Cycles are more important than fundamentals for 2016

Cycles should now be a dominant factor in attempting to project the direction of the markets. Many market studies have shown that cycles are more important than fundamentals, particularly for long term forecasts. Note well that when cycles are occurring with business and economic fundamental conditions that seem to match the cycles’ projections, the cycles are even more effective in their ability to forecast market conditions.

Many cycles occur often on or near to their projected schedules which at times are made well in the past. Although not perfect, it would be ill advised to overlook what they are projecting. The brokerage industry rarely pays attention to cycles since they can interfere with the brokerage houses’ amount of business. If the cycles are predicting a brutal bear market, it is difficult to promote or suggest investing to the public.

The market cycles for 2016 send an ominous message. A major bear market in industrial stocks will commence very soon. This bear market has actually commenced for many stocks already. We have both long term and short term cycles that simultaneously are projecting a difficult bear market commencing very soon. Couple that with some very high current valuations and we should expect a difficult bear market for the large industrial stock markets.

The point of following this closely is not simply to avoid the downturn, but to identify the industries that will benefit from these market conditions. The good news for 2016 is for mining companies. Major cycles are now projecting a major bull market in gold and many mining stocks.

Keep in mind that no cycle occur on schedule or occur at all. Yet, the cycles should be paid close attention to. The cycles that are now projecting a bear market for the industrial stock market project a bear market that could last for several years. And other cycles project higher prices for commodities such as gold and oil; so we could be commencing a hard asset cycle. Suffice it to say that cycles are in our view more important than fundamentals.

As an addition, the cycles are also forecasting another oncoming decline and bear market in real estate which is a major part of the economy. The bottom line for us is that all of our analysis suggests that gold and silver mining stocks could be the place to be.