Let's get this out of the way...

In our last Family Gathering, I announced I am doing my best to retire. That means we will have our September Family Gathering, the October newsletter and mid-month Family Gathering. After that, "Focus on Stocks" is all over.

I will do my annual forecast report for 2025, which does cover quite a few stocks.

Why? Simple. Earlier this year I was excited to go to a Bob Dylan concert. He's about my age, as is Joe Biden. So to see someone still performing was an inspiration. Some inspiration that turned out to be. He sat behind a piano all night, never played his guitar. The guy next to me fell asleep. When the show was over, he finally stood up and hobbled off the stage, making President Biden look agile.

I also saw Ali's comeback fight, Tom Brady's last game, Tiger Woods' inability to climb back on top and Frank Sinatra's last concert. I swore I would not hang around too long.

In October, I turn 82. So I have maybe 18-20 years left; some will be better than others. I want to do more than watch prices tick on a screen, pulling my emotions up and down for those few years. My goal has been to walk off the stage with a strong stride.

Thanks to people like you, I have had a great career and life. Thanks to all of you for subscribing to this service and to StockCharts.com for all their incredible hard work in making it happen.

Now you know, so let's get to it...

A Deeper Dive into the Dollar Index

As I mentioned last month, the Dollar Index responds well to cycles. In Chart 1, you can see my most current cycle forecast.

There are more to market moves than just cycles, as I still think conditions matter. But just what are those conditions? For the US Dollar as I see it, these other conditions are the price of gold, M2 (money supply), Crude Oil (the Titans, as mentioned in our last online webinar), and the Commercials Net Positions of the users and producers of Crude.

Let's start with a look at Gold. In Chart 2, the US Dollar is in black, while gold is (of course) in gold.

I have inverted the price of gold. For the most part, it moves just the opposite of the USD, which is very apparent in this clip. Herein lies the Doomsday Dollar crowds belief the Dollar will crash as they believe in Gold. To have their vision of the future come true -- AU to reign supreme -- gold must rally, which means the dollar must flame out. This is their religion.

In Chart 3, you see how the two have been the flip side of a coin for the last six years as well. The magnitude is not the same, but most of the turning points are.

How Gold Relates to the Dollar

We have seen the inverse relationship between the USD and gold. To make this more specific, you can use the Williams Valuation Index in StockCharts with a 13-week setting to identify times the USD should rally when it is undervalued to gold. By the same token, at times the relationship shows overvalued (sell zones) when the USD becomes stronger than the normal relationship of these volatile markets.

In the following charts, I am showing the S&P 500 Index in blue. It also correlates pretty well with the USD. When stocks are down, the Dollar declines. The Dollar usually rallies when stocks move up.

There is a twist here. I have pushed stock prices forward almost 300 weeks, as it appears what happens in stocks later influences the USD. Just look at the last two charts to see the surprising parallel between these economic gauges.

In Chart 7, we see that the US Dollar should soon rally if there is causation to this correlation. Keep in mind I have led stock prices into the future. This not a precise timing tool. Its value, as I see it, is primarily in forecasting longer term trends and turning points.

When to Mortgage the House to Buy the US Dollar

While I would never mortgage the house, I might at least get one on the car or back 40 when the Commercials, the real players in this market, are close to or net long in their positions. Who are the Commercials? They are banks, brokers, and governments.

Check out the next chart to draw your own conclusion, as I present the buying history of this crowd for about the last 19 years.

The net positions of the Commercials are shown in red. They are seldom net long, rising above the blue horizontal line. When above that line, we have always seen market rallies. True, it took some time in 2007, but since then there have been almost immediate rallies when we have seen this much buying from this informed crowd.

You may also want to couple that with what I talked about in the August Family Gathering; the relationship between the Dow Arab Titans. As you recall, I showed the Titans are a good forecasting tool for Crude Oil. Next is the chart I showed with the Titans pushed forward to forecast crude oil.

If you missed the presentation, just go back and watch it to see the relationship.

Here's the next step. I know crude oil is a good predictor of the Dollar Index. Thus, the Titans should be even better. Chart 10 is what I have found.

In black, you see a weekly chart of the Dollar Index with the Titans in blue - pushed forward 16 weeks - as our forecast for where the Dollar should be headed. We never know if it is causation or correlation, yet it is an amazingly tight fit between these two economic measures.

Last, but not least of course, is an update and projection. The relationship speaks loudly of a rally in the USD to come starting mid-September.

Still wondering when to take out that mortgage to go long the USD? The formula is pretty simple: anytime these guys are close to net long AND two of our other tools here confirm a rally.

Wealth Is Not Health

Since writing this column the question I get most often is, "Larry, what do you personally take?" That's a little hard to answer as I dabble in lots of things, but here are the basics of what I do.

Like Bob Hope (see prior article), I take a multi vitamin-mineral daily. I usually use the one for males from Swansons. Look, like most people, I skip days. Sometimes I forget to -- or just don't want to -- take all these. So this is not like a daily must/ritual. I have consistently taken 400 IU natural vitamin E since the late 1960s, along with higher doses of vitamin A and D.

At least twice a year, I do the senescence purge I wrote about earlier. I do the charcoal detox program four times a year. I also take a double dose of the telomere supplement just about every day along with apigenin. I use lutein, zeaxanthin and astaxanthin for eye health, taking that combination about every 3 months for 6 to 7 days.

It may just be snake oil, but I have personal knowledge of people who had cancer with very positive results using Panacur (Fenbendazole) or mebendazole. So I also take that twice a year. Here is a trailhead.

Let's not forget I am a non-smoker, have cut way back on alcoholic drinks and a frequent intense exerciser.

Joint Relief?

As some of you know, Louise and I went to the Olympics in Paris. On the way back, we went to London where I tried a relatively new technique to stop the pain in my left knee. The pain has been self-induced from 69 marathons, ultra-marathons, and who knows how many half-marathons, plus 5K and 10K races. I have used hyaluronic acid injections with good results. The problem is eventually most folks develop an allergic reaction, as I did.

Three times I have had PRP, or platelet-enriched plasma treatments, with limited success. Stem cell injections were a godsend. I've had the treatment four times, with great results the first three times. Last year, I was again having more pain than I preferred and went for my fourth time; there were just no results. Neither good or bad. This summer, I had a cortisone shot with immediate relief, yet we all know that is just a temporary fix.

It was time for something else, so I read and studied up on Arthrosamid. This is essentially what happens.

When hydrogel (Arthrosamid) is injected into the knee joint, it is taken up by the synovial cells and forms a new joint lining. This new lining reduces the knee's inflammation, leading to less pain. The gel also produces cushioning and lubrication. Essentially, it is an implant as the gel sticks/stays in the joint painting over the damaged area. Hopefully, this will avoid a partial knee replacement.

Scientists performed biopsies of knees after Arthrosamid injections. They found that the gel was taken up by the cells lining the joint, also called the synovial cells. These cells made a new "pseudo" joint lining. Despite 20 years of use for animals and 10 for humans, the product it is not yet available in the US. You will see it openly marketed all over Europe and the UK.

It's been too early to know if this is working for me. I like the idea behind it and there are good reviews as well as clinical results. The big unknown is there is very little data on people over 80. For younger people, the success rate is said to be 70%. If you have joint issues, you may want to learn more. In the October letter, I will do a follow up.

PQQ

Speed up weight loss? The supplement PQQ (usually used to increase energy) does this by boosting the efficiency of your cellular energy production.

A new study by researchers in Japan caught my attention, as it claims that pyrroloquinoline quinone (PQQ) can speed up your body's metabolism and increase weight loss. It does this by boosting the efficiency of your cellular energy production, unlike the mechanism behind Ozempic, etc. Here is a link to the study on using Pyrroloquinoline-quinone to reduce fat accumulation and ameliorate obesity progression.

The researchers discovered that PQQ is a particularly powerful weapon against obesity because it reduces visceral fat. That is the dangerous kind of fat stored mostly around your abdominal cavity, which becomes more of a problem as you age. Most people take 20 mg per day.

As always, keep in mind I have no medical training. This is just one man's attempt to live longer and better; certainly not a recommendation. Like me, I suggest you study and decide for yourself.

Now back to the markets...

Remember the Movie The Graduate?

One of the classic lines from The Graduate, the one we all laughed at, was when young Ben Braddock was told, "Just one word, plastics. There's a great future in plastics". As it turns out that was correct. We should have listened instead of laughed. What is not made out of plastic these days?

Over the years on my many trips to Europe I have noticed what's going on there eventually happens in the US. In the 1970s while we were using paper bags, they had these really neat and strong plastic bags that later became ubiquitous in the states. I had my first croissant in Switzerland, had never seen such delicacies before. Now you can get them - not as good - at Costco. Long before Detroit started making smaller cars, I saw them in Italy. On this trip, in France visiting Ralph Vince, we were amazed to see cars so small you don't need a driver's license! They have pretty much turned to socialism; we may be next. The EEC has blocked many online news sources so our friends across the pond largely get only one side of the news.

Above all though, I noticed how electric Europe has gone. Sure, we saw lots more electric cars there than here. Then there where hundreds of massive electric busses, large electric trucks, small electric skateboard, large electric trains. Clearly, to borrow a line from The Graduate, "there is a great future is in electrics." Stock investors need to be on the lookout for who the sellers of electricity will be.

A final note here -- we really never needed cash. 99% of businesses took one form or another of credit card. At least one of the three big credit card companies (Visa, MasterCard, and American Express) should be in every long-term portfolio.

It's Time for Gold to Decline

Let's take a look at the two main cycle formulas I use to help us see the future of a market.

In blue, you can see what has been the most dominant cycle in AU for the last 6 years. It has been consistent for some time now. See the peak in the cycle just about now? It suggests a down move into the end of the year. There have been 10 occurrences of this cycle, or wave, in the past with 7 of the 10 waves at the time Gold declined. The odds, then, are 70% for a decline starting soon.

In red, you see my master cycle forecast. This is the same formula used for stocks and predicts years into the future. It also speaks of a decline at this time.

As you know, GLD is the ETF for Gold. The data is limited. One must ask, "Do we find a similar pattern in the futures contract? Here is the answer.

Using the futures contract gives us more data to check the veracity of these cycles. I found the same cycle of about the same length has best reflected/forecast the price of Gold. What we have here is cycle agreement. Cycles say this is the time zone to look for sells.

Finally, let's see what cycles tell us about the very short-term buy using our tools on daily data.

Again, we see pretty much the same thing - a decline now into late October. Need I say more?

Going Beyond Cycles...

While cycles can lay out the timeframe of the move, the magnitude of the move - in length and size - can often be determined by looking at the Commitments of Traders (COT) Report. See my past issue if you are unfamiliar with the COT Report.

What you see in Chart 15 in red is the net position of the users and producers of Gold, the Commercials. When they are doing a lot of buying, the line is high (they are accumulating). When low, like now, they are sellers. I have marked off the low readings, which you will note come at times when it would have been better to be a seller than a buyer.

What do you suppose this means when the Commercials are sellers and cycles are forecasting a down move?

Look for and take trend change sell signals.

Time for the Willows to Weep

The Fantasticks has always been my favorite off Broadway play. Love the story line, love the simplicity and love the music. Here are the lines from the "September" song.

"Try to remember the kind of September

When life was slow and oh, so mellow.

Try to remember the kind of September

When grass was green and grain was yellow.

Try to remember the kind of September

When you were a tender and callow fellow.

Try to remember when life was so tender

That no one wept except the willow."

Indeed, September has seen some real weeping for those not aware of the trade I am about to share with you. This trade is one of the four "Machu Picchu" trades I first wrote about many years ago. There is a reason behind these trades. If you ever make it to Machu Picchu, you may learn the secret. Go there or simply study the seasonal pattern in all stock market indicators to see that the later part of September is controlled by the bears.

In a moment we will look at the seasonal pattern. But first, here is hard data from my Trading Days Left In the Month concept.

Not all months have the same number of trading days. To get an accurate view of what happens at month-end, we need to query about how many days are left. Doing that equalizes the month-end influence.

Table 1 shows the results of SELLING from the last day of September from 1 to 22 trading days. 22 would, naturally, be at the first of the month. In the last 25 years, SELLING on the opening of the 10th trading day left has produced winners 93% of the time. There have been 23 profitable trades out of 25. In this test, the trade was held for four trading days with a protective stop of $2,400. I am using the S&P 500 E-Mini futures contract.

Truly amazing when you recall I first wrote about this 10 years ago, so it is backed with real-time results.

You can get an idea of how good a trade is by how long you can hold it. Here, you see the results of holding the trade for 1 to 12 trading days. As expected, the longer you hold, the more profits should increase, though accuracy will drop. This trade fits that criteria. Using a rapid exit of one trading day shows 96% winners, 25 of 26. I prefer a four-day hold with 92% accuracy and a hefty $43,275 of profits.

Stock traders can trade the SPY, the ETF for the S&P 500 Index. More aggressive traders can trade any of the Nasdaq ETFs.

Let's look at the last three years to help us understand the trade. I am showing the trades with my True Seasonal in blue.

Last year, the trade was about as good as it gets. Oh sure, you could have gotten in higher and out lower. But for a mechanical strategy developed 10 years ago, I am pleased with the results.

The trade worked great in 2022 as well. Smart traders may have gotten in earlier. Nonetheless, our fixed rules ferreted out a good chunk of the decline. The overriding point is that there is seasonal weakness in stock prices in the later part of September.

Traders were presented with an immediate decline when going short in 2021... only to be slapped in the face with a short rally right back up. The rally failed as prices dropped lower.

No one knows for sure the exact pattern price will etch out on our charts this year. What we do know is that there is a real bias for stocks to decline in the timeframe I have described.

It is our task as traders to use our skills to maximize the trade.

A Look at Individual Stocks

Our August Family Gathering gave you forecasts (they do not change) for a cornucopia of current active stocks. In this letter, I am adding a few we did not cover.

Amazon is one the most widely held stocks by fund managers, as well as individual investors. The red line above shows us the most likely future path this stock is navigating. The blue line represents very short-term cycles. They are telling us a major up move will begin in late October, with a catapult in price to year-end.

Meta, which most know as Facebook, has held up far better than pretty much all stocks during the recent selling waves. (Apple fits this same pattern.) This is a positive sign, so let's take a look at what lays ahead.

As mentioned, Apple has also held up better than most stocks. Let's take a look at AAPL next.

My forecasting tools say pretty much the same is in store for AAPL, as is for the rest of the market. Expect selling pressures now with a rally to start mid-to-late October.

On the recent rally, Booking Holdings (parent company of Booking.com) is another stock that caught on fire. That fire will begin to fade, but should flame back up following the path shown in Chart 22.

Bitcoin fanatics should also prepare or at least expect a further decline. A few months ago, we warned this would happen. It has, and recent updates continue to project weakness into late October, a la the red forecast. The blue line represents the most active short-term cycle.

Transports to Move

In Chart 24, you see my forecast for the Dow Jones Transportation Index. The index appears poised for a rally at the end of this month. There has been a reliable seasonal pattern as well.

Thanks to StockCharts, we can see my True Seasonal pattern along with my Money Flow Index. An ideal time to buy has been when the seasonal points up while the funds have been buying, as evidenced by a high reading/level in the red line. Stock traders can use the ETF symbol XTN to take advantage of this expected move.

Finally, here is what I expect to happen to the major markets: a decline.

That decline should begin about now, lasting until mid-to-late October. It's the same dance for most of all the stocks I have studied.

In Closing

Looks to me like September will be tough on perpetual bulls, as well as those not prepared to handle the emotions of what is looming here. What's the best thing to do? It's a good time to take a vacation!

Good Luck and Good Trading,

Larry Williams

If you have questions for Larry that you'd like addressed in future postings, please email familygathering@stockcharts.com.