InvestingSuccess

The sign says it all. We are transitioning from a ridiculously low rate environment to a higher rate situation. The Federal Reserve bowing to political pressure and market temper tantrums refused to raise rates in 2019. Then 2020 arrived and with it came Covid and spiraling mortality rates. The taps were opened wide and money flooded the financial system in a bid to keep it afloat.

But, like the gardener who starts to water his garden and walks away, the FED left the tap running too long. In classic textbook fashion, this excess money has now created an inflationary monster. The FED is now scrambling to slay this beast.

The Bond market is anticipating that rates will move higher and that the FED’s balance sheet will be run down to drain money from the system. This is a correct anticipation on the part of the Bond market.

Equity analysts are now likewise scrambling to re-jig their NPV models in light of a higher discount rate. Mr. Market is uncertain whether to rally, go sideways, or drop as the yield curve flirts with inversion.

Volatility is the new mantra. If you know how to use technical chart indicators and hourly charts, you can take advantage of this volatility. Unfortunately, the vast majority of people have not honed this skill. 2022 could be a rough year for people who follow the buy and hold philosophy.

Will the economy tip over into recession? Or, is it robust enough to handle real interest rates going positive? McWhirter astrology says that with the North Node of Moon in Taurus, the economy will gradually slow from here until the end of the current 18.6 year cycle in 2026. The final phase of 18 year cycles usually bring with them recessionary pain, and lots of it.

To get a glimpse of what may come to North American shores, the following chart shows the ETF (N:EZU) that tracks the Euro market complex.

The MAC-D is below zero, the SMIE Oscillator is in negative territory and the Lane Stochastic has further to fall into negative territory. The European market complex is broken right at the moment.

In North America, the chart of the S&P 500 tells more of the tale. The MAC-D is above the critical zero line, but the SMIE Oscillator and Lane Stochastic are looking shaky. If the MAC-D should dip beneath zero, things could get rather ugly. If I turn my attention to Quantum Lines, I note that the 5th harmonic of the Jupiter and Neptune Quantum Lines have been violated. This is not a good sign. Support now is apparent at a Saturn 5th harmonic QL (4315 on the S&P) and failing that at Neptune and Jupiter 4th harmonics (4256 or 4125). There is some more weakness coming in the near term. Whether either of the actual 4th harmonic levels will be hit or whether a mid-point between them and the recently violated 5th harmonics acts as support remains to be seen. My hope is that the Saturn 5th harmonic level at 4315 acts as support.

Do not lose sight of the fact we are in a Shemitah Year which started in September 2021 and runs until late August 2022. Powerful events unfold in Shemitah Years in accordance with Biblical texts. I envisioned that interest rates would be a theme in this Shemitah Year. Sure enough – bond markets are trending strongly negative. What I did not fathom was the Ukrainian situation unfolding as it has.

The volatility will continue as we venture deeper into 2022. I will do my best to keep readers and subscribers apprised of what I see coming with regards to cycles and planetary events.