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2021: Cyclical Year In Review
A look at the year from a macro and Hurstonian viewpoint with highlights and lowlights. Also, a look at what is to come in 2022 from Sigma-L.
A Year to Remember
Of course 2021 will be remembered in most of the public’s mind as the year the pandemic really took hold and we assimilated a new lexicon: variant of concern, lockdowns, vaccinations, case counts, work from home, delta, alpha, omicron and so on.
One term that was lurking in the background all year, perhaps more so in the second half of the year, was inflation. The bogeyman of central banks, the measure they are tasked with, in most developed economies, to keep below a certain threshold. A task most have miserably failed to achieve at this point in time. They are largely powerless of course, a feeble set of monetary levers that are increasingly fragile against a background of highly leveraged assets they dare not threaten.
In addition, they have little control over the true nature of financial markets, that of X-motivation, the term coined by JM Hurst to describe the components in financial markets driven by periodic motion. A look at the cyclical structure in oil tells us the inflationary move from the 9 year nominal low was baked in way before the pandemic really took hold. The peak of the 54 month component in mid 2018 set the stage for the dramatic fall of 2020 and the 9 year low. From there it was simply a matter of how high the amplitude of the component would be. The 18 month component has shown very little frequency modulation in this entire sample since 2016, a remarkable quality.
The inflationary move in oil was also mirrored in natural gas, aswell as copper, gold, silver, uranium, palladium, platinum and a whole host of related commodities. These moves could not be suppressed in passthrough to consumers for long and it was no suprise to see CPI measures across the globe shoot through the roof over the last few months.
Cryptocurrency really was the highlight of the year from a Hurstonian viewpoint. Although we have only begun to cover the movements in Bitcoin, Ethereum and Litecoin since the start of this website, the periodic motion was beginning to clarify way back in 2020. From a pure price viewpoint many instruments are looking to end the year largely flat compared to the start but we have gained a crucial advantage over the period: cyclical information.
The periodic motion is exemplary, evidenced by the nominal gain of 153.55% in the first quarter for Sigma-l. More widely this means subscribers and Hurst aficionados can look forward to many more excellent opportunities, long and short into 2022 and beyond. A 40 week low looms in the 2nd quarter of 2022 with the 18 month low due at the end of 2022. Cryptocurrency will certainly be one to watch.
It seems as though Gold (and Silver) has been teasing all year and disappointing, at least from a non Hurstonian perspective. All manner of rationalisations have been given for an imminent ‘surge in price’ by goldbugs and hard asset lovers across the globe, especially in light of surging inflation. However the view longer term when we look at the 40 week and 18 month components is one of sideways to down price action with the next 40 week low due in April 2022 and the 18 month low due in late 2022, early 2023. The 20 week low being established now is a crucial pointer of underlying trend. We know these markets are widely watched by traders and we will continue to bring our Hurst Cycles insight to bear for subscribers in 2022 and beyond.
2022 From Sigma-L
We have been wonderfully suprised by the interest in this rather niche signal processing based technique and I would like to take this opportunity to thank all of you who have supported the site, paid and free subscribers alike. Below are some of the plans we have for the site in 2022:
Expanding instrument range: Brent crude, EURUSD, GBPUSD, NZDUSD, GBPJPY are in the pipeline, amongst others, including more Cryptocurrency pairs.
More spectral and numerical based analysis. We will look to add alternatives to the pattern matching approach used by ST to decompose financial markets.
More Hurst tool articles: VTLs, Principles, More FLD enhancements, curvelinear channels, bandpass filter extraction techniques.
More ‘Anatomy of a Trade’ articles! We know these are very popular as it gives a chance for readers to learn from actual trades made in the market, from entry to exit and management.
However you are spending this festive period, we wish you a happy new year and look forward to reporting on the endlessly interesting financial markets in 2022!
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