Weekend update

REVIEW

The week started off at SPX 2553. The market opened higher on Monday, nudged higher Tuesday, then hit a new high at SPX 2564 on Wednesday. On Thursday the market gapped down at the open to SPX 2548, but quickly recovered to close positive on the day. Then on Friday the market gapped up at the open and ended the week right at the OEW 2575 pivot. For the week the SPX/DOW gained 1.45%, and the NDX/NAZ gained 0.35%. Economic reports were mostly positive. On the downtick: housing starts, building permits, and the leading indicators. On the uptick: the NY/Philly FED, export/import prices, industrial production, capacity utilization, the NAHB, existing homes sales, plus weekly jobless claims hit a multi-decade low. Next week: the first report on Q3 GDP (est. +2.6%), durable goods, and more housing reports. Best to your week!

LONG TERM: uptrend

Saeculum, Secular and Cyclical. In past decades the latter two terms were used quite frequently in the financial markets. Nowadays, however, they seem all but forgotten. This week the market celebrated the 30-year anniversary of the 1987 stock market crash. When one looks around at the people involved in the markets these days, very few were even adults when that event occurred. Not surprising then, those terms, along with many others, have been forgotten.

The Saeculum is a repetitive four-generational cycle lasting 75-80 years. It unfolds in four turnings, phases, or as we term it in the financial markets, Secular cycles. A term derived from Saeculum. Each of the four Secular cycles last about 15-20 years, and unfold in a repetitive sequence. The Secular cycle sequence is termed: growth, protest, unraveling and crisis. The best times to own equities is during a growth or unraveling Secular cycle. The worse time to own equities, but the best to own commodities, is during a protest or crisis Secular cycle.

Recent historical examples. Secular crisis cycles (1929-1949 and 2000-2016). Secular protest cycle (1966-1982). Secular unraveling cycle (1982-2000). Secular growth cycles (1949-1966 and 2016-xxxx). This is where we believe the market is today. In the early stages of a Secular growth cycle that will last into the early 2030’s. Certainly there will be cyclical bull/bear markets along the way. Just as there are cyclical bull/bear markets within every Secular cycle. But the big gains in equities occur during the Secular bullish growth and unraveling cycles. Check the chart.