The Icebergs algo is just not the quickest, so it’s not meant for daytrading, nevertheless it gives a novel option to see the general market situation in a visible “panorama” kind format that our mind can soak up significantly better than a bunch of summary indicator strains.
To make this submit extra helpful I’m simply going to share the most recent long run month-to-month and weekly Icebergs charts for a number of main markets, after which illustrate the brand new parts in that context. So right here goes:
Month-to-month SPX
New ingredient #1 is the sky, which is proven by the background colour behind the mountains. It may be gentle blue or pale orange. When it’s gentle blue the market is “chilly” and performing extra bearish, and if the sky is pale orange it tells us the market is extra “sizzling” and bullish. This works as a form of affirmation (or lack off) on what the remainder of the chart exhibits. E.g. a wholesome “inexperienced mountain” above 4 is often accompanied by pale orange sky. If it isn’t then there may be motive to doubt the transfer. Main long run shopping for alternatives are inclined to occur in opposition to a chilly blue sky, however you continue to wish to look forward to different parts like “sea ice” and “fish” (triangles) within the water, to choose up the very best moments. The years 2002 and 2009 give some superb examples of this.
New ingredient #2 is the “vultures” (downward gray triangles) within the sky. They sometimes seem above mountain peaks, and often coincide with “gold on the mountain” (yellow). These vultures are the logical counterpart of the underside fishing triangles that seem within the water. So, vultures are indications of a potential peak and fish have a tendency to seem close to essential bottoms. Identical to actual vultures are very affected person and might circle round for a very long time earlier than they get to eat, this is a sign that may seem for a lot of bars in a row. So, it’s a ready recreation whenever you see vultures, simply be alert. As you possibly can see within the chart, not each case of vultures foretells a significant bear market, however virtually each main bear market begins after a interval of vultures ends. That’s what we have to bear in mind about it.
OK. So what we see in that chart for SPX as 2024 ends is that now we have inexperienced mountain nicely above 4, gold on the mountain, and pale orange sky. So, very clearly the circumstances are bullish, as they’ve been for a while. No huge secrets and techniques there. However the vultures have appeared across the summer time of 2024, so extra warning is warranted now, particularly with the gold (yellow) on a downward slope. As you possibly can see this downward sloping “gold” was additionally seen in 1999 and 2000, in late 2017, and in late 2021. On every of these event some critical draw back value motion adopted.
Icebergs charts have to be studied visually, so to provide you extra follow materials right here is the month-to-month SPX Icebergs for 1970-2000:
Be aware the weak or absent mountains and chilly blue sky for many of the 70s. Additionally examine the 90s. In exceptionally lengthy bull markets you possibly can have gold and lava, with or with out vultures, for prolonged durations. That’s why seeing them is just not a motive for fast panic, it’s only a motive to bear in mind that the given market is just not that low-cost anymore. However you don’t know when that transfer will finish. Transferring your stops a bit nearer to the market is without doubt one of the methods to deal with it. Do not forget that the month-to-month image is only for the long term orientation. Entries and exits are higher executed on the idea of weekly and/or each day charts. A number of weekly charts will probably be given on the finish of this submit.
Month-to-month EURUSD
Clearly a way more bearish image right here. Be aware you’d have executed fairly nicely in case you purchased these backside fishing probabilities and offered when vultures appeared within the sky. No methodology is prefect, however in case you are a very affected person investor you are able to do very nicely by ready for the uncommon backside fishing probabilities on a month-to-month chart after which maintain for so long as issues look adequate to carry.
Month-to-month Gold
One of many extra intriguing long run charts proper now. The mountain has not been this excessive because the 2000-2012 bull market, and there may be additionally lava. Which means there may be elevated danger for a correction or pause as we enter 2025, however observe that the identical state of affairs occurred in early 2004. That gave principally sideways motion for that yr, after which the bull market continued. If the vultures go away, and the worth of gold holds up, then an analogous state of affairs might be within the making.
Weekly Bitcoin
Weekly chart is the longest I can supply for Bitcoin (not sufficient information). Right here we see the vultures have appeared in late 2024, and inexperienced mountain is falling away. Not an excellent look. Nothing that may’t be fastened, however to do any new shopping for I choose to attend for backside fishing probabilities, which was final seen in mid 2022, when Bitcoin traded beneath $20,000. And sure, some merchants like to speak about “bitcoin winter”. It’s blue sky background with ice within the water that exhibits such winters within the Icebergs charts. When you can wait to purchase in winters and do your promoting on some heat days in summer time when the mountains are inexperienced and excessive, then you’ll do higher than most merchants. When you missed the Bitcoin winter in 2022, then you possibly can solely look forward to the following one. In fact, it seems simple after we examine a chart with the good thing about hindsight. In actual time it’s more durable. Investing and buying and selling will at all times include a sure danger. You need to get in on very chilly winter days if you wish to purchase close to a long run backside. However perhaps even colder days are arising. That’s the uncertainty.
Weekly Oil
Weekly oil. A market that has gone very chilly and virtually lifeless (no important value actions anymore). Inexperienced mountain above 4 has not been seen since 2022. That makes it one to observe. It might present a final capitulation transfer to the draw back, or it might slowly enhance and see inexperienced mountain come again. It has simply painted a really giant icebergs (gray), however nothing is occurring (but). Additionally pay attention to these pink backside fishing probabilities (salmon) on the crash backside in 2020. These are very uncommon to see on month-to-month or weekly charts.
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