years, the January-February period has seen a few major reversals ..maybe topping action in 2002? ..but for now, it's heading towards the objective.

Japanese Yen (nearest futures) - (12/17/01) The yen is currently in the longer-term retracement window and at the 61.8% target of 7911 on 12/18/01. There is potential for a change in the psychology at that point. It's hard to believe it would be more positive (probably more negative "crisis"?) ..but we'll wait to see how it unfolds.

Swiss Franc (weekly continuation) - (12/12/01) It is quite possible that we are seeing the beginning of a major upturn in the Swiss franc.

A Brief Commentary - (02/28) The recessionary conditions now developing in the global economies will probably dampen some of these strong seasonal trends, ..but, markets like unleaded gasoline, crude oil, lean hogs, pork bellies, and even, soybeans and some of the soft commodities could have strong uptrends this spring. **It's important to have the price action move in the direction of the seasonal before entering the trade!! In the gold market (my love-hate relationship), it will probably take a break-out in the Swiss franc over the last swing high (.6328) to attract major investor buying to turn gold higher. Also, wait to sell June 2002 Euro-dollars (90 day bank paper) and June T-Bonds ..I'm expecting topping action between now and the end of March.

Bridge Commodity Index (CRB) (Cash Index) - (02/28) There are seventeen commodities which are components of the CRB Index, the sub groups are weighed as follows: grains 17.56%, meats 11.76%, softs 29.41%, metals 23.53%, and energy 17.65%. Look at the strong uptrend in the CRB chart below, from late February into mid May. Look for bottoming price action or uptrends in these sub groups and plan your trade. Detailed trade recommendations coming.

30 year Treasury Bonds (June futures) - (02/28) The pick-up in demand for borrowing starts taking hold by the end of February. As you can see by the chart below, T-Bond prices (the inverse of bond yields) start trending lower into the mid May period. This year with the Federal Reserve forcing interest rates lower ..the topping out of June T-Bond prices will probably be deferred into late March. It could be setting up for a great short opportunity later in the month.

Dollar Index (cash composite) - (02/28) There are tremendous cross-currents working for and against the U.S. Dollar. For the Dollar, the seasonal is clear ..it gains strength through most of the first half of the year, then declines into the October/November period. Against the Dollar, is excessive debt at all levels, over-inflated equities/real estate, a major economic slowdown, and massive trade imbalances. I think the U.S. dollar has a big fall coming ..either now or going into the third quarter. Detailed trade recommendations are coming.

S&P 500 (nearest futures) - (03/03) Market is falling on economic weakness/uncertainty and is now gaining downward momentum. Breaking through recent cycle lows wo sink investor confidence and trigger more liquidation (record outflow from funds). We are just past the following longer-term cycle lows: 102Wk. to 124 Wk.> (11/17/00 to 01/22/01), and the 50 Wk. to 60Wk.> (10-02-00 to 12/11/00). The amplitude off these cycle lows should be greater than what we have seen! It looks like we heading down to the next support area 1155 to 1173 ..on our way to 923 to 986 probably in 18 months.

Swiss Franc (nearest futures) - (02/08) Market is breaking down through the 2X momentum speedline and will likely need to consolidate in the area of .5900 (against the equal momentum line) before setting up for another potential buy. Swiss franc needs closes over .6298 to confirm next leg up. The longer-term objective is .6704 to .6991.

Swiss Franc Monthly (nearest futures) - (02/06)

Dollar Index (nearest futures) - (02/01) My guess is that foreign money is starting to trip over themselves ..trying to move money to Euroland and even Japan (it's that bad!). The Dollar index is very thin to trade ..buy the Swiss Franc the best of all worlds.

30yr. Treasury Bonds (nearest futures) - (02/01) A major move is underway ..muscled by the Federal Reserve. I expect emotionalism to carry the T-bonds to new swing highs and perhaps as high as 111.00 by the end of March. Here's a receipe (third world style) for a major top in T-bonds: a weakening US dollar, excessive debt at all levels, money supply is now being aggressively increased, and low real rate of returns, ..they're luckly I wasn't their teacher in school! Short-term trade from the long side ..to much upward momentum to short.

30yr. Treasury Bonds (nearest futures) - (02/08)The following weekly chart is another prespective on the T-bonds. Currently, the market appears to be rather range bound and I would trade it from both side. Seasonally T-bonds usually top out by mid-February.

30yr. M2 & M3 Money Supply - (02/01) As you can see by the chart below, there was massive expansions of the money supply, (1)during the Asian Crisis in 1998, (2)dark unknown Y2K trepidations in 1999, and (3) now, because consumers can't afford to go to the shopping malls. Since 1995, the total U.S. money supply increased by 50% ..but don't tell any foreign investors about it!

Consumer Confidence Index - (02/01) A couple of interesting observations ..since the mid-60's, whenever confidence dropped off sharply, it continued to decline right into a recession. And the second point is, there is no quick turn around! It takes at least a couple of years ..before there is any sustained improvement in public confidence.

Soybeans (Nearest contract) - (02/01)

Soybeans (May contract) - (02/06)

Soybean Meal (May contract) - (02/08) This is a Moore Research Trade. The details are at the "trade recommendation" link on the CFOS Research Affiliates page (buy 2/13 & sell 4/01). ..additional demand for U.S. soymeal could come from worldwide mad-cow concerns.

Chicago Wheat (Nearest contract) - (02/11) A long-term buy maybe setting up wheat during the late March to early May period. Let the market tell us. Seasonal lows usually come during the summer ..maybe this year it will be discounted early.

N.Y. Gold (Nearest contract) - (02/11)

Armchair Commentary updated - 01/15/01
Potential turnaround coming up in the S&P 500 ..I think we're in a longer-term bear market, ..but, there's been alot of bad news that has been discounted at current price levels. A significant rally could occur now and follow through over the next few weeks ..taking the S&P 500 into the area of 1410 to 1430 (in bear markets, the rallies don't go as high as most would like). This week, I'm looking at the short side of T-Bonds, EuroCurrency, and Sugar. The US dollar could start a secondary rally ..and I expect to try buying the S&P 500 ..hopefully after a re-test of recent support 1304 to 1306 (March futures). If I have any good ideas I'll add them during the week. ..sorry about the crappy gold trade ..it would have been more fun in Vegas!

The key to the current economic slow-down is too much debt ..personal, ..corporate, ..and government. In the past, it has taken about 18 to 24 months to bring debt levels down to more comfortable levels (perhaps by late 2002). The decennial (decade) chart below, also points to a low in the stock market during a simlar time frame ..the mid-2002 to mid-2003. The "Presidential Election" pattern indicates an economic low during the second year of a new president's term (mid-2002). The important 4 year to 4.5 year stock market cycle last bottomed 10/08/98, it is next due to bottom between 10/07/02 and 04/07/03. A complete retracement of the S&P 500 index move from 1998 to 2000 would bring the S&P 500 index down to 923.32 on 07/27/02 (equal delta target) ..986.48 is a 50% retracement of the 1994 to 2000 bull run and 07/30/02 is a 33.3% retracement date of that model (33.3% in price = 1168.05). My best feel for this, ..is a low in stock prices and public confidence in the November/(congressional elections)/December 2002 period. The US Dollar Index could follow a very similar path reaching a low between November 2002 and March 2003 ..perhaps in the 96.00 to 98.00 price area ..maybe lower.

Here are some significant dates ..potentially intermediate turning points, that will come up during the next 60 days or so:
S&P 500 Index - 02/22/01
CRB Index - 02/19/01
US Dollar Index - 12/29/00, 01/20/01
Swiss franc - 01/22/01
US Treasury Bonds - 03/03/01
NY Gold - 01/04/01
NY Crude Oil - 01/08/01

The markets are now being driven by fear of loss. ...Cash is king! As always, the opportunities lay at our feet ..it's our job ..to step back and to see what they are telling us to do.

...You can contact Hal Swanson at 1-800-652-2367 or halswanson@yahoo.com ..if you have questions.

Updated 12/08/00
The markets are in a liquidating mode ..and the intensity of the declines are increasing. On top of politicial uncertainty ..there is growing economic weakness ..and the mood of the U.S. public is turning more negative. It will take some time to repair the damage being done. By all measurements and social patterns that I follow, it will probably take 24 to 36 months (excessive debt must be buried) for a guarded, but better confidence level to return to the markets ..and to begin the slow process of re-building both the credit and equity markets.
The length and depth of the recession will, as always, depend on decisions made by the Federal Reserve and our Washington leadership. (side note) I remember when Ronald Reagan was elected President in November 1980 ..the Commodity Research Bureau Index made its historic high on November 20, 1980 and never looked back. A President in control is vital for healthy markets. ..Keep praying for strong cabinet choices ..it seems to be working. ..Our foes will test us!

Wall Street with its bloated overhead, is talking up a stock market rally after the election mess is resolved. The Treasury, Federal Reserve, and the President in waiting, all want the U.S. dollar to remain strong ..I expect a heavy public relations effort to re-inflate stocks and the dollar. An extended secondary rally (when it occurs) will set-up an excellent sell opportunity for both markets. As the dollar experiences a cyclic downturn, we should see global demand for U.S. commodities improve ..and higher prices on all those cheap items we enjoy from overseas.

Updated 11/22/00
The Florida Presidental mess will probably have a rippling effect that will touch all of us. It takes a high confidence level ..to make a leveraged paper world turn. Recently, public confidence has been declining, as evidenced by tighter lending requirements ..and stocks going into a steep decline. Now, whomever becomes President will govern over a divided country ..another negative expectation.
With debt levels at record highs (extremely high relative to income), ..this combination will likely translate into a slowdown in spending ..and the re-appearance of recessionary conditions. In the past, this process of reducing consumer debt to more comfortable levels has taken about 18 to 24 months.

Based on the chart analysis below, ..it appears the next 60 days may offer excellent opportunities for trading and positioning ..as the US dollar, crude oil, and T-Bonds (there goes the budget surplus) form major tops. At the same time, gold, EuroCurrency, Swiss franc, and the Australian dollar should be bottoming out.

Updated 11/14/00 The Dollar is stronger than mustard! ..and the only President the Dollar cares about ..is the one on the paper bills! ...There are growing expectations that crude oil prices could be bid up over the next two or three months (creating more demand for Dollars). What is causing this growing demand, is the current adverse weather in Europe and Northern China; in addition, OPEC is taking an increasingly hardline against raising oil output .."for what's in our best interest" (probably, an added way for the Arabs to pressure Western powers into giving concessions against Israel.) All of this is taking place while oil inventories are at the lowest levels in decades!! Take a look at the chart below titled " Crude oil ..heading towards 41.15 (01/08/01)" and the chart titled "Crude Oil ..prices correlate to 4X Mo. Speedline". The projected price target and date is a return to the 10/10/90 high of 41.15. The projected date is derived by calculating the "speed" (average velocity) from the high of 41.15 on 10/10/90 to the low of 10.75 on 12/22/98, ..then by finding which multiple of this "speed" correlates best with current and past crude oil prices ..I then, project a path toward that price/time objective. I think crude oil prices will develop a topping price formation/pattern in the general area of 41.15 and/or in the time frame of 01/08/01. ...until then, buy it on breaks and break-outs with stop-loss protection. Also, the Dollar should move higher towards it's target window in January 2001 ..buy the Dollar Index on breaks and on break-outs until the top starts forming ..use stop-loss protection ..a must! (look at those charts below). ...Hal

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