Investing via a rear view mirror is rather easy, knowing what lies down the road becomes the real challenge for investors.
No doubt certain Commodities have moved much higher over the past year. Important portfolio issue right now..what BIG move lies around the corner? See below for a few new trends that look to be taking place and what the “Power of the Pattern” is suggesting.
CLICK ON CHART TO ENLARGE
Earlier in the week I ask what message was being sent/what does it smell like (see post here). Even though Oil is going through the roof, the “Power of the Pattern” was suggesting that it smelled like “DEFLATION” (falling prices)!
Earlier in the week I ask….”should you get your clues from Lybia or the price of copper?” (See post here)
The Power of the Pattern in the above 5-pack is suggesting that some key trends appear to be in the early stages of reversing and that lower prices appear to be in store, for a wide variety of assets! I mentioned in an earlier post today that the high yield mutual funds haven’t reflected a key reversal of their positive price trends. If they would happen to join in on the downside price action, it would confirm that a MAJOR trend change is at hand.
Thanks Chris, I appreciate you taking the time to elaborate further.
Kevin….Thanks for the post and your comments. There is only one person that is, ALWAYS RIGHT about the markets, it isn’t me for sure. It is MR. MARKET who is always right. I have over 20 years of fundamental training from Sir John Templeton, so I understand fundamentals fairly well, yet my technical decisions are based upon Mr. Market…PRICE. What I mean by “deflation” is nothing more than “falling prices.” I mentioned deflation in a few post, yet I did say that if it was to be true, it is in the very early stages. Nothing has been proven for sure along this line.
If you are correct per major inflationary forces are dead ahead and prices move higher, I will not fight the price trend! One thing I have learned in my 30 years of doing this and I have it posted on my wall…”TRADE WHAT YOU SEE, NOT WHAT YOU THINK!” This line of thinking has helped me a ton over the years. I am not a bull or a bear, just attempting to inflate portfolios regardless of market direction.
Thanks again Kevin,
Good Morning Chris, Thanks for the charts and your post.
You sound like a purely technical type of trader. Fundamentally, I’m convinced that we are on the cusp of (hyper)inflation, rather than deflation (especially as it pertains to commodities and foodstuffs). When your chart/pattern works suggests one thing, and your gut tells you the opposite, do you still enter the trade (hold your nose and buy), wait for further confirmation (larger break from trend), or skip the trade all together?
Personally, I’m one of those types predicting major inflationary forces dead ahead, and see the break of the trend as just a bump in the chart (snap-back, dip-before-the-run, whatever you want to call it)… I see the charts, plain as day, but… my gut says stuff’s about to hit the fan.
Richard…good question. Some of these lines highlighted in this post, go all the way back to the lows set over a year ago and this is the first time these lines have been taken out. IMHO, this is at least a minor issue! 2008 saw a rally in commodities, including oil then….almost all assets fell in price (deflation/falling prices in almost all asset classes) other than bonds and the dollar. This is the “deflation/falling price” theme I am concerned about and don’t want to see for all of us. It is one thing to avoid a decline or score on defense, yet if the majority of assets deflate, the macro picture really gets hurt.
We might win the “trading battle” yet could lose the macro war. We are NOT THERE now, yet a few things on a very, very short term basis are starting to smell that way.
Hi Chris, when you say major trend does that refer to any range/percentage change? I have a feeling you’ll tell me that the pattern will tell you when it’s changed again but thought I would ask. Thanks.