Market Forecast Webinar

Transcription

1 Jake Bernstein Market Forecast Webinar The Coming Commodity Collapse Saturday 1 March by Jake Bernstein jake@trade-futures.com * * FAX

2 Fasten your seatbelts The wildest ride in history is coming 1 December 2007 Forecast What happened? Gold, platinum, oats, corn, soybeans, soybean oil, crude oil and CRB index all make new all time highs on massive volatility Virtually all commodity markets have shown their largest ever volatility and intra-day price swings Small trader sentiment as of 29 March is > 80% bullish on 25 of the major 35 markets. This is the first time in the history of Daily Sentiment Index that so many markets have been this high. In short the public is more bullish than ever What s next? Declines of up to 65% are likely 2008 by Jake Bernstein *

3 Forecasts No tops in place as yet Additional large gains likely but with huge risk Watch husi interest trates for the clue Corrections down could be 60% or more Watch 10 oc indicator and divergence for sell signals Prepare to BUY Muni Bonds Why? Watch for lumber buy triggers See long term channel support Will go down in history as one of the largest sucker plays ever Compare to the 1970 s 2008 by Jake Bernstein *

4 What factors am I Looking at? The Cycles: an overview The level of professional trader bullish sentiment: highest ever! The level of small trader bullish sentiment: highest ever Market correlations and inter-relationships The long term interest rate pattern Price and indicator divergence Status of Commercial positions But first let s look at a few comparisons of then and now 2008 by Jake Bernstein *

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6 The current rally in soybeans 2008 by Jake Bernstein *

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8 Gold then 2008 by Jake Bernstein *

9 Gold now 2008 by Jake Bernstein *

10 Wheat then 2008 by Jake Bernstein *

11 Wheat now and.? 2008 by Jake Bernstein *

12 Crude oil rallies and corrects 2008 by Jake Bernstein *

13 Crude oil now and////? 2008 by Jake Bernstein *

14 Silver then 2008 by Jake Bernstein *

15 Oats gives it all back! 2008 by Jake Bernstein *

16 Silver now and? 2008 by Jake Bernstein *

17 Platinum then and 2008 by Jake Bernstein *

18 Platinum now and? 2008 by Jake Bernstein *

19 Soybean oil then 2008 by Jake Bernstein *

20 Soybean oil now and? 2008 by Jake Bernstein *

21 My forecasting record 1) BEFORE the start t of the biggest bull market in the history of copper, and platinum my advice was to go long 2) BEFORE the start of the largest bull markets in precious metals history my advice was to go long 3) BEFORE the start of the largest bull market in wheat history my advice di was to go long 4) BEFORE the start of the big bull markets in the soybean complex and corn history my advice was to go long 5) BEFORE the big bull market in cattle my advice was to go long 6) BEFORE the real estate decline my forecast for 2 years was clear and unhedged I predicted a top and a decline until by Jake Bernstein *

22 7) BEFORE the bottom in coffee prices I predicted d the start t of a new bull market 8) BEFORE the rally in Yen/Dollar I predicted a major rally in the Yen 9) FOR 2 years BEFORE the record breaking rally in Canada $ vs. US$ I predicted a move to new all time highs in the Canadian $ vs US$ 10) BEFORE the bull market in cocoa I predicted a major low it has come 11) BEFORE the massive volatility being seen in virtually all markets today I advised clients to be prepared for massive volatility 12) BEFORE the spread of electronic trading I warned that large price swings would develop as a result of electronic order entry - correct And there were many other forecasts that were right on the money no I have not been 100% right and I never will be but these forecasts alone were not only correct but in MOST CASES completely opposite from what the experts were telling us WHY BELIEVE ME? Consider the long term forecasting track record Read my book THE NEW PROSPERITY published in 1989 by the New York Institute of Finance WHAT S NEXT.. Here are some things to consider 2008 by Jake Bernstein *

23 Huge Declines are Coming: Are you Ready? Many major cycles are in the correct time frames for long term trend change we are waiting for timing triggers they have NOT happened yet we will look at some of them There is considerable divergence illustrations to be shown Very low interest rates will fuel the already serious credit crisis through bailouts More financial crises were predicted at the December Webinar..they are now here. We were told to be prepared for bank failures when Bernanke casually mentioned it on Friday An economic accident in China looms large and it will result in a chain reaction in all markets the world over - Excessive speculation in metals will come to an end trapping many small traders don t be surprised to see gold drop over $80 in one day but there are now triggers yet When the tops come declines over 60% or more would be reasonable and have historical precedent But BEFORE the declines what will likely happen? Simply stated it s ALL ABOUT TIMING and the timing is NOT YET RIGHT for tops Let s look at the indicators and other relevant data for strong clues 2008 by Jake Bernstein *

24 A FEW THINGS TO CONSIDER! Day trading in stocks and futures are excessive and continue contribute to large price swings most day traders lose and will continue to lose due to the huge volatility When oil prices collapse there will be a chain reaction in virtually all markets BUT the tops are not in place. What will be the trigger? Low interest rates will feed the very problem that created the current situation Government bailouts will further the crisis The longer US interest rates remain low the longer the bull markets will last and the more likely we are to get an inflationary blowoff Long term technical support levels in many markets are much lower than current price levelsl Previous bull market corrections have run between 60% and 75% Hedge funds are a primary source of market volatility and their participation will become even larger in Many will lose money due to market volatility SOVEREIGN Wealth Funds (SWF) are now a major force and will add significantly to volatility and wild price swings. The track record of government investment is not the best - DANGER 2008 by Jake Bernstein *

25 Computerized trading and arbitrage trading will continue to dominate much of market activity this will exacerbate rallies as well as declines. When the tops come the declines will be faster than ever Fate of the energy bubble (next example) All markets are more closely related than ever chain reactions will occur! What to watch for (to be discussed in detail with specific examples) I am NOT TRYING TO SCARE YOU I am trying to prepare you and make you money! If you listened to my long term forecasts over the last few years then you have made big bucks it s time to protect those profits and make more profits on the way down Remember that markets DROP faster than they rally 65% of the bull market in gold could be erased in a matter of months 2008 by Jake Bernstein *

26 Energy the new bubble November and Every secular bull market has its bubblebbl The alternative energy is the new dotcom The chart below was shown at my November Webinar What happened by December? (See next page) 2008 by Jake Bernstein *

27 Here s what happened 2008 by Jake Bernstein *

28 And now! 2008 by Jake Bernstein *

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31 What happened AFTER 2008 by Jake Bernstein *

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39 Tools I used in my forecast brief overview Long Term Cycles Momentum and MACD Divergence Comparative price trends / intermarket analysis Small trader sentiment (DSI) Valid chart patterns Historically reliable price patterns Commitment of Traders Commercials Value Area Index compares prices using historical value levels Price ratios and spreads 2008 by Jake Bernstein *

40 What has been happening? New all time highs in most currencies vs. US Dollar New all time highs in most energies New all time highs in wheat New all time lows in US Dollar New all time highs in platinum and copper New all time highs in Dow Jones, Russell and S&P New all time high in Dow Jones Transport Index New all time highs in CRB Index New all time highs in OJ New all time highs in many industrial metals Housing crisis Sub prime crisis full effects not known yet Banking crisis spreads Some bank failures imminent 2008 by Jake Bernstein *

41 Reversal in Aus/US$ after all time high 2008 by Jake Bernstein *

42 Aussie/US$ Now 2008 by Jake Bernstein *

43 Gap higher open, all time high, lower close Canada$ 2008 by Jake Bernstein *

44 Here s what happened! 2008 by Jake Bernstein *

45 Canada $ Now MA Channel Timing 2008 by Jake Bernstein *

46 Apple has topped (Late Nov forecast) 2008 by Jake Bernstein *

47 Apple now 2008 by Jake Bernstein *

48 Google market leader has topped (Nov forecast) 2008 by Jake Bernstein *

49 Google now 2008 by Jake Bernstein *

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51 Foreshadowing 2008 by Jake Bernstein *

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53 The short term sell trigger points 2008 by Jake Bernstein *

54 First support for GLD 2008 by Jake Bernstein *

55 LONG TERM XLE SUPPORT 2008 by Jake Bernstein *

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60 Let s look at small trader sentiment Why look at small trader sentiment? Who is the small trader? Is the small trader always wrong? Is the large trader usually right? Current sentiment readings and then Let s look at the cycles 2008 by Jake Bernstein *

61 Exceptionally high small trader sentiment 2008 by Jake Bernstein *

62 Gold is well past the mid-point of the cycle Arrow shows when I gave my long term buy recommendation 2008 by Jake Bernstein *

63 Copper cycle topping Here is where I recommended longs 2008 by Jake Bernstein *

64 CRB Cycle 2008 by Jake Bernstein *

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71 Gold cycle past top time frame 2008 by Jake Bernstein *

72 Silver and spike resistance 2008 by Jake Bernstein *

73 Silver support area and cycles 2008 by Jake Bernstein *

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78 Canada$ Aussie $ and Crude Oil Trends Compared Canada $ Crude Oil Crude Oil Leads Aussie $ 2008 by Jake Bernstein *

79 Gold, CRB, and Crude oil Trends Gold Crude Oil 1 st to bottom CRB Index 2008 by Jake Bernstein *

80 Crude Oil, Soybeans, Cattle Crude oil Soybeans Cattle 2008 by Jake Bernstein *

81 What is parabolic and why use it now? When markets go into parabolic mode they tend to bottom or top quickly, reverse trend and make large moves that retrace their recent moves The parabolic indicator allows us to determine a trend reversal point based on the parabolic movement of the market The faster and higher a market moves the closer the parabolic reversal point gets to the current price and vice- versa parabolic tops are much more frequent than parabolic bottoms why? Many markets are now in parabolic mode so we need to use the parabolic indicator to determine possible trend changes Markets usually go into parabolic mode at the END of a move and NOT at the beginning of a move SEE two chart examples 2008 by Jake Bernstein *

82 Parabolic rally and trend reversal points Parabolic reversal point is hit trend reversals dramatically Parabolic reversal points 2008 by Jake Bernstein *

83 Another example of parabolic of a parabolic top 2008 by Jake Bernstein *

84 Characteristics of Major Market Tops Bullish fundamentals and news Heavy trading volume often record-breaking High bullish sentiment large and small traders Near vertical moves (parabolic) Huge speculative e activity ty prevails Large intraday volatility (trading ranges) Large overnight volatility Many new traders entering the markets New trading vehicles introduced The media is often very bullish Cycles and technicals are usually at or near a peak 2008 by Jake Bernstein *

85 Canada $/US$ Long Term Cycles: by Jake Bernstein *

86 The Parabolic Rally in Canada$/US$ Midpoint of Cycle 2008 by Jake Bernstein *

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88 Aussie $ / US$ Cycles - Update 2008 by Jake Bernstein *

89 Conclusions: Canada $ and Aussie $ vs. US $ There has been a near 1 to 1 relationship between crude oil, gold, Canada $ and Aussie Dollar Cycles in Aussie, Crude, Canada$, Silver and Gold are topping timing triggers still to come Most other markets (not all) have rallied with them and stand to drop when the top in crude oil comes For 2008 next big bull markets could be lumber and natural gas Crude oil cycles are topping Soybean and other grain cycles are topping No sell triggers yet 2008 by Jake Bernstein *

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91 Conclusion: BrPound/Dollar Cycle is at a peak suggesting dollar will gain on Pound Due to late cycle top decline in Pound could be precipitous and fast Decline in Pound could be prompted by a top in crude oil (same will hold true for Canada $ and Aussie $) Await timing trigger for entry Next chart shows initial long term support 2008 by Jake Bernstein *

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93 Cattle: Mid Decade Lows by Jake Bernstein *

94 Cattle futures:10-11 year cycle in and trend projection Cattle still likely to make new all time highs 2008 by Jake Bernstein *

95 Cattle: commercials are buying! 2008 by Jake Bernstein *

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98 Bull market likely to begin soon in hogs 2008 by Jake Bernstein *

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103 Coffee buy triggers 2008 by Jake Bernstein *

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107 Time to buy natural gas and sell crude oil? 2008 by Jake Bernstein *

108 Soybeans could still rally relative to corn 2008 by Jake Bernstein *

109 Hog/Cattle Ratio Bottoming? 2008 by Jake Bernstein *

110 Silver low relative to gold 2008 by Jake Bernstein *

111 Buy soybeans sell wheat? 2008 by Jake Bernstein *

112 What is the gold/crude oil ratio telling us? 2008 by Jake Bernstein *

113 A confluence of factors make lumber a market to consider 2008 by Jake Bernstein *

114 Lets look at some triggers MA Channel with Williams ADMA 57 Momentum 28 Divergence MACD 9, 18 Divergence 10 open close (see charts) 2008 by Jake Bernstein *

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122 Conclusions and Forecasts Many markets have entered periods of parabolic up movement that usually correlates highly with the END of a move rather than the start of continuation of a move. Numerous cracks in the armor of the secular bull market have started to appear market leaders are deteriorating Bearish divergence persists and has triggered sell signals in a number of markets suggesting that short term tops are in place A number of cycles are topping or have topped but have not yet given sell triggers *** Another attempt at highs in most markets is still possible and, in fact, new highs could still be made in silver, gold and some currencies BUT the warnings are CLEAR and unmistakable *** The dollar shows its lowest sentiment and most bullish divergence configuration in history while most currencies show the opposite patterns Parabolic reversal points are very close to current prices in many markets more warnings of possible tops some have already triggered Corn and soybean prices could still rally into mid 2008 Silver is a better value than gold but both markets are in the final phase of their long term cycle peaks. New all time highs h still possible in gold as the blowoff continues by Jake Bernstein *

123 Conclusions, Directions, Suggestions (cont d) Small trader speculation in mining shares, FOREX and futures is excessive and typically indicative of tops in the making we have seen the result The US Dollar and Yen may be the best currencies to own for the intermediate and long term To rescue the US dollar interest rates may need to be raised substantially *** The real estate crunch isn t over as yet the long term real estate cycle doesn t ideally bottom until 2009 BUT values are abundant and some areas are now ripe to buy speculation in foreclosures will be the next big game *** Don t be surprised if we see some bank and brokerage house or lender bankruptcies but these will likely be disguised as buyouts or takeovers Huge mortgage write downs by financial institutions will decrease tech purchases and thereby affect tech stocks which are NOW showing their concern by falling sharply The environment is right for an economic accident. The weakest link in the chain is China. Be prepared. Speculation in China is rampant and dangerous by Jake Bernstein *

124 Conclusions, Directions, Suggestions (cont d) Crude oil prices could very well reach the much vaunted $100 level l as they blowoff it s even possible that $105 could be hit but then watch for a massive dumping by producers Stocks are likely to continue lower BUT a year end rally and top in early January are very likely. BUY quality stocks only or buy tech stocks after they have corrected at least 25% from their highs OR after they have hit long term (monthly moving avg channel support. Example: 30% correction in AAPL = about $135 and long term support MAC is about $125 Stocks that have not participated in the rally or that have corrected are good to own as long as they are quality shares: i.e. JNJ, PFE, MDT, HNZ, SBUX, AFFX, WAG, AXP, DD etc. and major banks and brokerages but not yet! Natural gas should gain on crude oil consider a spread when timing is right and consider natural gas stocks Consider the following as bargains and as good candidates for bull markets: hogs, cattle, OJ, coffee, cocoa, sugar, cotton, lumber, natural gas. Lumber could be the BIG surprise bull market of 2008 as builders load the boat at cheap prices for the next housing boom 2008 by Jake Bernstein *

125 Conclusions, Directions, Suggestions (cont d) Volatility will be immense and it will increase even from current high h levels. l Why and how to take advantage of it? Small traders who aren t using large enough stops will be wiped out. The new crop of aspiring day traders will be grist for the mill. Newcomers to FOREX will suffer in the high volatility climate US Farmland prices are likely remain stable and may in fact rise and more farms fall into strong hands and the market for bio-fuels makes even the poorest land a valuable asset Precious metals strategy: continue to take profits on long term positions. You should now be out of at least 35% of positions. Roll into recommended markets on buy triggers (i.e. lumber, cocoa, sugar etc) The news will push markets up and down in extremely volatile selloffs and rallies. If you re a day trader use bearish news to buy into markets BELOW support and to sell into markets ABOVE resistance. EXTREME moves will be your best bet buy you will need large stops. Speculative activity in alternative energy sectors is too high. They stocks may drop even faster than crude oil when the markets top. Alternative energy stocks are now in the midst of a bubble similar to the dotcom bubble by Jake Bernstein *

126 My picks for bull markets in 2008 as of early December 2007 Lumber could be one of the biggest bull markets in many years thin volume caution Sugar rally is long overdue - could be an excellent started market for new traders Cattle should test all time highs Hogs should be strong and may be bottoming now Coffee overdue for a strong rally Cocoa could be choppy but worth long term buy OJ coming down to long term support Natural gas could rally very strongly in 2008 Precious metals buy at long term monthly support US Dollar will likely rally strongly when interest rates bottom Buy Grains and soybeans on declines to monthly support REAL ESTATE buy late in the year 2008 by Jake Bernstein *

127 More 2008 picks as of early December Bank stocks Brokerage stocks Yen should gain on the US dollar Palladium is still a good long term value Look at long term price ratios as shown in this Webinar Crude oil at long term support will likely be a buy long term support quarterly chart see next page Selective buying in home builders Selective buying in petroleum stocks Buy natural gas stocks on declines Buy biotech stocks on declines Buy drug stocks that have declined (PFE) 2008 by Jake Bernstein *

128 Dow Jones drop to yearly support very possible 2008 by Jake Bernstein *

129 And now 2008 by Jake Bernstein *

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131 Picks for tops and/or bear markets Swiss, Aussie, Euro, BrPound Interest Rate futures Soybeans complex and grains Energies other than crude oil Year # 8 pattern in stocks if they CLOSE any month below the Jan 2008 lows Farmland not likely to decline much why? Energy stocks bubble Chinese stocks BRIC countries (Brazil, Russia, India, China) 2008 by Jake Bernstein *

132 Concluding Thank you for attending Mentoring appointment interview (numbers below) of click link below: June 2008 San Francisco 3 day seminar information at Write me at: jake@trade-futures.com 2008 by Jake Bernstein *