2021 Forecast anyone?

[786Trader]

Hi guys, 

              It's forecast and yearly strategy time. Well I'm a tad late really.  What does 2021 hold regarding finance, commodities and indices? 

Personal strategy for 2021 is obviously to not lose money, where possible.  Being predominantly an Oil and gasoline trader, I shall start with that. Global stocks and supplies are just about balanced as of now with slight imbalance in US as Covid effects continue to stall demand in key states. However, OPEC+ seem to have their communal act together and are actually acting in unison regarding supply. Naturally, this has increased the price, as intended. Price of Brent crude expected to rise from current level $51.00 to a minimum of $60-$65 by the end of 2021. Price will rise by at least 17% as airlines return to a semblance of normal. A further rise will be caused by USD depreciation and increased demand fed by a gradual return to normal road use, also expect some supply disruption as threats of war or political upheaval threaten the supply chain. All this should lead to an increase of 20-25% over the course of 2021. I expect the price of Gasoline to increase in line with Brent., currently 13850 and expect to see 16500+ by the end of 2021.

The Dow. The Dow will continue to be overvalued and even increase by a factor of perhaps 10%. I expect the relative calm of a Biden presidency will be balm and stimulus enough to the markets long used to having to check the Donuts manic twitter (nutter) feed before going to work. I expect a Republican majority of ONE in the senate which will serve as counter-balance to the urges of Democratic fiscal excess. Markets will like this. I expect the Dow to rise to 31500- 32500 maybe higher, before a significant retracement sometime after the summer. 

 

FTSE. This year has been a total **** storm for the FTSE 100. Even the trade deal has only served the auto industry and not the Financial Services industries (the golden goose and net £85 billion contribution to the treasury p.a). I expect there to be a satisfactory deal in the end re Financial Services, though with caveats, as the EU is not wild keen on the UK becoming a vast washing machine for tax avoiding EU residents. (The very thought, how dare they even imply....) However, the FTSE IS undervalued. I would expect to see the FTSE rise from current levels 6650 to 7350 possibly even higher.  The UK economy will return to some sense of normalcy and with it a rebound in confidence and spending, including in travel and leisure.  Trade deals with the USA may be problematic as more folk become aware of the full implications of leaving the EU's common agricultural policy, as US farmers may insist on full access to UK market as precondition to US doing a deal on Financial and digital services, for example, in a classic " pork for pork" exchange which tends to  especially please incumbent US politicians. Also, sooner or later Google, Facebook and co are going to HAVE to pay their FAIR share of tax to the Uk economy from which they derive so much taxless profit. Could also prove tricky in  trade negotiations.

As a result of the considerable in flows of capital into the Uk markets I expect the £ to continue to appreciate from multi year lows. The Cable will reset in Sterlings favour.  I also expect the BoE to take first mover advantage and raise interest rates by upto 1%. This will also be beneficial to Sterling and may even boost GDP...I expect Sterling to break the $1.44 , retrench and explode past 1.55 post US negotiations and a deal, even if that is unlikely within the 2021 time-frame. I don't see Sterling devaluing much against USD in 2021.

Finally, on the subject of dwarf giants. The price of Zoom and Tesla has astonished many folk in 2020. In doubt is the actual value in the price, the dividend and the whole question of value. Tesla's price suggests it will be the dominant manufacturer of EV's in the world, with no significant competition worth the name. I would suggest that overstates Teslas position. True enough it is profitable, thanks mainly to the grants it receives for making eco friendly vehicles. But it is also vulnerable. It is possible that traditional manufacturers may end up dumping perfectly reliable reasonably priced cars on the market at a time when Teslas are still comparatively expensive. At least 10 years before gasoline vehicles will be no longer available, 15 for hybrids. That's a lot of competition and enough time for several able competitors to rise, consolidate and take on Tesla at its own game.  Making Teslas  stratospheric p/e as outrageous and unjustified as it appears. It's a possibility. Zoom has millions of users but not enough revenue. It also has competition in the form of Google, Microsoft Teams, Slack, even Facebook. It was Zooms lucky year, not sure it will maintain value or users when comparative new normal returns. Both stocks am liable to short, at my peril, at various points in the year.

Wishing all good health and handsome profits for 2021. Happy New year!

 

 

 

 

 

   

[THT]

Happy New Year and all the best for 2021

I don't do short-term forecasts as the methods I use will work just fine regardless of what direction the market actually go in

I do do long term forecasts though!

The general market officially turned Inflationary end of 2016 (according to how I view things) for its 16-19 yr cycle, that will drag virtually every asset class upwards with it

Funny enough I've never ever traded oil/gas

I'll have to dig out the prediction I made about the dow/sp500 5 or so years back  - but very simply the 16-19 yr cycle during its UP phase (which commenced Nov 4th 2016) on average gains approx (from memory) 1500% simple growth (ex divis) - I see no reason why this growth phase won't repeat 1000%+ as well

Interesting about Interest Rates in the UK - again that cycle is ending and the next one starting so I'd envisage inflationary Int rates going forward

People say "Can't believe how long Interest Rates have been low for" - I can the last time this cycle hit was in 1930-1951 which was 21 years of depressed Int rates - I think the events they blamed were the 1929 crash and world war 2 - but BOTH events were a consequence of the underlying cycles!

THT

[goldenbrown]

By total fluke I have just come across this:

which has a follow up second part:

I would be interested to know people's opinions on this.

Thanks for the feedback

Edited January 16, 2021 by goldenbrown

[THT]

On 16/01/2021 at 15:16, goldenbrown said:

By total fluke I have just come across this:

which has a follow up second part:

I would be interested to know people's opinions on this.

Thanks for the feedback

I'll try to be concise:

Dent was in 2010 calling for the mother of all stock market crashes - so were Elliott Wave International in fact EWI have been call for a massive collapse since 1986! 

Some of what he says is accurate - deflation for example - the reason QE has not caused inflation is because it was issued in a deflationary cycle

The crash he talks about won't happen - I listened to dent and EWI back in 2010 and I choose to do my own research as other things i was investigating suggested the opposite to what they were both spouting

Read my Time Cycles page, it explains the deflationary/inflationary cycles - proven with 220+ years of stock market history behind the reasoning

The deflationary cycle he refers to ended late 2016, its now inflationary according to my calcs and research and my prediction is stock market is going upwards until the mid 2030's when it will crash and top out - yet Dent still thinks its in play

Up until then we might get a 1987 style crash event but overall the corrections will be modest not massive and they will all be quickly surpassed

I don't listen to anyone out there - I trade independently according to my methods so I don't need to be buying and holding and if I'm wrong so be it - it won't affect my trading as the market dictates my positions, not my expectations - since 2010 this has work exceptionally well, where if I'd of followed EWI and Dents forecasts I'd of lost everything in 2010!

I've no thoughts on Gold other than it is inflationary hedge - as mentioned on another thread when the stock market is inflationary (which I think started 2017) then price correlation backwards to last time it was inflationary (1982-2000) gold was subdued

 

 

[Ozquant]

We are in the midst of a market where value is irrelevant as people only seek price . Forecasting in this type of market is near impossible . Reminds me of 1999 where 3 rolls of ethernet cable and a good spiel could conjure up a multi billion market cap on no revenue at all .  I can really only go by technicals and even they are in extreme doubt with Central Banks making price discovery unlikely .   

 Previously when the 1 year moving average on VIX surpassed 20 the market (SPX) produced a swing high that was not exceeded for many years  . we are now in that realm and with reduced conviction i feel a top will be made during 2021 that will last for 3 or 4 years  .  Central Banks are almost past the point on no return with money printing and with inflation seemingly on the horizon the fan meets the proverbial .

Anyway love the volatility and ultimately as a short term trader i dont really care where the market is in a year  although the probability on my eyes is we are lower than it is today .  Trade well out there , get a handle on volatility , best thing you can ever do .  

[THT]

On 03/03/2021 at 09:54, Ozquant said:

Previously when the 1 year moving average on VIX surpassed 20 the market (SPX) produced a swing high that was not exceeded for many years  . we are now in that realm and with reduced conviction i feel a top will be made during 2021 that will last for 3 or 4 years 

In the cycle we're in there should not be a correction of the magnitude of 2000-03 or 07-09 - the cycles changed from down then to up now

there will be corrections but they should be short lived - for visual see 1949-1966 or 1982-2000 

 

[Ozquant]

It is what it is . I am a short term trader so i dont really care where markets go beyond a max 10 week time frame .  

"  Forecasting in this type of market is near impossible  " I am certainly not making any definitive predictions but i am a technical trader and the pattern exists in VIX  so its what i will go with but i reserve my right to change bias at any stage 

Gann cycles , armstrong etc not my thing  . My alpha is produced  in the next 2 days not 2 years . I am a systematic trader who backtests , writes all my code in my charts outside 2 generics that i modify anyway  . I Quantify anything i can  .  Try to be as objective as possible with open minded critical thinking principles . But i know what i know and most are using things have zero edge and they dont even know it  .  If you knew you had a negative expectancy youd stop doing that thing .  Volatility is my main focus and it tells me most of what i need to know  , of course i use other things for context but the base methodology is Vol  .   

I just shared that VIX thing to show something different  .  This long term prediction game is full of broken clocks  . Many permabears have called 27 of the last 2 crashes 😁 . Just trade what comes day by day and sleep on mostly cash is my MO .  I trade 5m charts and 3 weeks is an investment to me  . Rock on  

[THT]

3 hours ago, Ozquant said:

It is what it is . I am a short term trader so i dont really care where markets go beyond a max 10 week time frame .  

"  Forecasting in this type of market is near impossible  " I am certainly not making any definitive predictions but i am a technical trader and the pattern exists in VIX  so its what i will go with but i reserve my right to change bias at any stage 

Gann cycles , armstrong etc not my thing  . My alpha is produced  in the next 2 days not 2 years . I am a systematic trader who backtests , writes all my code in my charts outside 2 generics that i modify anyway  . I Quantify anything i can  .  Try to be as objective as possible with open minded critical thinking principles . But i know what i know and most are using things have zero edge and they dont even know it  .  If you knew you had a negative expectancy youd stop doing that thing .  Volatility is my main focus and it tells me most of what i need to know  , of course i use other things for context but the base methodology is Vol  .   

I just shared that VIX thing to show something different  .  This long term prediction game is full of broken clocks  . Many permabears have called 27 of the last 2 crashes 😁 . Just trade what comes day by day and sleep on mostly cash is my MO .  I trade 5m charts and 3 weeks is an investment to me  . Rock on  

I was just trying to help by saying that the chart you posted was of a down cycle and that its now UP - so that might skew your expectations - it might not but fore warned is fore armed as they say

That's what the cycles pick up increased volatility its the exact reason the markets recently corrected - some of them actually work!

Yeah I've been a technical trader for years 12 full-time

I agree I bet most would be traders have a neg expectancy and don't realise it

Yep Elliott Wavers have been calling for 5 of 5 since 1986 - still hasn't come, because it won't

 

[Ozquant]

48 minutes ago, THT said:

I was just trying to help by saying that the chart you posted was of a down cycle and that its now UP - so that might skew your expectations - it might not but fore warned is fore armed as they say

 

 

Ultimately what ever happens regarding " cycles" will be of no help to me . I am my own trader    Re volatility , its my niche , My models pick up most swings high and low .  My methods are recactive not so much predictive .   Its doesnt matter where it goes as long as it goes  .  1 year predictions are just a little fun with no weight in my profitability . Most years are up so just on that you should be bullish year on year and you will be right more times than not  .  I dont care if i am right or wrong . I left my ego behind a while back  .  Vix hasnt been around long enough to have a handle on its efficacy but i have done studies on realised volatility back multi decades and i put some credence in my conclusion  , but once again it will have zero influence on my returns unlike most  . We know there are no absolutes in this game , just probabilities and possibilities , define the former and manage the latter and it takes care of itself   ..  rock on  

Wise words 

Edited March 4, 2021 by Ozquant

[THT]

8 minutes ago, Ozquant said:

Ultimately what ever happens regarding " cycles" will be of no help to me . I am my own trader    Re volatility , its my niche , My models pick up most swings high and low .  My methods are recactive not so much predictive .   Its doesnt matter where it goes as long as it goes  .  1 year predictions are just a little fun with no weight in my profitability . Most years are up so just on that you should be bullish year on year and you will be right more times than not  .  I dont care if i am right or wrong . I left my ego behind a while back  .  Vix hasnt been around long enough to have a handle on its efficacy but i have done studies on realised volatility back multi decades and i put some credence in my conclusion  , but once again it will have zero influence on my returns unlike most  . We know there are no absolutes in this game , just probabilities and possibilities , define the former and manage the latter and it takes care of itself   ..  rock on  

Wise words 

I think most professional traders have that methodology and mindset its what sets us apart from the rest

I don't look at the VIX, as with cycles for you, the VIX isn't of interest to me, done perfectly well without the need for it so far and that won't change going forward