A Mystical Number Predicts a Major Turn

A Mystical Number Predicts a Major Turn

Fri, Jun 10 2011, 13:53 GMT
by Gonçalo Moreira - FXstreet.com

Can any cycle model work on a specific level to a precise day, years and decades in advance? We have the chance to figure this out in the next days. The eminent turning point is coming from Martin Armstrong's business cycle studies which signal the June 13/14 2011 as a major reversal of fortune in financial markets.

Although there is no major market peaking or bottoming dramatically right now, we still see price structures in the currency markets involved in reversal affairs. The Swiss franc, for instance, is approaching a high against the US dollar, as are the Australian dollar or the New Zealand dollar, although less exuberant both. This means we need to watch the dollar as we move into the crucial date.

"The debt crisis will get worse over the next 4.3 years into 2016 and that we are more likely than not going to see rising interest rates."

Martin Armstrong, who discovered the cycle, explains in a recent essay that "... markets that tend to be approaching highs are the interest rate markets. This tends to suggest that the debt crisis will get worse over the next 4.3 years into 2016 and that we are more likely than not going to see rising interest rates regardless of what the governments wish to create." Indeed, if Southern European countries break away for the deflation imported by having adopted the Euro, with the resulting economic debt chaos, the dollar would be favored.

The cycles logic would suggest, in the case of metals, that a high for gold on June 13th/14th with a low in the dollar would signal a reversal in both markets. However, gold may remain range bound in higher levels, pausing it's trend when priced in dollars, only to resume the primary trend after the temporary consolidation.

The Theory:

Some of the biggest investors out there view cycle theories with respect, and factor cycles

into their financial commitments. Investors use cycles as an overlay to shape their big pictures of the financial world and to remind themselves that there is always a reversion to the mean.

Armstrong ’s model, focuses on those markets showing a exuberant personality, those with the greates concentration of capital in one sector, and tracks the footprints of money around the world. When capital shifts it's attention, it behaves like water: it goes where it encounters the least resistance, leaving behind big financial panics.

"Capital behaves like water: it goes where it encounters the least resistance, leaving behind big financial panics."

Armstrong was the one to observe the shifts in capital flows hit the markets every 8.6 years across many asset classes. The estimate of magnitude seemed to revolve around periods of 51.6 years, which nests a series of 6 business cycles of 8.6 years each. Armstrong revealed that the business cycle concept can be backtested into ancient history going back to the Greek and Rome empires and all monetary systems that followed.

For More GoTo:

http://www.fxstreet.com/technical/forex-forecasts/june-13th14th-the-turning-point/2011/06/10/

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