WHY 2 K?
Part II
WHY 2 K?
Part II
by Eric S. Hadik
INSIIDE Track Trading
Consistent
with analysis first described in the July 1998 Cycle Of Time IV (that forecast
a stock market top on July 19-21), late-November/early-December 1998 is
the next critical time in the stock indices.
I
expect to see not only confirmation that the stock market is entering a
multi-year bear market at that time (with another turn down), but also reinforcement
to my long term cycles that identify this time period as a major bottom
in the CRB (gold, silver, crude oil, soybeans & other commodities).
Opportunity should abound in the coming months for short and long term traders/investors.
Since
the markets almost always anticipate events, an investor should look out
6-12 months to see what fundamental events could possibly confirm this kind
of market action. This brings us back to our discussion of the Year 2000...
and not simply the Millennium Bug.
Most
investors are tunnel-visioned when it comes to the potential disaster associated
with the Millennium Bug. They do not consider that other factors could be
equally pertinent in this time frame. Part of the reason is that Y2K is
more tangible and easily understood (even if the ramifications are not clearly
known).
For
instance, individuals know that the problem will hit at 12:00:01 am on January
1, 2000... or so they think. This allows the timing to be established and
a degree of certainty to be established in the midst of great uncertainty.
Unfortunately, many people believe they have until that fateful hour to
prepare.
We
also know the problem is a result of programming & management decisions
made over the last half-century. This provides a nice neat scapegoat as
the target of current and future finger-pointing.
And,
we know what needs to be done in order to fix it... at least in theory.
This allows the solution to be quantified in one's mind and solvedeven if
it is only a fantasy.
We
also know why it has been allowed to fester this long without being addressed
more seriously... greed. The short-term mindset of corporate CEO's and shareholders
prevents companies from devoting the necessary resources towards this problem
in order to prolong a company's life.
It
is somewhat comforting to be able to discuss and decipher the Millennium
Bug in each person's mind. The reactions run the gamut from the ostrich
approach (stick one's head in the sand and say the problem will go away)
to the 'run for the hills' response.
No
one can immediately discern which of these is more prudent or what compromise
of the two is wisest. But, at least everyone can make a decision based on
certain known facts. The bottom line is that the problem is in our control...
or so it is thought.
That
is one approach. I, however, believe that cycles (and the Creator of these
cycles) destined this time frame to be one of great transition regardless
of whether computers were even an issue. Y2K is simply a giant, and dangerous,
distraction. It is, however, a distraction that must be dealt with nonetheless.
I
have laid out part of my argument over the last several years, since 1992
and before, why 1998 should usher in this period.
I
presented some of these in the October issue of the Bull & Bear
Financial Report. Among them were:
#1. The psychological aspect of the turn of a decade,
century and millennium. Just as a 30th, 40th & 50th birthday receive
undue emphasis (as opposed to the 29th or 31st, 39th or 41st, etc.), so
will the year 2,000 create excess anxiety.
#2. The Jewish Year 5760 (a perfect multiple of the
recurring 360-year cycle) which encompasses late-1999 through late-2000.
As I attempted to explain in the last issue and in the Cycle of Time V,
the years surrounding 5760 are the culmination of cycles that have spanned
the ages.
#3. A 2,000-year cycle (the approximate time that
it takes a constellation to move one space in the elliptic) that includes
Adam, Noah, Jesus and the present... periods associated with judgment of
one type or another.
#4. A 6 'day' cycle in which a day is equivalent to
a 1,000-year period. In this cycle, the Biblical account of 6 days of creation
and 1 of rest are compared to 6,000 years of a larger-degree 'creation'
before 1,000 years of rest (peace).
#5. One of the worst solar storms in history is forecast
for January 2000.
I want to add a few more considerations to these before moving forward...
#6. May 5, 2000 is the first alignment of Mercury,
Venus, Earth, Mars, Jupiter & Saturn in 6,000 years. This event reinforces
the proposed 6,000-year cycle mentioned in #4. It also provides a very unique
celestial event like the much-touted 8/25/87 harmonic convergence that marked
the precise top in the DJIA.
#7. Meteor storms which begin in November 1998 and
continue through November 1999. By the time this is read, you will know
whether the mid-November 1998 Leonid Meteor storm has caused any damage.
Whether or not it has, there is still several periods of risk over the next
12 months. The following quote describes some industry reaction and expectation
about these storms...
Meteor Storm Could Pose
Threat To Earth Satellites
"Satellite
operators are bracing for a possible onslaught from the heavens next month--a
meteor storm that may be the worst of its kind in three decades.
Serious
damage to satellites and service disruptions are unlikely, industry officials
say, but satellite operators are taking precautions to reduce possible effects
of the meteor onslaught, expected to last roughly two hours on Nov. 17.
Scientists
say the storm's intensity is unpredictable, and the consequences may be
dire. There now are 500 commercial and military satellites flying above
the Earth, compared with a few dozen in '66. That's the last time this type
of meteor shower, called the Leonids, flared up to this degree.
...The
Leonids bring annual meteor showers to Earth that intensify into a stronger
storm roughly every 33 years...While the Leonids meteor storm has been observed
for centuries, scientists aren't sure what to expect this year. They do
agree the coming storm should be the worst since '66.
Back
then, the Leonids produced 150,000 meteors in an hour, say Web sites devoted
to the storm. That's about 7,000 times its normal rate of 15 to 20 meteors
per hour.
...But
even computer models and high-powered telescopes come up short in predicting
the Leonids' intensity. This year or next could spell trouble for satellite
operators.
...Researchers
don't expect particles from the Leonids storm to punch a hole in a satellite's
protective covering...But the particles are expected to whiz by at a speed
of up to 70 kilometers per second. That's about three times faster than
a run-of-the-mill meteor, or 1,700 times faster than star pitcher Roger
Clemens can throw a baseball, says NASA's Jenniskens. The tiny particles
could create an electrical charge when smashing into a satellite.
"The
more likely scenario is that these small particles create charged (ionized)
plasma at impact," Ailor said. "That's like a small lightning
strike that can cause electronic problems within an aircraft."
Meteor Showers Visible
From Earth This Year
Leonids:
Nov. 17 and 18. Expected to be the most intense since '66. There also is
a chance of a repeat performance on Nov. 18, '99.
Geminids:
Dec. 12-14. A meteor shower associated with an asteroid called "Phaethon."
There may be as many as 80 meteors in an hour under moonless, rural skies.
Perseits:
Aug. 8-15. The best-known meteor shower, which is expected to provide a
clear showing at the same time in '99. (Source: Sky & Telescope magazine)"
Investor's Business Daily 10/06/98
Investors
should note the parallels here. If these meteor storms occur about every
33 years, it means they also occurred in 1932 (66 years ago). 1932 marks
the bottom in the stock market following a 3-year bear market. 1966 marks
both the top and bottom of the market and an intervening 26%, 38-week (there's
that cycle again) decline.
This
is just another example of a natural phenomenon pinpointing important turns
in investor sentiment. 1998/1999 is destined to represent the same thing.
A similar 38-week decline from July 20, 1998, as in 1966, identifies the
week of April 12-16th as the next key cycle in the market. More on this
later...
#8. European Unity beginning with monetary union in
January 1999. This is a tremendous task from a computer-programming standpoint,
so Europe is going to have to contend with two major tasks in one year.
Since the Euro is first priority, how much emphasis can be placed on Y2K?
In addition, Europe is already attracting a great deal of the best programmers
for this task. How many will be left for Y2K?
Here
again, however, the monetary union is secondary. The revival of the Roman
Empire, a prophetic theme that runs throughout the book of Daniel and Revelation
in the Bible, just happens to be coinciding with all of these other natural
and man-made events.
#9. Middle East conflict is inevitable. This is a
corollary to point #2 - the Jewish Year 5760. However, the events and timetables
are more tangible and are presented for those who cannot conceive of the
numeric importance and impact of #2. May 1999 is when the Oslo agreements
reach fruition and when Yasser Arafat has repeatedly announced he will declare
Palestinian statehood. Which brings us to the Cycle of Time V: Israel &
Jerusalem at a Crossroads.
WYE 2 K?
When
the COT V was being completed (10/98) it became obvious (to most) that no
peace agreement was forthcoming at Wye River, Maryland. Benjamin Netanyahu
was packing his bags on his 49th birthday (10/21/98) and preparing to depart.
Regardless, I still concluded that another agreement could soon be signed
as the culmination of 25 years working toward peace.
Two
days later, the US pulled a rabbit out of the hat and managed to piece together
an agreement. Just as an interest rate cut can mark the top of a bond or
stock rally & the missile attacks on Iraq marked the top in Crude, so
too is this agreement likely to mark the end of peace in the Middle East...
not the beginning.
All
the work has gone into the agreement (for show). None of the work has gone,
or is likely to go, into implementation. And, mark my words... in May 1999
(or sometime immediately surrounding that), the PLO will find something
that Israel has not done to their liking and use it as an excuse to declare
statehood (citing Jerusalem as the capital of a PLO nation). The time for
peace is passing.
#10. I will not even get into this topic since I am
not sure what to think. However, any lovers of the truly esoteric can investigate
predictions of Nostradamus (pertaining to July 1999) and of Edgar Cayce
(who forecast an earth axis shift in 1999).
The
bottom line is that even if 50% of these cycles are bogus or 50% have only
minimal impact, that still leaves 50% with a much greater impact. Again,
it is the principle of synergy that makes this discussion so pertinent,
not any individual aspect of it.
Late
Update: Already the Wye River
Memorandum is falling apart. Another bomb exploded in the West Bank, following
several explosions over the last 7-10 days and Netanyahu is adamant about
Arafat's compliance this time around. To quote the 10/29/98 Wall Street
Journal:
"Netanyahu
told Likud supporters Israel won't cede any land until Arafat details how
he will carry out security promises, drawing quick Palestinian criticism.
The U.S. said a plan is to be submitted tomorrow..."
This
was followed by suicide bombings in Jerusalem and an attack on Jewish soldiers
in the West Bank... precisely as forecast. Finally, on 11/14/98 Yasser Arafat
announced he definitely plans on declaring statehood in May 1999 with Jerusalem
as the capital. The fireworks are set to begin. More in the months to come...
There
is another potential that needs to be considered, though I am not recommending
investing off of this analysis. An investor should simply keep it in the
back of their minds for now. Several months ago, I detailed some of the
multi-century earth cycles that were converging in 1998-2001. One of the
first dangerous alignments of not only long-term but also near-term cycles
will come to play in early-1999 and was recently detailed in my International
Stock Index comments in the November INSIIDE Track. I reprint this excerpt
below
Stock Indices (Int'l)
10/29/98
- October was kind to equity markets. This fit with comments from last month
regarding what would be different about this October. My conclusion was
that we could see an early-October low and subsequent 2-3 week rebound instead
of the expected October crash.
Asian
markets, sans the Nikkei, fared the best. While some of them were experiencing
25% advances, the Nikkei could not even squeak out a 1% jump.
The
Nikkei has traded in a symmetrical pattern the last 2 1/2 years and I expect
some similarities in the coming months. In 1996, a high was set mid-year
and led to a 29-week decline into January 1997.
A
23-week rebound ensued and a lower high was set exactly 52 weeks (1-year
anniversary) from the preceding high. This ushered in another 29-week decline
into January 1998 and subsequent low exactly 52 weeks (1-year anniversary)
from the previous low.
Following
both the 52 week low-low pattern (which portends a low during the week of
January 4-8, 1999) and the 52 week high-high pattern (which portends an
intervening low at the .618 or 32 week mark during the week of January 25-29,
1999), I am forecasting a low in January 1999. But, that is not all that
enters this equation.
It
is fascinating to me that this market has hit rock bottom twice at the same
time that the most prevalent and consistent earthquake cycle occurs in Japan
- mid-January. Since this cycle has had its greatest impact in the odd-numbered
years (1/93, 1/95 & 1/97), January 1999 is important... particularly
January 16/17th, 1999.
In
1998, there were 5 major earthquakes (globally) between January 10th &
15th (6.2 or greater) and Mt. Etna was erupting this entire time. In January
1997, there were 8 major earthquakes (5.7 or greater) between the 11th &
22nd & 2 major volcanic eruptions.
A
Japanese 6.3 quake occurred on January 17, 1997. January 16/17 1995 saw
the 6.8 Kobe, Japan earthquake - costing over $50 billion (US). January
16, 1993 saw a 7.5 quake in N. Japan at the same time a 5.7 was hitting
N. California (the Northridge, CA 6.6 quake also occurred in this sequence
on January 17, 1994).
I
know that cycles are not the only thing that governs earth disturbances.
And I realize that it would be irrational to predict an earthquake (or volcano)
based solely on cycles. But, I would be extremely wary of Japanese stability
- both geophysical and monetary - during this time period.
(Another
sequence of quakes occurs on full moons. January 17, 1999 is a new moon,
while January 31st is a full moon AND lunar eclipse. A solar eclipse follows
on February 16th. This leads me to believe that the first 45 days of 1999
are high risk for a significant, and potentially costly, earth disturbance
...quite possibly in Japan.)
As
I pointed out in the past, in January 1995 the Nikkei was in a downtrend
and the Yen was heading higher. Immediately following the Kobe quake, the
Nikkei plummeted and the Yen skyrocketed. Repatriation of the Yen and selling
of equities was needed to cover costs. The Yen and Nikkei are in similar
patterns now and could see a similar reaction if something shakes loose
in January.
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