VIX & Volatility Ahead

QUESTION: Do you run your model on the VIX and can you run your volatility you illustrated at the Princeton Seminar on volatility?

ANSWER: Yes. It does not matter. Strangely enough if you create a index of stocks that only closed higher on Tuesday, it amazingly conforms to the 8.6 cycle, technical analysis, and volatility in its various flavors as we demonstrated at the conference. So yes, we run our volatility on the VIX as well.

The decline in volatility in general since the spike high in 2008 will turn by January 2014. This means that we will begin a upward cycle in general volatility as measured by the VIX. Indeed, look at the VIX on the CBOE. The crash in volatility conformed perfectly with the 8.6 frequency bottoming precisely in 17.2 months (2 x 8.6).

Countertrend Reaction v Reaction

QUESTION: You seem to be the only person who distinguishes between a “countertrend reaction” and a “reaction”. Can you illustrate the difference?

ANSWER: Reactions are typically 2 to 3 units of time regardless of the level be it daily up to yearly. They are part of the “trend” and normally count as part of the trend cyclically. A Countertrend Reaction is a move that exceeds 3 units of time. This is normally a change cyclically speaking and thus is a separate cycle altogether. This can be easily illustrated by the 1989 Crash in Japan. The decline conformed to our Pi Cycle of 31.4 weeks plus the 8 week Countertrend Reaction.

Site is Being Moved to Switzerland

The site and blog are moving to Switzerland for security purposes. The main site there is Princeton-Economics.COM. This site will be redirected for the blog and we will be starting paid regular services from there. The Global Market Watch is also ready. When the site is functional and all client names will be secure in Switzerland, which by law requires all servers to be maintained in Switzerland containing client information (we do not sell client names EVER), we will announce the start this summer. We will have the portfolio monitoring service up as well where you can have the computer keep track of your investments and notify you on any change in trend. Once that information can be secured, then the service will begin.

The Advisory Board and International Think Tank with a global collaboration effort will also begin by year-end. We are finalizing a position to head that aspect with someone who has had 30 years experience on Capital Hill behind the curtain to head up dealing with all governments globally. This will be the first International Think Tank and we will open this to membership rather than accepting grants with strings attached. The number one goal is to maintain independence and to provide the research for all governments globally when things start to get really bad. The tree has been cut. It now depends upon which direction does it fall – totalitarianism or freedom & human rights. We appreciate all the interest in joining the board, and we are moving in this direction to bring together experienced people from around the world for the first time ever rather than just theory. We all know something is seriously wrong. Governments generally remain in denial until it is too late. It is unrealistic to assume we can stop what must take place. The object is to provide an alternative when we crash and burn.

Real Estate beats Gold as #1 Investment & Euro Yen Recap

Land Auction Great Depression

The Gallup Poll is out surveying the investment sentiment of American investors. Gold has held that top slot up until now. Gold has now fallen for the first time to the second position as investors return to the old historical investment sector – real estate. Even in Europe people are starting to move toward real estate as we should see a bounce into 2015. The surge in gold coin sales has not proven to be new investors, but those already in the market bargain hunting. Any surge bringing in new investors will need to wait for the next rally.

So far everything appears on track with volatility rising making counter trend reactions strong yet going nowhere as in the yen and euro. In the Euro for example, the Weekly Bullish is in the 13900 zone which is far from the recent low reflecting the amount of volatility within the system.

The Japanese yen declined and the dollar made an effective double top at the 99.93 level. This is a big psychological area being par 100. Japanese institutions took profits selling foreign assets since it was the first 20% profit they have seen in 23 years. Nonetheless, only a daily closing BELOW 92.75 would suggest some follow-through. Here we will see most likely a 3rd test of the 100 level, and it may be the 4th time that we plow through it. The highest monthly closing has been 97.40 on the cash. A monthly closing above 97.76 will signal we are starting to breakout, Technical support begins at mid 9300 area with the critical intraday support at the 9000 level. This double top formation is important for it will show the dollar rally that will put the most pressure on the entire global economic system and eventually force the US economy into recession starting 2015.75.

The best trading strategy under these conditions is to sell highs in the Euro according to time against reversals where the risk is the least. In the yen, buy the dollar against support below or on the breakout when that unfolds. Both the euro and the yen are reflecting that we are indeed in a bull market for volatility and when everything turns again with 2015.75 on the ECM, the volatility will be twice as high as what we experienced between 2007-2009. That is where we can see the next phase transition in gold. Don’t forget, gold has yet to test the 1980 high adjusted for inflation which standards at about $2300 level. So forget the hype. Gold has NOT broken out yet nor has it truly made new highs in REAL terms – only nominal.

http://www.mining.com/gold-on-top-no-longer-investors-have-a-new-darling-25556/?utm_source=digest-en-mining-130501&utm_medium=email&utm_campaign=digest

Euro

The Euro peaked in two weeks, fell back, and has rallied into this week. Nonetheless, key resistance still remains unchanged in the 13400 zone and the turning points are the weeks of 05/06 and 05/20. The top of the channel for resistance we warned about was in the 13400 level which has not been reached as yet. A weekly closing BELOW 13350 this Friday will keep the Euro neutral to bearish short-term. So far the high has been about 13242. So we have not reached critical resistance yet. If there is going to be a drop, it would most likely come going into the week of 05/20. There should be some rally and then we have problems for the fall.

We need to see a closing on a daily basis ABOVE 13400 to suggest a rally before the decline. The Weekly Bullish stands at 13913. So this currency is not headed upward on a sustainable basis.