In this final report of our first year at Sigma-L we take a detailed look at the trades and market conditions that defined a memorable period. We also look ahead to 2023 and prospects for subscribers
Figures below refer to the hypothetical trades detailed in every market report on Sigma-L and, specifically, the Trading Strategy section. These statistics span the period September 1st 2021 to August 31st 2022 and complete a full annual period of the site since it’s inception.
We close off the year to date on Sigma-L with a nominal gain of just over 474%, spanning 116 trades since September 2021. Outperformance came from both cryptocurrency and the energy sector, reflecting periodic clarity in these markets and, subsequently, high yield trade opportunities.
Early in the year cryptocurrency massively outperformed as the 80 day nominal component was a tremendous signal for many months. Subsequent to the decline in price over the 2nd and 3rd quarter gains were reduced. Energy at that point picked up with profitable trades in WTI Crude leading the gains. Precious metals have been consistent with contrarian trades against the orthodox macro views most profitable. Forex and stock markets have contributed in the background, forex the most notable sector to benefit from a normalisation of gain figures due to the drawbacks of calculating simple nominal percentage figures as a baseline.
In 2023 we have a potentially historic year in prospect. Not only is price approaching an 18 month nominal low in stock markets, potentially the last 18 month component of a larger swing down, but cryptocurrency is also on the cusp of a major low.
In the oil market we will track the decline to the 54 month nominal low (due early 2024) with all it’s turbulence undoubtedly providing more excellent opportunities.
Precious metals are grinding downwards for some time to come. Gold, in particular, will be fascinating to watch with it’s exemplary 80 day component providing a compelling signal over the last year and a half for trades in both directions. Of course what happens in Gold also happens in Silver and generally with more amplitude!
The 80 day ‘nominal’ component (average of ~ 55 days over the period) in Gold via our bespoke time frequency analysis. Such clean, stationary signals are rare. This component displays minimal amplitude and frequency modulation over the period.
The Forex markets have been dominated by the Dollar in 2022. With the peak of the 54 month component in the DXY due mid 2023 we should get some excellent trading setups in multiple instruments. As volatility returns to the shorter and medium term periodic components we will look to take advantage for subscribers.
Read on for a detailed, sector by sector breakdown of the year in numbers and images.
Sector Breakdown
Cryptocurrency
Back in January 2022 Bitcoin approaches the 18 month VTL. The subsequent cross of which confirmed a peak of 54 month magnitude occurred late in 2021. The question of where the previous trough should be placed (here placed in 2020) is a crucial one as we move through 2023.
Bitcoin (and cryptocurrency in general) approaches a trough of 18 month magnitude 9 months later. This is a crucial low and it will be fascinating to trade and observe the smaller components in 2023-2024.
This Quarter: Nominal Gain: 40.85% | 3 Year Normalised: 17.28%
Year to date: Nominal Gain: 166.34% | 3 Year Normalised: 110.90%
Yield Per Trade: Nominal Average: 5.54% per trade 3 Year Normalised Average: 3.7% per trade
Max Gain / Loss Litecoin (21/09/2021): 31.06% Bitcoin (09/05/2022): -15.85%
We started our analysis of cryptocurrency near the inception of the previous 18 month component low back in September 2021. The trend was established and bullish, which certainly helped us have a stellar first quarter in digital currencies, returning a handsome 153.55%.
The 2nd and 3rd quarter returned relatively mild losses at -15.85% and -12.22% respectively, before bouncing back in the final quarter with a nominal return of 40.85%.
Subsequent to the 40 week nominal low in March-April 2022 amplitude was heavily attenuated in the 80 day component as the larger bearish trend took hold rapidly. That trend is almost over with an imminent 18 month nominal low incoming. 2023 will be the year we can confirm the magnitude of the low in 2020, a crucial point for cryptocurrency and the years ahead.
Energy
WTI crude in March 2022 approaches a peak of the 18 month component. This peak is highly likely to be also a peak of 54 month magnitude, with the next trough in early 2024. This was peak energy inflation and, at the time, yet to feed through to consumers a great deal.
In a similar manner to cryptocurrency and stock markets, oil approaches an 18 month nominal (yellow on chart) low soon.
This Quarter: Nominal Gain: 61.86% | 3 Year Normalised: 51.18%
Year to date: Nominal Gain: 190.14% | 3 Year Normalised: 172.16%
Yield Per Trade: Nominal Average: 12.68% per trade 3 Year Normalised Average: 11.48% per trade
Our two energy markets, US Natural Gas and WTI Crude have really been strong performers all year, yielding the most per trade on both a nominal and normalised basis over 15 trades, in both directions.
The remainder of 2022 will likely see the anticipated 18 month nominal low and, in a similar vein to stockmarkets and cryptocurrency, we will see whether the phasing of the larger 54 month component low in 2020 is accurate. Certainly the 18 month component is a tremendous signal and has been for nearly a decade now.
Precious Metals
Gold back in November 2021 and on the cusp of a move up through the 18 month FLD to the 18 month nominal peak.
The 18 month nominal peak comes in on schedule. As ever, mainstream media and macro based ‘goldbugs’ on social media were extremely bullish on Gold at this point.
This Quarter: Nominal Gain: 26.48% | 3 Year Normalised: 28.77%
Year to date: Nominal Gain: 60.28% | 3 Year Normalised: 75.84%
Yield Per Trade: Nominal Average: 36.21% per trade 3 Year Normalised Average: 5.42% per trade
Max Gain / Loss Silver (29/11/2021): 13.79% Silver (30/5/2022): -2.08%
The precious metals market provided one the best signals across the period and sectors we cover on Sigma-L, especially in Gold. Described above in the main summary section the 80 day component has really been a ‘beacon’ over several months. This assisted us in achieving an excellent gain of around 60% over the period.
The larger components in Gold and Silver still have some uncertainty surrounding them and 2023 will hopefully increase clarity as time progresses. This is not the case with the smaller components, the 20 week and 80 day nominal waves are likely to maintain their stationary nature and subsequent clear trading opportunities.
Stock Markets
The S&P 500 approaches a peak of 54 month magnitude and, possibly, a peak of 9 year magnitude in early 2022. The strength of the reversal here took even us by surprise.
Now, price approaches an 18 month nominal low, likely to see support at the 54 month FLD, in orange. Should this phasing be correct the latter half of 2023 will be very bearish indeed as price approaches the 54 month nominal low in the 1st quarter of 2024, likely at the 9 year FLD, in red.
This Quarter: Nominal Gain: 14.50% | 3 Year Normalised: 28.77%
Year to date: Nominal Gain: 36.21% | 3 Year Normalised: 77.51%
Yield Per Trade: Nominal Average: 1.21% per trade 3 Year Normalised Average: 2.58% per trade
Max Gain / Loss DJIA (03/08/2022): 5.38% S&P 500 (10/5/2022): -3.61%
Stock markets indices have been our most traded instrument this year as we tracked the fascinating fall from what is highly likely to be the 54 month nominal component peak in early 2022. Although yield per trade was relatively small we outperformed the S&P 500 on a returns basis (-12.4%) over the period by a large margin.
Hurst originally used stock market data to pioneer signal processing of financial time series and we often wonder what he would make of the new tools we have at our disposal! As we approach this next 18 month iteration the next 6 - 8 months will be absolutely essential reading for a early insight into where this bear market is heading next.
Should the current phasing of the 54 month component be correct, which places the last low of the component in 2020, we have the next trough due in the 1st quarter of 2024. Therefore the final iteration of the imminent 18 month component within the 54 month component should, in general circumstances, be even more bearish.
Forex
AUDNZD displays excellent cyclicality at the 18 month component. This phasing, from late 2021 preceded a large move up.
AUDNZD moves up in an almost linear fashion from the 18 month nominal low. The component has most likely now peaked and is due a trough in early 2023.
This Quarter: Nominal Gain: 6.62% | 3 Year Normalised: 29.39%
Year to date: Nominal Gain: 21.06% | 3 Year Normalised: 101.06%
Yield Per Trade: Nominal Average: 0.78% per trade 3 Year Normalised Average: 3.74% per trade
Max Gain / Loss USDCAD (05/10/2021): 3.47% DXY (28/01/2022): -1.24%
The forex markets have been dominated by the strength of the dollar over the period. This does not mean, however, there have not been gems amongst the domination with USDCAD a standout amongst our selection. The exemplary signal at the 80 day component providing some excellent profitable trades in both directions.
We will look to expand our forex exposure in the coming year with the addition of GBPUSD in particular being an exciting prospect.
The dollar is set to peak from a 9 year component over the next year or two. During this process we are likely to see the smaller components (20 weeks and below) come to the fore as underlying trend flattens.
Trade of the Year: Natural Gas
Increased volatility across markets throughout our first annual period of Sigma-L has presented many excellent opportunities for the cyclical, swing trader.
Our trade of the year was in US Natural Gas, where a long entry, detailed in our report of the 24th June 2022 yielded a 40% gain.
An entry of 5.698 was valid, via a cross of the 10 day FLD on the 7th of July and targeted 8-8.5.
This trade was a ‘Hurstonian’ classic, moving up through a bearish FLD cascade toward resistance at the 20 week FLD in July 2022. Such is the nature of the amplitude in energy markets this was a high nominal yielding transaction
Trade Breakdown
Below we list a complete record of hypothetical trades and their corresponding report dates for Sigma-L over the period 1st September 2021 to August 31st 2022. Columns for trade direction, trade dates, targets, gains and risk:reward are included. We hope this is helpful for potential and current subscribers.
Note - An ‘Expired’ trade is a potential trade that has been retired as price has not triggered a buy or sell signal (usually by a cross of an FLD) by the time of the next report or has exceeded it’s current wavelength since the report inception.
- Targets are specified in each report linked to the trade. In the case of a specified range, the target is deemed to be the minimum of the range. In many cases the target is exceeded.
- ‘No Trade’ simply represents a report that specifies no trade is to be taken.
Stock Markets
Cryptocurrency
Energy
Forex
Precious Metals
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DISCLAIMER: This website/newsletter and the charts/projections contained within it are intended for educational purposes only. Results and projections are hypothetical. We accept no liability for any losses incurred as a result of assertions made due to the information contained within Sigma-L. This report is not intended to instruct investment or purchase of any financial instrument, derivative or asset connected to the information conveyed in the report. Trade and invest at your own risk.
The nominal gain is a percentage increase (or decrease) from entry price to the target (or stop loss) price specified in each report. In the event of a price range being specified (as in our ‘Trade of the year: Natural Gas’, 8 - 8.5) the minimum target of the range is used. As these are purely nominal figures, no leverage is implied in the gain/loss calculations.
The 3 year ‘normalised gain’ attempts to normalise gains to approach a more ‘apples to apples’ comparison between sectors. A range of price is taken from the last 3 years and used to calculate the normalised gain percentage. This has the effect, for example, of compressing cryptocurrency gains and amplifying forex gains, due to the hugely different nominal price movements.
Yield per trade is an average of trade gains / losses over the period. Calculated by summing the gain / loss for each trade and dividing by the number of trades enacted.
