Stocks and markets are now and ever shall be an eternal mystery to us humans. In principle, their mechanics are very simple: Either up or down, no other way. It’s as simple as day and night, as yes or no. It’s by no means that simple however to read them, and it’s even more difficult to trade them successfully.

You all know the story of the ape that gets more out of the markets with his selection throwing a dart to a list of certain stocks than a practiced investor, or rather do you know many millionaires or billionaires living just around your corner who became rich with investments??

Even the companies, banks, producers and countries that are able to determine, regulate, influence and manipulate certain stocks and markets always have enormous problems to do the right thing, to read and assess the financial center the right way. The complexity around the financial center "world" demands too much of most people and too little of nobody. Mistakes and bankrupt are as normal as frauds and insider stories. What remains is the dream of quick money, the constant income return and the wager on falling or rising markets per se.

As if the tendency of a specific market to identify and act were not difficult enough, the complex interaction of the individual financial centers demands too much of us, as a rule. A market determines and influences other markets. Now it doesn’t at all again, then in turn it does in a much stronger scope. The cash flowing and streams of cash within the market respectively the markets and between the market-participants stay largely in hiding. A tangible prognosis how and why markets and thereby the market-participants act and interact, thus influencing other markets is certainly going to remain difficult evermore.

What is left is to put together the individual puzzle parts hoping to be caught up by enlightenment sometime…

I’ll just reduce simply and roughly narrowing down with it. The US$ together with the American stock markets including US bonds in their entire interactive complex structure, oil including the petro-dollar system and copper, Dr. Copper, are the most important gauge for where our earth is going to travel to.

The fever curve of the USA – because of still being the most important national economy – as well as both mentioned commoditys show us "actually" and "normally" whether the global economy is shrinking, growing, stagnating, heading towards a crisis, whether there are conflicts – currently or going to be. They show us whether inflation, deflation, stagnation, stagflation dominate respectively are going to emerge or should arise.

Not only Europe but also the USA are inflating their respective currencies well notoriously. The printing presses have been operating at full blast for years. Thus, the national debts are rising in both regions. The official inflation rate is currently far below 2%. That’s why there is no or very little interest on deposits. Since the generated amounts of money arrive at the "rich = banks/corporations/trusts/concerns and the really rich" remaining there – those have to carry the whole house of cards on their shoulders after all – only some fractions of the money creation arrive at the working population whose wages may rise closely above the official inflation rates at best.

The officials’ remuneration oriented by the inflation rate is settled by the state. The economy orients its remunerations by the official inflation rate and frequently by the officials’ remuneration. The far-reaching result is that the middle class in the West is crumbling, the poor becoming poorer because the effective inflation everywhere and always is far higher than the officially quoted one. The "rich" are going into EU and US stock markets with the borrowed cheap national kale. That’s why these markets have been rising enormously over the last 6 years.

The wider area of Asia by contrast has been growing on a solid and natural basis during the last decades. Asia is producing a genuine rock-solid economic growth not (or just a little bit) grounding on debts. That’s where the peoples are still working for building-up their economies by the force of their hands and arms ==> economic growth by honest work…

Many Western nations – to be emphasized above all the USA and the United Kingdom – are tinkering together an artificial/virtual economic growth generating cash quasi from the nothingness putting it again into their respective economic cycles thereby maintaining artificially their economies respectively growing artificially. The keyword is financial services, an economic sector that didn’t have much importance for the national economies 15 years ago.

The West (especially the USA) justify the printing of new virtual money inter alia with the fact that the emerging eastern continents/countries like Asia or India and other tiger and BRICS states will still have to pay their growth to the West for decades to come, respectively thy will.

==> Thus, the West is taking an advance as it were following this logic: the East is going to keep growing for centuries to come, so we will make good money during the next centuries. Let us gust print/generate this cash now that it is necessary. Those little problems we are having will be surmounted laxly with that.

==> As long as the trust in the West (USA) is given, this model will work fundamentally.

…because the west (USA!!!) has many, many commoditys of our earth mostly under total control. The most commoditys extraction is in the hands of western controlled nations and trusts/corporations. In the end, the west can thereby control the commodity prices because it quasi "makes" them. Roughly said, in the West, the East is buying the raw materials needed for building-up its economy. Thus, generally the West controls the supply. The East takes the commoditys off the west’s hands, determining thereby the demand situation – roughly said.

 

Three pieces in the puzzle, oil, copper and palladium

 

Actually, oil extraction is nearly under total control of the USA. Oil is the most important commodity of the earth. The Near East is protected and controlled by the USA. Brent oil is extracted and sold by the Europeans. The Europeans, the Near East and the USA together are the main extractors. They determine the price so to speak thereby being able to regulate the world-market price for oil from the supply side.

 

 

Russia is on the second place, China on the third of the worldwide extraction. The main consumer is the still USA. 1/5 of all the refineries are situated in the USA. Asia needs the western oil for growing.

 

Copper is the traditionally gauge of the global economy extracted from the earth mainly by western trusts/conglomerates. The main extractor nations are Chile, Peru, USA.

 

 

The main consumer is China. The Chinese also smelt the larger quantities.

==> Both monthly charts are showing now a possible dramatic development. There is the threat that the global economy will totally nose-dive within next 12 months!

The emphasis is on the word "threat". It may happen, but it doesn’t have to. There are still two trading weeks to come in August. If the High Grade Copper (HG) Future contract closes August at the current stand, cooper would have delivered a massive sell signal cause then it trades in bear market territorry!!

Please mind the currently strongest secular bull-market supports. In both monthly up setups we have the actual situation that both important commoditys are testing their respective secular bull-market support the 1*1 Bull Market Gann Angle at the moment. Copper is trading beneath already. A monthly close below this main support means a severe sell signal. From my point of view it is dramatic that both important raw materials have this elementary test take place now at the same time. From the beginning of the current bull market to their bull market highs, both commoditys produced first up impulses in lockstep for 8 respectively 9 months both topping exactly at the lower line of the 2nd double arc in the monthly time frame. Since the bull market tops beginning of 2011 at the lower line of the 2nd till beginning of 2013 also the correction move of the markets took their courses in unison. Both corrected down to the first square line = support, both rebounded from there again, being able to re-conquer the first double arc.

Since the beginning of 2013, they developed indifferently however. Whereas crude oil is hinting bullish continuation, copper has been crumbling more and more testing even the 1*1 Bull Market Angle for the first time intensely at the beginning of 2014 and the first square line support at 3$. Crude oil succeeded to reach the 2nd double arc resistance in 2014. Copper always tested the first double arc somehow, by and large joining it downwards.

Crude was promising since 2013, copper was rather pessimistic-minded by contrast.

The very big question is now, whether the two in August respectively September/October will generate together a powerful sell signal thereby precipitating the world into the deflation-horror-scenario!?

Particularly crude oil seems to give indications since it is currently situated in the influence sphere of the first double arc that draws the market down for about 3 more months. The first double arc intersects the time Axis at both thinner orange verticals. Since a significant top is made at the upper line of the 2nd, exactly at the month where the upper line of the first double arc intersects the time axis, crude visibly going downwards, this condition might last until the lower line of the first double arc intersects the time axis.

The result would certainly be a significant break of the 1*1 Bull-Market Support till October 2014!

According to W. D. Gann’s angle trading rules, this in turn would activate the 1*2 Gann Angle as the next important downtarget= 67$ till spring 2015!

If the 2nd double arc being now unequivocal resistance, presses down crude till the end of its temporal sphere of influence, crude oil may trend down till mid-2016. Prices below 50$ would be the inevitable result in that case.

On Friday crude oil tested the 1*1 Gann Angle for the first time in the current bull-run. Technically, such a strong support has to hold at the very first test. That’s why I really don’t expect August to close below the 1*1 Gann Angle yet. If ever, that is not likely to happen before October.

Copper, I think, will draw crude oil downwards. This is where it is looking very bad! Certainly, the current August low is exactly at the upper line support of the first double arc, but since the downtrend on daily base has just "begun", I don’t consider cooper to be able to close newly above the 1*1 Bull-Market Angle. This one takes its August course at 3.19. An August close below 3.15 will be a POTENTIAL SEVERE sell signal on monthly base.

Here, again, a clear close below the 1*1 Gann Angle will activate the 1*2 Gann Angle as next downtarget!

Depending on how sustainable the first double arc wants to give support for the next months – either copper rushes down mercilessly until reaching the 1*2 Gann Angle, or it will join choppy the first double arc support downwards – 2.30 till March 2015 respectively 2.45 till summer 2015 are to be reckoned with.

Important for the August respectively September- and October course: If both markets together and at the same time produce the possible motnhly sell signals again in order to swing simultaneously into the then official bear market, the declines will follow the faster in 2015.

If both markets avoid the sell signal in unison till October holding in this period respectively turning up again they will be likely to maintain the 100$ respectively the 3.30$ very choppy till end of 2014.

Palladium says/signals that crude oil and copper are supposed to swing into the bear market officially soon because China and Russia will work together increasingly, when it comes to oil and copper.

 

They will take less oil and cooper from the West trying to purchase what they need elsewhere (in Iraq, for instance) respectively increase massively their own oil and copper extraction. Furthermore it seems to me that the West with USA as the principal orderer have been pressing down the oil price pointedly and intentionally! Therewith they might manage – as effectuated successfully in 1991 with the decay of the Soviet Union – to shift Russia’s growth into the recession. In this case, Putin would have severe personal problems if Russia’s economy went down the toilet!

 

 

Palladium is the ideal thermometer talking about the West/East tensions. It is under Russian supply control since Russia is the main producer. It indicates clearly that the East is turning away from the West. The Western countries can be glad to get still some part of it. In a foreseeable future, palladium - directed by Russia – will mainly be given into the eastern economic sphere. The West will have to pay high prices to assure itself of it.

Crude oil and copper seem to generate massive sell signals in August. Also in August, palladium breaks out over the important 886$ first square line resistance in the monthly 33 Candle GUNNER24 Up Setup. W. D. Gann: "When price meets time, a change is imminent!!!!

For August, a clear close above 886$ is to be expected. Just on Friday, the current breakout move went on after the metal had digested the first rebound from the important 886$ resistance during 2 weeks.

But as early as at the second try the 886$ will be overcome persistently! Next target is thereby the 1077$ mark, notified here and here already. In the setup above, it is at the first double arc resistance. The 1077$ is only an interim stage, however. Main targets for this uptrend are either the 1500$ or even the 1700$. Please, read up here, as well.

In the monthly palladium chart above, I illustrated the performance of palladium in the uptrend over the last years. Once there are up moves that proceed very stably and persistently under relatively well-ordered conditions- the green marker. And then, there are those panic buy attacks. They are always brutal showing exorbitant monthly gains. They last 2-3 months, sometimes up to 7 months.

 

At the moment, palladium is really still in a moderate uptrend. Nothing like panic is to be seen yet. THAT MIGHT CHANGE ABRUPTLY IF AUGUST CLOSES ABOVE 886$. A powerful buy signal would anticipate somehow a panic move. Russia doesn’t even have to sanction! If Russia sanctions palladium within the next weeks, you may forget the 1000 respectively 1077. In that case, the metal will temporarily quote more expensive than gold in 2014 yet = STRONG BUY!!

 

  

 

 

Be prepared!

 

Eduard Altmann