When summer's end is nighing

A quick re-cap of published financial cycle models

Aging bull at end of summer in front of the wall street (created by DALL-E, Source: https://labs.openai.com/s/VmnEFa4hDbpJG619aPBaZYWK )

Seasonal cyclic transition from summer to autumn – time for an update.

I love cycles in every aspect of our lives. Even though there haven't been many updates in the last few weeks, I have been busy with this topic almost every day.

The purpose of this blog is to update analysis when there is something new. I'm not going to fall into the "social blog content creator" mania of needing to post something just because everyone excpects bloggy new news. That’s why you haven’t seen any updates here for a while.

Getting Out of the Box

To open our minds to “thinking in cycles,” let's begin with a poem rich in cyclical associations.

When summer's end is nighing
  And skies at evening cloud,
I muse on change and fortune
  And all the feats I vowed
  When I was young and proud.

The weathercock at sunset
  Would lose the slanted ray,
And I would climb the beacon
  That looked to Wales away
  And saw the last of day.

From hill and cloud and heaven
  The hues of evening died;
Night welled through lane and hollow
  And hushed the countryside,
  But I had youth and pride.

And I with earth and nightfall
  In converse high would stand,
Late, till the west was ashen
  And darkness hard at hand,
  And the eye lost the land.

The year might age, and cloudy
  The lessening day might close,
But air of other summers
  Breathed from beyond the snows,
  And I had hope of those.

They came and were and are not
  And come no more anew;
And all the years and seasons
  That ever can ensue
  Must now be worse and few.

So here's an end of roaming
  On eves when autumn nighs:
The ear too fondly listens
  For summer's parting sighs,
  And then the heart replies.

AE Housman (1859-1936)
Poem untitled

The reason why I’m offering this poem is because I ended posts in June with the statement, “major cycles are expected to point to a bottom late this summer.”

Summer's end is nighing … and now?

Market (rallies) are aging – the bulls are aging.

Why? There are more new lows than new highs happening this year. There are more new lows when the indicator is negative, which favors the bears. The bears have been in control for most of the time in 2023, not the bulls.

This chart shows the “52w New Highs - 52w New Lows” for 2023 in the U.S. stock markets. The red line is the net zero level.

Based on this chart, we have spent most of 2023 in a net new lows regime. The +11% in the S&P – or the rally of the "magnificent seven" – in the first half of this year might hide the real picture.

52-Week Highs Overall minus 52-Week Lows Overall / 2023 YTD

I refer to this chart because we can now put the earlier articles into context with the actual market reaction. The two "peaks" in this chart occurred in February and June of this year.

It was at these exact levels and times that we published the following cyclical analysis, which pointed to a peak and the associated forecast that markets would move lower by "late summer 2023."

We still expect the bottom of the long-term cycles to be reached in "late summer”

Cycle Analysis published 12. Feb. 2023 (LINK)

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It is time.

Cycle Analysis published 22. Jun. 2023 (LINK)

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I was surprised by the upward momentum introduced by the magnificent seven from May to July. The momentum of the magnificent seven overshadowed the actually negative situation on the U.S. stock markets. And it sent capital-weighted indices such as the S&P soaring.

Here is the Equal Weighted S&P500 chart. Highlighted are the releases of our cyclic analysis with the warning that this is not the next bull market with clear indication to expect a low area to come in late summer.

Now the S&P EW is trading at its yearly low and YTD it is now in negative territory.

S&P500 Equal Weight - and projected “Late Summer Low” (Source: Invesco RSP ETF, TradingView)

In regards to stock market cycles, we are now there as expected – a late summer low in the U.S. stock markets has arrived, as projected, as shown, and as written here several times. The next step is to identify and time the bottoming window.

That’s why I’m here. We need to update that analysis to find the timing for the expected low. Stay tuned!

We have another story to recap and update. Do you remember the projection and cyclic call on U.S. Natural Gas? Even though we stayed on the sidelines for the U.S. stock markets (“stay calm on the sidelines after February until late summer will come!”), there are other asset classes that spoke a clear bullish message: Natural Gas.

Here is a recap of the clear cyclic analysis from April this year:

Cycle Analysis published 15. April 2023 (LINK)

Weekly and daily cycles are indicating a cycles-within-cycles bottom alignment for natural gas. Pointing to higher prices.

Natural Gas traded around 2.11 USD at that time. The economic conditions indicated lower prices ahead. But the cycles told us a different story with a clear picture. Today, Natural Gas is trading above 3 USD - just 6 month after that analysis with a gain of +50%. Also, we need to revisit this analysis to check to hold, take profits, or what? Stay tuned.

Stay tuned for the next update, which is scheduled for next two weeks.

See you soon.

Regards,
Lars

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The trading year might age, and cloudy
   The lessening sentiment might close, 
But air of other summers
   Breathed from beyond the snows,
   And I had hope of those.