charts

[hardnox]

I think this surely will pertain to ag markets although I'll need to sort out in what way.

I've shared that I try to take a look at very long term charts on a weekly basis. Last year I happened to noticed that a fairly innocuous looking move up in the DX had in fact broken out of the 30 year downtrend. That turned out to be pretty important as the 9 month dollar rally weighed heavily on most of the commodity complex.

Anyway, I can't figure how to reproduce and post this chart but if you draw an uptrend line in the SP500 under the Oct 2014 low and the initial, and failed, shot down in early Aug. of this year. That swhen it was broken a few days later a waterfall upport level takes on significance because when i gave way a few days later a waterfall decline ensued.

Bear with me, I know this is hard to describe this way but following that the market rallied sharply but, and here's the big deal, only managed a retest kiss of the failed uptrend before falling away.

For my money I'll give it a decent probability that we have a major top in place and a slightly lesser prob that we're going to see some spunkiness to the downside.

Guess would be that it might be slightly and unevenly positive commodites- it is hard to rally the buck when the US market is in the tank and a weak equity market revivies talk of no rate cut or more QE. But of course on a 100 point down day it is hard to get anything feeling too positive.

BTW, about trading. It isn't investing, it is more like counting cards in blackjack- you make a bigger bet when the odds shift to 60% in your favor and over time you win, just like the casino does on the other side. You don't put your whole pot in the pile.

[ihtractortherap]

Nox, Can you post a chart or expound on the 30 year cycle. Where are we at with grains currently within this cycle and when do you expect it to bottom??

[vrbuck]

At least for the next few years we in commodities will enjoy the wind at our backs from a crashing dollar. For my money I would expect to revisit the lows in the buck from a few years ago. A double bottom if you where. The last three years we have had the joy of working against a head wind of a rising dollar.

[hardnox]

DX was horribly overbought so getting swatted back from 100 on Thursday probably shouldn't have come as a surprise. It seems  possible that we could chop between 93 and 100 for many more months but odds favor fresh highs before its easy to call a major top. A Sideways dollar gives some room for commodity rallies.

I guess the other interesting big picture item to note is that we could be in the process of putting in a bottom on the CRB. Oil is problematic as it may go to 30 or something ridiculous but a lot of markets are starting to show a pulse- particularly softs such as cofffee, sugar, cotton. A bottom in the CRB doesn't mean that we're going back to the mid 2000s when there was a gold rush of cash into it (clear cycle top action)- it just means that the process of liquidating out that exuberance is running its course. Following that is probably a decade or so of sideways action well below the previous highs.

Fri stocks action certainly removes the likelihood of an immediate move lower but I still think it is part of a broad topping process. Da Boyz will want to book out some kind of positive gain for the year so they get their bonuses but there's a lot of heavy lifting going forward.

[hardnox]

http://community.agriculture.com/t5/Farm-Business/30-year-commodity-cycle/m-p/21161

found the above. Not too bad but it actually took 6 months to strike the high and it was a higher high. Lower high in the Jeffries CRB and I could claim that but that wasn't the index I was talking about.

Here:

http://www.sobabyboomer.com/2015/06/have-you-heard-of-the-30-year-commodity-cycle.html

I've been thinking about this a fair bit and would say that I'm not at all sure that the next 30 years will follow the script that the last 90 have but I still think you'd be foolish to totally ignore history- so far it is playing out pretty well.

Might be some huge surprises out there but if anyone thinks they got those figured out, good luck.

[hardnox]

http://www.nytimes.com/2015/12/07/opinion/the-not-so-bad-economy.html

In regards to the 2011 inflection point. It did in fact turn out to be primarily a matter of speculative flows from all the Very Smart People who Just Knew that hyperinflation was coming any day.

A part of our current malaise is just the end of the liquidation of all that built up 2002-11ish.

The last of it should be wrung out over the next few months but that doesn't mean a resumption of the broad commodity bull anytime soon. But it should be easier for individual comms to rally.

I guess one thing will be to watch for the Next Big Tout like The commodity Supercycle, BRICs etc. The lesson of which is that they will have their day but when they're done they're done.

[BA Deere]

We are in unprecedented times as far as national and public debt and you`d have to go back to WWII to find higher debt to GDP ratios.  We do have inflation, in medical care, new cars, football tickets, CEO compensation. 

There`s two Americas, those on top that make an unheard of times more than the workers in their company.  And those going behind working two service economy jobs.   What has happened is we`ve exported our inflation, the American worker wanted more of a wage and the company just flat out moved where wages and regulations are cheaper "The world is flat",  half the workers in the American based factories aren`t needed so they`re layed-off and those at the top give themselves a raise and the stock price goes up because they have a low wage expense.

The question is how long can consumers with job insecurity be expected to buy all this cheap foreign crap?  It can`t get any cheaper, Sears, JC Penny K-Mart, Wet Seal all struggling, the dumbest investment today would be in another shopping mall.

At some point, "the powers that be" will have to decide do we let money trickle into mainstreet or do we have a depression?   If they choose the latter it will be a "man made depression" because Lord knows they`ve printed and borrowed engh money that we SHOULD have all kinds of hyperinflation, it`s just those that buy Lamborghinis and Bugattis have had the bennefit of the print and spend Keynesian economy. 

People flipping burgers and stocking shelves at Wally World buy with their extra pennies whatever it is that the Kardashians are selling (haven`t yet figured out what it is that a Kardashian actually produces), but that is our economy in a nutshell.