"I think this is actually a pause,” said Gina Sanchez, founder of Chantico Global.
“The most important thing for the outlook on the dollar is going to be the expectation for future interest rates.
And as long as those continue to remain hawkish — the belief that eventually we’re going to see an interest rate hike — then you’re going to continue to see strength in the dollar.”
Sanchez expects the Federal Reserve will hold off on a rate hike until September.
In the meantime, the European Central Bank in the midst of quantitative easing, potentially weakening the euro versus the buck.
“We would have to see really, really bad numbers in the U.S. to avoid continued strengthening,” said Sanchez, a CNBC contributor.
“The weakness of the rest of the world means the dollar continues to strengthen.”
The technicals are also bullish, based on the chart work of Craig Johnson, senior technical research strategist at Piper Jaffray.
“The dollar will remain King Dollar and it will also retain its crown,” declared Johnson, who is also president of the Market Technicians Association.
He is particularly optimistic on the dollar index’s future because he sees it breaking out of a pennant formation that had been in place for over a month.
“The next move in the dollar — and it’s starting to happen today — is to the upside,” he said.
“The next resistance comes into play at around 99 to 100.
That’s where we think, in the short term, we can see the dollar further appreciate toward.”
Johnson sees the dollar as having bounced from a large bottom it made over the past five years.
“The dollar is still going to continue to strengthen,” he predicted.
“It’s going to continue to pull in money from outside the U.S. and, ultimately, that means weakness for commodities, too.
Bullish the dollar.”
--Lawrence Lewitinn, "Is the Dollar Rally Over?", Finance.Yahoo.com, February 27, 2015.

Dear subscribers,

If you live in or near Baltimore or Washington, D.C. and you would like to get together near the end of March 2015, please let me know.

This is update #2076 for Monday morning, March 2, 2015.

In case you're wondering why I haven't included my logo this week, AWeber made an error in creating their new update software. If I insert the logo, as I had done in my most recent intraday update, then all of the font types and sizes become modified. Eventually, this is supposed to be fixed, but you never know. I have been experimenting with ways around this problem, but I haven't figured out a satisfactory solution. At least AWeber has by far the most reliable delivery record of all of these services, and in my personal experience has never had a single failure to any Gmail or Yahoo account.

An important development in the global financial markets in recent months has been increasingly negative real interest rates in the vast majority of countries. China's central bank cut its key interest rates again by a quarter percent, and many other central banks have done likewise. The real interest rate in any country is its nominal or stated interest rate minus its inflation rate. Inflation has been generally low, but as nominal rates have been slumping, real interest rates have become more negative than they have been since the late 1970s and early 1980s. Historically, increasingly negative real rates have correlated positively with rising prices for commodity producers and related assets.

So far, 2015 has featured an intensification of some long-term trends, including higher levels for the U.S. dollar and for most other U.S. assets, as well as the reversal of some former trends including lower U.S. Treasury prices (meaning higher yields) along with the early stages of rebounds for assets which had recently reached six-year lows including many commodity producers and emerging-market securities. I think it is very likely that the most extended trends have already begun or will soon begin reversals which will eventually become dramatic moves in the opposite direction. This will include substantially lower prices for nearly all U.S. assets, including stocks, bonds, real estate, Treasuries, and the greenback, as well as rallies lasting a year or more for commodity-related and emerging-market assets. While U.S. Treasuries are generally considered by most to be relatively non-volatile securities, I think they will slump to their lowest levels since 2011 by the first half of 2016. I will discuss U.S. Treasuries in more detail in an upcoming update.

Of course True Contrarian investors have been hearing about investing like Mr. Spock for more than nine years, but finally someone else has written an intelligent article on a similar topic:

The Fed continues to talk about deflation and especially about how wages are allegedly stagnant, but the facts on the ground are mostly pointing in the inflationary direction as higher pay is becoming almost a litmus test of a company's social consciousness:

Here is a rare bullish outlook toward gold's behavior between now and next year, citing the rarely-mentioned but important fact that increasingly negative real interest rates worldwide historically correlate with rising prices for commodities and their producers:

Real interest rates are continuing to become more negative in many countries, including China's recent cut by a quarter percent:

U.S. dollar bullishness remains pervasive and nearly universal, being taken for granted by many analysts:

Each time that a major asset is completing a multi-year top or bottom, there are numerous analysts who explain why it's completely logical and will become even more extreme:

Just in case you think politics is all about friendly compromising and good-natured debate, here is a true story from Brooklyn:

I have mentioned the following contrarian investor several times in previous updates--he just passed away at the age of 109:

Here is a well-written obituary of Leonard Nimoy:

The U.S. dollar index dropped to a Wednesday 4:15 a.m. low of 94.127, rose to a Wednesday 8:00 a.m. high of 94.480, descended to a Thursday 5:00 a.m. low of 94.059, climbed to a Thursday 1:05 p.m. high of 95.357, dropped to a Friday 8:10 a.m. low of 94.905, advanced to a Friday 9:35 a.m. high of 95.364, ascended to a Sunday 7:15 p.m. peak of 95.505, its highest mark since January 25, dropped to a Monday 7:20 a.m. low of 95.063, and traded Monday morning near 95.21.
The behavior of the U.S. dollar index appears to be in the process of completing a false upside breakout as it rallied to its highest point since September 2003. The most likely continuation is a "surprising" retreat below 80, and perhaps back to around 75, completing its next multi-year bottom probably near the end of 2015. Just as the U.S. dollar index has made several lower highs since July 5, 2001, it has made several higher lows since March 16, 2008, so another higher low in the mid-70s seems probable for late 2015 and/or early 2016. The full pattern of important lower highs dating back to 2001 is listed below just before the data for TLT.
Emerging-market currencies had been especially out of favor throughout 2013-2014 and into early 2015, and will likely be among the strongest to rebound throughout the remainder of 2015 and probably into the first several months of 2016.
The U.S. dollar index has been in a peculiar long-term bull market since March 16, 2008, when it had completed an all-time nadir at 70.698.
Since then, the U.S. dollar index completed its first higher low of 71.314 on July 15, 2008; its second higher low of 72.696 on May 4, 2011; its third higher low of 73.421 on July 27, 2011; its fourth higher low of 73.452 on August 17, 2011; its fifth higher low of 73.525 on August 29, 2011; and its sixth higher low of 74.724 on October 27, 2011.
It may have completed additional higher lows in November 2011, but we won't know that for certain until the greenback completes its current intermediate-term retreat.
Peculiar is an excellent word, because the U.S. dollar index surged to an important high in less than one year on March 4, 2009, and has been forming several important lower highs since then, thereby creating a long-term bear market which has persisted for roughly one year less in duration than its long-term bull market.
On February 19, 2015, the U.S. dollar index fell to a 3:30 a.m. bottom of 93.835, its lowest level since February 17, 2015.
On February 17, 2015, the U.S. dollar index retreated to a 6:55 a.m. bottom of 93.801, its lowest point since February 6, 2015.
On February 3, 2015, the U.S. dollar index slid to a 1:30 p.m. bottom of 93.250, its lowest mark since January 21, 2015.
On January 25, 2015, the U.S. dollar index climbed to a 6:49 p.m. peak of 95.527, its most elevated reading since September 2003.
On December 16, 2014, the U.S. dollar index slumped to a 7:05 a.m. bottom of 87.627, its lowest reading since November 27, 2014.
On November 16, 2014, the U.S. dollar index dropped to a 9:30 p.m. bottom of 87.182, its lowest level since November 6, 2014.
On October 15, 2014, the U.S. dollar index plummeted to a 9:40 a.m. bottom of 84.472, its lowest point since September 23, 2014.
On September 16, 2014, the U.S. dollar index slid to a 1:00 p.m. bottom of 83.864, its lowest mark since September 7, 2014.
On August 28, 2014, the U.S. dollar index retreated to a 1:20 a.m. bottom of 82.315, its lowest reading since August 22, 2014.
On August 8, 2014, the U.S. dollar index descended to a 10:35 a.m. bottom of 81.261, its lowest level since August 1, 2014.
On August 1, 2014, the U.S. dollar index descended to a Friday noon bottom of 81.188, its lowest point since July 29, 2014.
On July 21, 2014, the U.S. dollar index retreated to a 12:30 a.m. bottom of 80.420, its lowest mark since July 16, 2014.
On July 9, 2014, the U.S. dollar index retreated to a 9:30 p.m. bottom of 79.976, its lowest reading since July 3, 2014.
On July 1, 2014, the U.S. dollar index dropped to a 1:10 p.m. bottom of 79.740, its lowest level since May 9, 2014.
On May 8, 2014, the U.S. dollar index descended to an 8:35 a.m. bottom of 78.906, its most depressed point since September 14, 2012.
On July 9, 2013, the U.S. dollar index rallied to an 11:40 a.m. peak of 84.753, its most elevated reading since July 5, 2010.
On September 14, 2012, the U.S. dollar index slumped to a 10:10 a.m. bottom of 78.601, its lowest mark since February 29, 2012.
On July 24, 2012, the U.S. dollar index rallied to a 1:45 p.m. peak of 84.100, its most elevated reading since July 13, 2010.
On May 1, 2012, the U.S. dollar index dropped to a 9:55 a.m. bottom of 78.603, its l6owest reading since February 29, 2012.
On February 29, 2012, the U.S. dollar index retreated to a 12:05 a.m. bottom of 78.095, its lowest level since December 2, 2011.
On November 30, 2011, the U.S. dollar index slumped to a 9:00 a.m. bottom of 77.923, its lowest point since November 23, 2011.
On November 8, 2011, the U.S. dollar index slid to an evening bottom of 76.513, its lowest mark since October 25, 2011.
On October 27, 2011, the U.S. dollar index slumped to a 2 p.m. bottom of 74.724, its lowest reading since September 6, 2011.
On August 29, 2011, the U.S. dollar index slid to a very early morning bottom of 73.525, its lowest level since August 17, 2011.
On August 17, 2011, the U.S. dollar index slumped to a mid-morning bottom of 73.452, its lowest point since July 27, 2011.
On July 27, 2011, the U.S. dollar index retreated to a very early morning bottom of 73.421, its lowest mark since May 5, 2011.
On May 4, 2011, the U.S. dollar index slid to a mid-morning bottom of 72.696, its most depressed reading since July 29, 2008.
Relevant past peaks for the U.S. dollar index include 95.527 on January 25, 2015; 88.708 on June 6, 2010; 89.624 on March 4, 2009; 92.63 on November 16, 2005; 99.49 on August 26, 2003; and 120.99 on July 5, 2001.
I expect the U.S. dollar index to complete a historic top near the end of the next global equity bear market anywhere between 100 and 120, perhaps in the year 2016 or 2017.

TLT, a fund of U.S. Treasuries averaging 28 years to maturity, dropped to a Wednesday 12:10 p.m. low of 129.08, rose to a Wednesday 3:44 p.m. high of 130.39, closed Wednesday at 130.23, climbed to a Thursday 8:29:31 a.m. pre-market peak of 130.70, its highest reading since February 9, slid to a Thursday 4:00 p.m. low of 128.40, dropped to a Friday 10:15 a.m. low of 128.27, rose to a Friday 3:02 p.m. high of 129.62, and closed Friday up 1.08 at 129.53.
The behavior of TLT is typical for any asset which is still in a very-long-term bull market, but which will likely suffer an especially dramatic correction into 2016 before probably achieving a new all-time high again in 2017. Its next most likely move is to retest the bottom of its channel in the high 80s or low 90s sometime in the first half of 2016. This is part of a typical rotation from defensive to cyclical assets, which occurs during nearly any transition from a multi-year equity bull market to a subsequent equity bear market. Because defensive assets became more overvalued than usual and cyclical names including mining and emerging-market shares had been more undervalued than usual during June 2013-February 2015, this rotation will likely continue to be stronger than average throughout the remainder of 2015 and likely persisting into the first half of 2016 until TLT completes its next multi-year nadir. Afterward, when U.S. Treasuries have once again become highly unpopular, TLT will perhaps form several higher lows for a period of months until it once again rallies strongly and likely achieves a new all-time peak in early 2017.
TLT is likely to slump to roughly 90-100 and possibly below 90, where I will progressively repurchase it as close as possible to its lowest points during the first several months of 2016. I would like to see several well-known analysts declare that the long-term U.S. Treasury bull market which began in 1981 has ended, since that will signal that it still has a lot of life and at least one more spectacularly higher high still to come during 2017.
On February 20, 2015, TLT retreated to a 2:51 p.m. bottom of 126.00, its lowest point since February 17, 2015.
On February 17, 2015, TLT slumped to a 3:09 p.m. bottom of 125.92, its lowest mark since December 31, 2014.
On January 30, 2015, TLT rallied to a 6:04 p.m. after-hours peak of 138.85, a new all-time zenith.
On December 24, 2014, TLT slid to a 9:06:01 a.m. pre-market bottom of 122.92, its lowest reading since December 8, 2014.
On December 8, 2014, TLT dropped to a 4:24:42 a.m. pre-market bottom of 120.70, its lowest level since December 5, 2014.
On December 5, 2014, TLT slid to an 8:30:21 a.m. pre-market post-employment bottom of 120.48, its lowest point since December 3, 2014.
On December 3, 2014, TLT dropped to a 10:02 a.m. bottom of 120.13, its lowest mark since November 24, 2014.
On November 12, 2014, TLT retreated to a 4:59:24 p.m. after-hours bottom of 118.28, its lowest reading since November 11, 2014.
On November 11, 2014, TLT descended to a 4:51:34 a.m. pre-market bottom of 118.21, its lowest level since November 7, 2014.
On November 7, 2014, TLT retreated to an 8:47:18 a.m. pre-market, post-employment bottom of 117.83, its lowest point since October 6, 2014.
On September 17, 2014, TLT slid to a 3:56 p.m. bottom of 112.73, its most depressed mark since July 15, 2014.
On July 15, 2014, TLT retreated to a 10:27 a.m. bottom of 112.50, its lowest reading since July 9, 2014.
On July 3, 2014, TLT slumped to an 8:33:08 a.m. pre-market, post-employment bottom of 110.13, its lowest level since April 29, 2014.
On April 29, 2014, TLT slid to an 8:39:36 a.m. pre-market bottom of 109.98, its lowest point since April 22, 2014.
On April 22, 2014, TLT slid to a 10:30 a.m. bottom of 109.61, its lowest mark since April 10, 2014.
On April 2, 2014, TLT slid to a 3:19 p.m. bottom of 107.17, its lowest reading since March 20, 2014.
On March 19, 2014, TLT slid to a 2:00 p.m. Fed announcement bottom of 106.81, its lowest level since March 13, 2014.
On March 7, 2014, TLT slumped to an 8:32:41 a.m. post-employment bottom of 105.44, its lowest point since January 22, 2014.
On January 10, 2014, TLT dropped to an 8:28:12 a.m. pre-market and pre-U.S. employment report bottom of 103.05, its lowest mark since January 9, 2014.
On January 8, 2014, TLT retreated to a 1:02 p.m. bottom of 102.10, its lowest reading since January 3, 2014.
On January 3, 2014, TLT descended to a 10:33 a.m. low of 101.77, its lowest level since January 2, 2014.
On January 2, 2014, TLT dropped to an 8:30:15 a.m. pre-market bottom of 101.44, its lowest point since December 31, 2013.
On December 31, 2013, TLT slumped to a 1:59 p.m. bottom of 101.17, its most depressed mark since August 2, 2011.
On July 25, 2012, TLT climbed to a 10:09 a.m. top of 132.21, an all-time record zenith.
On July 25, 2011, TLT slumped to a pre-market bottom of 94.75, its lowest reading since July 7, 2011.
On June 30, 2011, TLT slumped to a mid-morning bottom of 93.29, its lowest level since May 2, 2011.
On April 8, 2011, TLT slid to a pre-market bottom of 89.64, its lowest point since February 18, 2011.
On February 10, 2011, TLT retreated to a late morning bottom of 88.14, its lowest mark since April 7, 2010.
On April 7, 2010, TLT slumped to an early morning bottom of 87.30, its most depressed reading since September 20, 2007.

VIX is probably the best-known measure of equity index implied volatility, which is synonymous with investors' fear of an upcoming bear market.
VIX descended to a Wednesday 1:34 p.m. bottom of 12.86, its lowest level since December 8, 2014, rose to a Thursday 3:04 p.m. high of 14.57, closed Thursday at 13.91, rose to a Friday 9:46 a.m. high of 14.17, dropped to a Friday 10:55 a.m. low of 13.29, and closed Friday down 57 cents at 13.34.
VIX began a pattern of higher lows from a multi-year bottom which occurred at 10.28 on July 3, 2014, which is signaling the recent or upcoming completion of a bull market for the S&P 500 just as the VIX bottom of 9.39 on December 15, 2006 followed by several higher lows for VIX presaged the general U.S. equity peaks in the second half of 2007. VIX will likely continue in a general uptrend with additional higher lows until it eventually reaches its next multi-year top probably in 2017. At that point, it will begin to form lower highs over a period of several months to signal that U.S. equity indices are approaching some kind of multi-decade bottom, just as progressively lower readings for VIX following its October 24, 2008 multi-year zenith of 89.53 served as an early notice of the S&P 500's historic nadir at 666.79 on March 6, 2009.
On February 2, 2015, VIX ascended to a 10:06 a.m. peak of 22.81, its highest point since January 16, 2015.
On January 16, 2015, VIX climbed to a 10:17 a.m. peak of 23.43, its highest mark since December 17, 2014.
On December 17, 2014, VIX surged to a 10:31 a.m. peak of 24.61, its highest reading since December 16, 2014.
On December 16, 2014, VIX rallied to a 10:14 a.m. peak of 25.20, its highest level since October 16, 2014.
On December 5, 2014, VIX slid to an 11:55 a.m. bottom of 11.53, its lowest point since September 19, 2014.
On October 16, 2014, VIX rallied to a 10:17 a.m. peak of 29.41, its highest point since October 15, 2014.
On October 15, 2014, VIX surged to a 1:28 p.m. peak of 31.06, its most elevated mark since November 29, 2011.
On September 19, 2014, VIX retreated to a 9:38 a.m. bottom of 11.52, its lowest mark since August 26, 2014.
On August 26, 2014, VIX retreated to a 9:36 a.m. bottom of 11.33, its lowest reading since August 25, 2014.
On August 25, 2014, VIX descended to an 11:56 a.m. bottom of 11.24, its lowest level since July 17, 2014.
On July 17, 2014, VIX retreated to a 10:22 a.m. bottom of 10.85, its lowest point since July 16, 2014.
On July 16, 2014, VIX slumped to a 9:36 a.m. bottom of 10.59, its lowest mark since July 3, 2014.
On July 3, 2014, VIX slid to a post-1:00 p.m. (half-day) bottom of 10.28, its most depressed reading since February 22, 2007.
On March 14, 2013, VIX slid to a post-4:00 p.m. bottom of 11.05, its most depressed reading since February 26, 2007.
On June 4, 2012, VIX rallied to a 10:09 a.m. peak of 27.73, its highest point since December 12, 2011.
On November 25, 2011, VIX climbed to an early morning peak of 34.77, its highest reading since November 21, 2011.
On November 21, 2011, VIX rallied to a late morning peak of 35.29, its highest level since November 17, 2011.
On November 17, 2011, VIX surged to a 1:52 p.m. peak of 36.46, its highest point since November 1, 2011.
On November 9, 2011, VIX soared to a late afternoon peak of 36.43, its highest mark since November 1, 2011.
On November 1, 2011, VIX soared to a noon peak of 37.53, its highest reading since October 7, 2011 and a gain of more than 53% within 1-1/2 trading days.
On October 4, 2011, VIX climbed to a 10 a.m. peak of 46.88, its highest level since August 9, 2011.
On August 9, 2011, VIX rallied to a post-Fed-announcement peak of 47.56, its highest point since August 8, 2011.
On August 8, 2011, VIX soared exactly 50% to its intraday peak of 48.00, its highest mark since May 21, 2010.
On May 21, 2010, VIX soared to an early morning peak of 48.20, its most elevated reading since March 10, 2009.

The S&P 500 Index climbed to a Wednesday 1:39 p.m. peak of 2119.59, a new all-time zenith, dropped to a Thursday 3:04 p.m. low of 2103.76, closed Thursday at 2110.74, rose to a Friday 12:32 p.m. high of 2112.74, dropped to a Friday 3:41 p.m. low of 2103.75, and closed Friday down 6.24 at 2104.50.
IWM is an exchange-traded fund based upon the Russell 2000 Index. IWM traded at 120.58 on March 4, 2014 and 120.64 at 8:43:34 a.m. in the pre-market session on March 6, 2014, just after the monthly U.S. employment report was released. On July 1, 2014, IWM reached a 1:26 p.m. high of 120.97. On December 31, 2014 at 10:52 a.m., IWM climbed to 121.41. On February 27, 2015, IWM achieved a 10:55 a.m. all-time zenith of 123.36. Meanwhile, IWC, a diversified fund of U.S. micro-cap shares, still hasn't surpassed or even closely approached its March 6, 2014 peak of 80.65. Whenever small- and micro-cap U.S. equities underperform their large-cap counterparts in such a manner, a major U.S. equity bear market is generally imminent as in 2007, 1999-2000, 1979-1980, 1972-1973, 1946-1947, 1936-1937, and 1928-1929.
Notice how IWM frequently surpasses previous peaks by tiny amounts, intended primarily to knock out buy stops used by momentum players.
Continuing a two-decade pattern, the S&P 500 had achieved a new all-time zenith above its October 11, 2007 top of 1576.09, just as its 2007 top was higher than its 2000 top which was above its 1997 top.
Within the next few years, the S&P 500 will slump below its March 6, 2009 bottom of 666.79, just as its 2009 bottom was lower than its 2002 bottom which was below its 1998 bottom, thereby continuing another long-term pattern.
This sequence of higher highs and lower lows over a period of many years is known as a megaphone formation.
Eventually, its dividend yield will climb above six percent, just as U.S. equities overall have done during all prior eras of stagnation.
On February 2, 2015, the S&P 500 retreated to a 10:06 a.m. bottom of 1980.90, its lowest point since December 17, 2014.
On December 16, 2014, the S&P 500 slumped to a 3:54 p.m. bottom of 1972.56, its lowest mark since October 29, 2014.
On October 16, 2014, the S&P 500 slid to a 10:17 a.m. bottom of 1835.02, its lowest reading since October 15, 2014.
On October 15, 2014, the S&P 500 slumped to a 1:28 p.m. bottom of 1820.66, its most depressed level since April 15, 2014.
On April 15, 2014, the S&P 500 retreated to a 1:02 p.m. bottom of 1816.29, its lowest point since April 14, 2014.
On April 14, 2014, the S&P 500 slid to a 3:14 p.m. bottom of 1815.80, its lowest mark since April 11, 2014.
On April 11, 2014, the S&P 500 slid to a 2:49 p.m. bottom of 1814.36, its lowest reading since February 13, 2014.
On February 5, 2014, the S&P 500 slid to a 10:29 a.m. bottom of 1737.92, its lowest level since October 18, 2013.
On October 9, 2013, the S&P 500 retreated to an 11:24 a.m. bottom of 1646.47, its lowest point since September 6, 2013.
On August 30, 2013, the S&P 500 slid to a 3:54 p.m. bottom of 1628.05, its lowest mark since August 28, 2013.
On August 28, 2013, the S&P 500 retreated to a 9:35 a.m. bottom of 1627.47, its lowest reading since July 5, 2013.
On June 24, 2013, the S&P 500 slumped to a 12:23 p.m. bottom of 1560.33, its lowest level since April 22, 2013.
On April 18, 2013, the S&P 500 slid to a 2:58 p.m. bottom of 1536.03, its lowest point since March 5, 2013.
On February 26, 2013, the S&P 500 slid to an 11:48 a.m. bottom of 1485.01, its lowest mark since January 22, 2013.
On December 28, 2012, the S&P 500 slid to a 3:50 p.m. bottom of 1401.58, its lowest regular-hours reading since December 5, 2012. At 16:14:45 in the after-hours session, the S&P 500 as measured by SPY at 138.55 would have traded at 1387.61, its lowest reading since November 28, 2012.
On December 5, 2012, the S&P 500 retreated to a 10:55 a.m. bottom of 1398.23, its lowest level since November 28, 2012.
On November 28, 2012, the S&P 500 slid to a 10:10 a.m. bottom of 1385.43, its lowest point since November 20, 2012.
On November 16, 2012, the S&P 500 slid to an 11:29 a.m. bottom of 1343.35, its most depressed mark since July 26, 2012.
If you admire the old monk, the 61.8% Fibonacci retracement is 1346.11, which was slightly broken to the downside on November 16, 2012.
On July 25, 2012, the S&P 500 slid to a 10:57 a.m. bottom of 1331.50, its lowest reading since July 24, 2012.
On July 24, 2012, the S&P 500 slumped to a 2:30 p.m. bottom of 1329.24, its lowest level since July 12, 2012.
On July 12, 2012, the S&P 500 slid to a 10:46 a.m. bottom of 1325.41, its lowest point since June 28, 2012.
On June 28, 2012, the S&P 500 slumped to a 2:31 p.m. bottom of 1313.29, its lowest mark since June 26, 2012.
On June 26, 2012, the S&P 500 slid to an 11:10 a.m. bottom of 1310.30, its lowest reading since June 25, 2012.
On June 25, 2012, the S&P 500 slumped to a 12:00 p.m. bottom of 1309.27, its lowest level since June 12, 2012.
On June 12, 2012, the S&P 500 slumped to a 10:39 a.m. bottom of 1306.62, its lowest point since June 6, 2012.
On June 4, 2012, the S&P 500 slid to a 1:25 p.m. bottom of 1266.74, its most depressed mark since January 5, 2012.
On December 19, 2011, the S&P 500 slid to a late afternoon bottom of 1202.37, its lowest reading since November 30, 2011.
On November 25, 2011, the S&P 500 slid to a late afternoon bottom of 1158.66, its lowest level since October 10, 2011. If you count the pre-market session, the futures-equivalent bottom at 8:36 a.m. was 1149.60, which would mark its lowest level since October 6, 2011.
On October 4, 2011, the S&P 500 plummeted to a 10 a.m. bottom of 1074.77, its lowest point since September 1, 2010.
On August 27, 2010, the S&P 500 retreated to a mid-morning bottom of 1039.70, its lowest mark since July 7, 2010.
On July 1, 2010, the S&P 500 slid to a late morning bottom of 1010.91, its most depressed reading since September 4, 2009.

GDX, a fund of primarily large- and mid-cap gold mining shares, rose to a Wednesday 3:29 p.m. high of 20.95, closed Wednesday at 20.79, rose to a Thursday 5:31:58 a.m. pre-market high of 21.40, closed Thursday at 20.96, dipped to a Friday 6:17:55 a.m. low of 20.90, rose to a Friday 10:56 a.m. high of 21.48, and closed Friday up 32 cents at 21.28.
On February 24, 2015, GDX descended to a 10:03 a.m. bottom of 20.21, its lowest mark since February 23, 2015.
On February 23, 2015, GDX retreated to a 6:34:23 a.m. pre-market bottom of 20.15, its lowest reading since January 14, 2015.
On January 21, 2015, GDX climbed to a 9:32 a.m. peak of 23.22, its highest reading since September 18, 2014.
On January 14, 2015, GDX slumped to a 2:23 p.m. bottom of 19.88, its lowest level since January 9, 2015.
On January 9, 2015, GDX dropped to a 9:05:03 a.m. pre-market, post-employment bottom of 19.79, its lowest point since January 8, 2015.
On January 8, 2015, GDX slid to a 3:25 p.m. bottom of 19.60, its lowest mark since January 6, 2015.
On January 5, 2015, GDX dropped to an 11:57 a.m. bottom of 18.76, its lowest reading since January 2, 2015.
On January 2, 2015, GDX descended to a 9:35 a.m. bottom of 17.95, its lowest level since December 30, 2014.
On December 30, 2014, GDX fell to an 8:08:06 a.m. pre-market bottom of 17.78, its lowest point since December 29, 2014.
On December 29, 2014, GDX retreated to a 3:32 p.m. bottom of 17.75, its lowest mark since December 24, 2014.
On December 24, 2014, GDX slid to a 9:46 a.m. bottom of 17.16, its lowest reading since December 17, 2014.
On December 16, 2014, GDX plunged to a 3:30 p.m. bottom of 17.08, its lowest level since November 7, 2014.
On November 7, 2014, GDX retreated to a 5:35:51 a.m. pre-market bottom of 17.05, its lowest point since November 6, 2014.
On November 6, 2014, GDX dropped to an 8:41:04 a.m. pre-market bottom of 16.59, its lowest mark since November 5, 2014.
On November 5, 2014, GDX plummeted to a 3:57 p.m. bottom of 16.45, its most depressed reading since October 28, 2008.
On August 29, 2014, GDX climbed to an 11:31 a.m. peak of 26.74, its highest level since August 20, 2014.
On August 14, 2014, GDX rose to an 8:35:43 a.m. pre-market peak of 27.65, its highest point since July 10, 2014.
On July 10, 2014, GDX rallied to a 9:48 a.m. peak of 27.78, its highest mark since March 14, 2014.
On March 14, 2014, GDX rallied to a 9:37 a.m. peak of 28.03, its most elevated reading since September 19, 2013.
On September 18, 2013, GDX soared to a 3:50 p.m. peak of 28.64, its highest level since September 3, 2013.
On August 27, 2013, GDX rallied to a post-open peak of 31.35, its highest point since April 12, 2013.
On April 9, 2013, GDX surged to an 11:59 a.m. peak of 36.29, its highest mark since April 2, 2013.
On March 21, 2013, GDX rallied to a 1:46 p.m. peak of 38.58, its highest reading since February 27, 2013.
On February 26, 2013, GDX rallied to an 11:57 a.m. peak of 39.29, its highest level since February 19, 2013.
On February 7, 2013, GDX ascended to a 10:54 a.m. peak of 42.94, its highest point since January 30, 2013.
On January 30, 2013, GDX rallied to a 10:39 a.m. peak of 43.14, its highest mark since January 24, 2013.
On January 22, 2013, GDX rallied to a 2:18 p.m. peak of 45.92, its highest reading since January 15, 2013.
On January 15, 2013, GDX rallied to an 11:52 a.m. peak of 45.96, its highest level since January 3, 2013.
On January 2, 2013, GDX surged to an 8:06 a.m. pre-market peak of 47.75, its highest point since November 30, 2012.
On November 23, 2012, GDX rallied to a 12:52 p.m. peak of 49.00, its highest mark since November 14, 2012.
On November 8, 2012, GDX surged to a 3:15 p.m. peak of 51.82, its highest reading since November 1, 2012.
On October 31, 2012, GDX surged to a 3:55 p.m. peak of 52.97, its highest level since October 17, 2012.
On October 17, 2012, GDX rose to a peak of 53.40, its highest point since October 9, 2012.
On October 5, 2012, GDX climbed to a 10:22 a.m. peak of 54.64, its highest mark since September 21, 2012.
On September 21, 2012, GDX rallied to a 9:41 a.m. peak of 55.25, its highest reading since March 2, 2012.
On May 16, 2012, GDX slid to a 1:51 p.m. bottom of 39.08, its most depressed reading since September 2, 2009.
On February 29, 2012, GDX rose to a 9:38 a.m. peak of 57.91, its highest level since February 2, 2012.
On February 2, 2012, GDX rallied to an 11:07 a.m. peak of 57.94, its highest point since December 9, 2011.
On December 1, 2011, GDX rose to a mid-morning peak of 61.01, its highest mark since November 16, 2011.
On November 8, 2011, GDX rose to a 1 p.m. peak of 63.69, its highest reading since September 21, 2011.
On September 21, 2011, GDX rallied to a mid-afternoon (pre-Fed) peak of 66.90, just below its all-time high.
On September 9, 2011, GDX climbed to a mid-morning all-time zenith of 66.98.
On December 7, 2010, GDX rallied to an early morning peak of 64.62, a new all-time high.

Today's first main topic is commitments 2015-2-27.

These are the traders' commitments from February 27, 2015, released at 3:30 p.m., beginning as I always do with copper since it is the most important overall number for commodities and the shares of their producers:

Copper's traders' commitments moderately deteriorated, with commercials reducing their net long position to 40,268 contracts. Seven weeks ago, copper commercials had been their most bullish in history. This has become significantly bullish for COPX and is similarly positive for the shares of most other base metal producers which should continue to be purchased into pullbacks. This is especially relevant given the recent plunge for COPX to 6.01 and its subsequent moderate rebound. Here are the commitments for the "poor man's gold":

Silver's commitments moderately improved, as commercials reduced their net short position to 42,147 contracts. This has become neutral for silver and for the shares of silver producers. Let's continue with the yellow metal:

Gold's traders' commitments moderately improved, with commercials reducing their net short position to 135,694 contracts. The current absolute level is 1.432 times as close to the bullish extreme since December 2001 (19,041 on July 9, 2013) as it is to the bearish extreme (302,740 on September 28, 2010), which has become moderately bullish for gold and for gold mining shares. Here are platinum's traders' commitments:

Platinum's traders' commitments modestly improved, with commercials reducing their net short position to 26,724 contracts. This has become moderately bullish for platinum and for platinum mining shares. These are the long bond's traders' commitments:

The traders' commitments for the 30-year U.S. Treasury bond moderately improved as commercials reduced their net short position to 3,650 contracts. This has become slightly bearish for U.S. Treasuries. Here are the commitments for the loonie:

Canadian dollar commercials modestly increased their net long position to 51,460 contracts, thereby establishing their most bullish stance since March 18, 2014. On January 30, 2015, the Canadian dollar traded at 78.22 U.S. cents for the first time since March 2009. Both the Canadian and Australian dollars appear to be forming important bottoming patterns. I favor purchase of the loonie and the aussie which are both likely to move above parity with the U.S. dollar during the first half of 2016. The following article highlights recent downgrades for the Canadian dollar:

These commitments are for the British pound:

Commercials in the British pound moderately decreased their net long position to 33,050 contracts, which five weeks ago had been at their most bullish posture since June 4, 2013. Nearly all non-greenback currencies show commercials being meaningfully net long, thereby strongly suggesting that the U.S. dollar index which reached its highest point since September 2003 has likely already begun what could become a significant decline toward its lowest level since 2011. Here are the euro's traders' commitments:

The shared European currency's commitments moderately deteriorated, with commercials reducing their net long position to 226,961 contracts after having been net long 252,964 contracts three weeks earlier--their most bullish stance since June 5, 2012 when there was a similarly publicized euro crisis and commercials had gone net long 259,084 contracts. The probability of an intermediate-term rally for the euro has dramatically increased. I think the euro hasn't achieved its ultimate long-term bottom, but sentiment has become starkly negative in the media and almost everyone I know is bearish toward the euro. Therefore, the euro will likely stage a "sudden, unpredictable" surge higher during the next several months and perhaps throughout the remainder 2015 and for several months in 2016.

Here are the commitments for the Swiss franc:

Swiss franc commercials modestly increased their net long position to 11,981 contracts. Traders who previously avoided the Swiss franc are making a foolish decision by selling euros to buy francs whereas they should be doing the exact opposite.

Here are the traders' commitments for crude oil:

Crude oil commercials moderately decreased their net short position to 280,334 contracts. No doubt you have noticed that the prices of heating oil, gasoline (petrol), and similar products had become quite cheap, especially after adjusting for inflation. Partly this is from the strong U.S. dollar, and partly from the global unpopularity of commodities; both of these trends are likely in the process of reversing direction and experiencing surprisingly strong countermoves, as the shares of commodity producers have already been suggesting since many of them may have bottomed at or near six-year lows during November 2014 through February 2015.

Let's also check out natural gas:

Commercials in natural gas moderately reduced their net long position to 201,663 contracts after having registered 213,457 contracts three weeks ago which had been their most bullish reading since March 15, 2011. FCG is no longer as compelling as it had been at its lowest points in January 2015, but it remains worth buying into pullbacks. There are no meaningful traders' commitments for coal or uranium, but energy products have demonstrated unusual extremes of commercial accumulation which is bullish for the entire sector of energy producers and their respective commodities.

Today's second main topic is Wile E. Coyote, part two.

Investors, like Wile E. Coyote, often act as a herd and chase an asset right off the cliff without even realizing what they have done. One fine day, they look down and realize that they've made a huge mistake. In a panic, their only possible action is to plummet vertically to the ground far below. Huge inflows by investors around the world into U.S. assets of all kinds, primarily because they're afraid of underperforming those who have done likewise, has caused dangerous overvaluations for U.S. stocks, bonds, real estate, and the dollar. The U.S. dollar has probably already begun what will become a historic plunge versus the currencies of commodity-producing countries, and will also retreat against non-commodity currencies including the euro and the yen. U.S. bonds, especially of the high-yield variety, have been especially ebullient and have attracted all-time record inflows, and are especially vulnerable to substantial losses just as they had been eight years ago when they began what became their worst bear market since the Great Depression. With all-time record inflows into most U.S. equity index funds since early 2013, U.S. equity indices including the S&P 500 and especially the Nasdaq are likely to decline more than 60% from their 2015 peaks to their ultimate bottoms probably in 2017.

As U.S. assets go from being incredibly popular to incredibly unpopular, this will cause two very different stages to occur in the global financial markets. The first stage will be primarily beneficial to other assets, as investors progressively make withdrawals from U.S. securities of all kinds and put that money into the rest of the world. Those assets which will benefit the most are those which are the most oversold and undervalued, and will thus gain the most from money which should have been invested in them in recent years but was instead misdirected into surging U.S. assets. If you look at those securities which recently have traded near their lowest points in 5-1/2 or six years, that is where you will find the vast majority of names which will become the biggest winners. For the first 1 to 1-1/2 years of a bear market, as we had experienced recently in 2000-2002 and 2007-2009, investors don't want to give up on the basic concept that taking risk is a good idea. They merely switch their perception of what form of risk-taking is best. Thus, money which comes out of assets such as the S&P 500 and the Nasdaq doesn't go back into a bank account paying less than 1% where the money had originated. Instead, it usually goes into whichever assets have been the biggest percentage winners during the current calendar year, or which ones have been recently touted the most by the mainstream financial media, or which ones have recently been purchased by investing celebrities. Assets which had been in severe bear markets are prime candidates for enjoying renewed popularity, since the worst bear markets lead to the biggest percentage losses, which mathematically tend to be followed by the biggest percentage rebounds merely to regress toward the mean. These big rebounds then become alluring to investors, especially those who didn't lose money in them during their bear markets and thus have no negative emotional associations with them. As more and more investors move away from their previous favorites into these new darlings, their percentage increases become even greater from their previous bottoms and thereby make them even more attractive to tardier investors who tend to wait longer before jumping aboard any bandwagon. Eventually, as more and more investors abandon previously popular U.S. equity and bond funds to purchase the shares of commodity producers and emerging markets which have become the new favorite kids on the block, they become more frequently promoted by financial analysts and advisors. The media reverse their previous dislike of these sectors and increasingly become cheerleaders for them. This is the process by which the worst bear markets become transformed into the strongest subsequent bull markets.

Eventually, some of the assets which had been in bear markets 1 or 1-1/2 years earlier become so popular that they begin enjoying their greatest inflows in several years. Their valuations may reverse from having been absurdly underpriced "value traps" to becoming overvalued and perhaps dangerously overpriced. Especially if there are relatively few sectors of the global financial markets which are rising, investors will crowd into them at a frenetic pace. Whenever a broad-based bull market transitions to a more specialized bull market, the progressive narrowing of the total count of rising securities is like a highway with six lanes of traffic funneling into two lanes--or even just one near the end of this process: it will cause huge increases for the last ones standing. In January 1973, there were fantastically high valuations for roughly 75 U.S. equities while nearly all of the others had already been in downtrends since 1972 or 1971. In May-June 2008, some emerging markets and commodity producers had soared to all-time highs while many small-cap U.S. equities had been in downtrends for a full year. There is no way to know exactly how this process will play out in 2015-2016, but eventually we will reach a stage where most global assets have already begun bear markets, while those which remain in bull markets become extraordinarily popular and can reach levels which would have been unimaginable in late 2014 or early 2015.

At that point, we begin to transition to the second of these two stages. Those assets which had been the biggest winners during the first stage experience massive investor inflows, a surge in insider selling, persistently positive media coverage, more frequent projections of astonishingly higher price targets, and similar signs of a topping process. Over a period of weeks or months, all of the recently popular assets stealthily begin bear markets. Sometimes crude oil is one of the last assets to reach a peak during this process, as it becomes one of the very few assets which are continuing to climb. Those who believe that crude won't get anywhere near one hundred U.S. dollars per barrel for many more years will be quite startled to see what happens in 2016. Eventually, nearly everything has entered a bear market, with the usual exception of assets such as long-dated U.S. Treasuries and their funds including TLT. The U.S. dollar, which by this time will have become extremely unpopular and will have achieved a multi-year bottom, begins to rebound from its recent nadir especially versus the currencies of commodity-producing countries.

What has happened is that we will quietly transition from an overall global bear market, hidden by strong rallies for some subsectors, into a universal bear market where almost nothing is continuing to move higher. When this happens, U.S. equity indices which will have been moderately supported by spillover gains for emerging-market and commodity rallies end up turning lower again. Exactly when most investors decide to take a new course of action depends primarily on their emotional state of being--which is driven almost entirely by investors' personal net percentage gains or losses. Nearly all amateur investors are obsessed with how much money they're making or losing on any given investment. It doesn't matter how much these investments have increased or decreased recently, or what their future prospects might be--all they care about is their own personal won-loss experience. The most disheartening event for most of these investors is if they were ahead at one time, then fell behind, then were ahead again, then almost broke even, and now are falling farther behind again. At a critical turning point, investors collectively become convinced that they're not likely to get back to breakeven, and so they decide to sell in disappointment. Since most investors end up buying any asset in a bull market near the eventual top of that bull market, the breakeven point tends to be within a narrow range for a significant plurality of investors, so they tend to act nearly simultaneously. For those investors whose breakeven points are higher, they will tend to act sooner; those who bought at lower prices will wait until later when they personally perceive that they're unlikely to break even.

Let's take a relevant example to see how this works. The S&P 500 Index bottomed on March 6, 2009 at 666.79 and reached a recent high of 2119.59 on February 25, 2015. If you take the halfway point, you might conclude that the average purchase price is 1393.19. However, data from the Investment Company Institute (ici.org) and elsewhere show that there were net outflows from U.S. equity indices throughout most of 2009-2012 when the lowest levels existed and U.S. equities had represented first compelling bargains and then reasonably good bargains. Significant inflows have only occurred throughout 2013-2015, and if you compute the average purchase price using this data you will see that it is very close to 1800 for the S&P 500. On October 15, 2014, the S&P 500 slid to 1820.66, which frightened enough investors to cause net outflows. Some investors were actually losing money for awhile, while others saw most of their gains temporarily disappear. Currently, investors are almost all ahead and thus paradoxically are least likely to do any selling. However, if the S&P 500 goes below 1800 as I expect will occur before the end of 2015, then most participants will be losing money. Many of them won't take action right away because they'll be hopeful of a rebound--and they'll almost surely get one because that is how the market lulls investors into doing nothing. At some point, perhaps in the spring or summer of 2016, the S&P 500 will go deeper below 1800--maybe close to 1600. It will bounce back perhaps above 1700, but instead of continuing higher will go below 1600 again. At some point near 1550 or 1500, many investors will conclude simultaneously that breaking even is a hopeless proposition, so they'll begin to sell. As they do so, the price will continue to slump, thereby causing investors who bought at lower prices to conclude that they won't break even and thereby encouraging many of them to also sell. This leads to a chain reaction as we had experienced in September-November 2008. The accelerating plunge at that time was usually attributed to Lehman Brothers, but if you study the data carefully you will see that most of the total loss for U.S. equity indices didn't even begin until a few weeks after the Lehman event (thanks to a subscriber for pointing out this information). The Lehman bankruptcy became a convenient excuse for financial advisors who didn't properly warn their clients to get out of the stock market earlier, but the real reason for the rapid pullback was because one investor after another concluded that he or she would never get back to breaking even which is when most people decide to sell. This is why most bear markets begin calmly and stealthily, and only become severe much later on.

I expect this second phase to become visible at some point during the spring or summer of 2016, and to reach a meaningful intermediate-term bottom probably several weeks to a few months before the U.S. Presidential election on November 8, 2016. Many investors will have sold out of despair at ever breaking even, while others will hang on perhaps remembering 2009 and how they were foolish for getting out of the market near the bottom. This will likely result in a bottom in the second half of 2016 somewhere near 1060, which would be roughly half of its recent peak. Positive anticipation of a new U.S. President, combined with the fact that every strong downward phase is usually followed by a short-term powerful bounce, will cause the S&P 500 to climb back to perhaps 1200 or 1300 by late 2016 and/or early 2017. Some analysts will become prematurely bullish--probably not at the exact low in 2016 but at some point during the subsequent recovery, declaring that the worst is over. The key to knowing whether we have bottomed or not will likely be found in fund flows and insider behavior. If insiders have been reluctant to make significant purchases, and especially if equity fund outflows are much milder than they had been in the first quarter of 2009, then this will be a telltale sign that dramatically greater losses lie ahead. On the other hand, if we experience stronger insider buying than we had in late 2008 and early 2009, while fund outflows reach all-time records, then this suggests that a bottom may be in process. From the vantage point of the beginning of March 2015, it is difficult to know exactly when the next major bear-market bottom will occur. In the unlikely event that the S&P 500 plummets to 850 or 800 during 2016, while the Nasdaq slumps below two thousand the same year, this could cause a historic nadir to happen near the end of 2016.

While this is possible, I believe it is far more likely that the bear market won't end until around the middle of 2017 or perhaps even the second half of 2017. Once the U.S. Presidential election is over, there won't be as much positive anticipation to psychologically elevate risk assets. I also believe that the current bear market will take at least two years to mature, and even if we have already completed the top for the cycle, this still means a bottom in 2017. If it takes longer than I expect for the S&P 500 and the Nasdaq to achieve their ultimate 2015 peaks, then the next bottom will be pushed even farther into the future. What usually happens in a severe bear market is that investors who are experienced enough not to make amateur mistakes end up buying far too soon, just as they had done in 2000-2002 and in 2007-2009. Many technology investors near the beginning of the century saw the Nasdaq collapse from 5132.52 to two thousand, and became eager buyers--only to watch the Nasdaq eventually grind its way down to 1108.49. Many fundamental analysts couldn't resist buying stocks in October 2008--I personally covered my short positions at that time--only to suffer significant additional losses for many sectors into early March 2009. It will be important to wait not just for compelling discounts, but for the mood to become so despondent that just about everyone you know has given up hope that stock market will ever be able to rally strongly again. Only then should you become a buyer, and you should act very gradually since almost everything which is already selling at its lowest prices in years or decades will continue to become cheaper and cheaper and cheaper before it recovers. When it's the best time to buy, there will be so many choices available that you'll become almost paralyzed trying to decide among them.

Some investors aren't interested in buying something "boring" like TLT and other U.S. government bonds, or various kinds of bear funds, during the second phase of the bear market, which is almost always a mistake. These people believe they can identify one or two securities which will magically climb while more than 99.5% of assets are slumping. When a bear market accelerates, investors don't distinguish between the good and the bad. Everything gets dumped together. Some investors will log into the internet and literally close out all of their positions within a few minutes. Since many amateurs take such action on the weekend, their orders will go through at Monday's open, causing numerous huge downdrafts on Monday mornings when the bear-market bottoming process is underway. Keep in mind that almost any bottom is a process, not an event; it is usually spread over a period of months and could persist for more than a year. Various securities will complete their bottoming patterns at different points along the way, thereby providing buying opportunities if you keep track of which ones are the most oversold and undervalued at any given time.

If you are interested in investing in real estate, remember that real estate tends to bottom a year or two after global equity indices have already done likewise. This is partly because equities anticipate economic events whereas real estate tends to reflect economic events which already occurred. It's also partly because mortgage rates will begin climbing prior to a bottom for U.S. equity indices and will likely accelerate their upward moves once rising stocks lead to improving economies around the world. During the previous bear market, many equities bottomed in late 2008 or early 2009, while real estate mostly reached its lowest levels in 2010-2011. In the upcoming cycle, the lowest prices for real estate in most of the world will probably occur not in 2017 but in 2018-2019. If the S&P 500 has rebounded from 600 to 1100 or 1200 and real estate prices are continuing to decline in a neighborhood where you want to be a buyer, especially if inventory has been rising and you have a wide selection, then you should probably start serious house hunting since eventually rebounding equities will lead to improving economic confidence and higher real estate prices even if mortgage rates continue to climb.

For now, we're in the early part of stage one of the transition from a bull market to a bear market. U.S. equities, bonds, real estate, and the U.S. dollar have recently begun bear markets or will soon do so. The primary move between now and some point in 2016 will consist of asset reallocation from the favorites since early 2013 to a new set of desired securities which have recently traded near six-year lows. Eventually, many of the formerly disliked assets will have become the darlings of investors, but that is likely more than a year into the future. Be aware that stage two will occur eventually, but don't become overly concerned with such an event until it is more closely approaching. Because stage one tends to occur rapidly, often beginning and ending within 1-1/2 or 2 years, annualized gains are usually higher than for assets such as the S&P 500 or the Nasdaq where bull markets can last twice or thrice as long.

Take care.

--Steve