I started exploring the 4-year cycle a bit, expecting to find an 8-year cycle. What I found, however, is an 85-month (7.1 year) cycle from low to low.
Cycle Lows
1. October 1966 low
2. January 1974 low (87 months later)
3. April 1980/August 1982 double bottom
(split = June 1981; 89 months later)
(split = June 1981; 89 months later)
4. November 1987 crash low (77 months after June 1981)
5. November 1994 end of consolidation (84 months later)
6. September 2002 low (94 months later)
7. March 2009 crash low (78 months later)
So, the cycle has taken between 77 and 94 months to complete, with an average of 85 months. Projecting into the future, we should expect another low in 2016 and the final low for the 40-year cycle to come in 2023.
Stockcharts.com does not let me go back past 1980, but here's how the cycles look since 1980:
Notice how the last several cycle highs have come in the last half of the cycle. Since we are in the bearish phase of the 40-year cycle, I speculate that the high for the current 85-month cycle will come in the first half of the cycle, or within 42 months or less from March of 2009. Which means before October 2012.
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Assuming we have proper cycles and they are reasonably stable, we should be able to find them using Fast Fourier Transform. The beauty of FFT is that you could decompose a time series data into linear combination of multiple frequency domain functions. Each frequency domain function gives you the cycle length and amplitude. Now I just need to dig up my old Digital Signal Processing course notes that I took over 15 years ago.
ReplyDeleteRobert Prechter did a very nice Elliott Wave Theorist on this very same cycle. It appears at this point that the only question is how we there. Down to 2012/13, up again and then down to 2016 or up to 2012/13 and then down to 2016. I am leaning toward a continuation of the current cyclical bull into 2012 followed by a long decline. I enjoy your work. Craig@tradercraig.blogspot.com
ReplyDeleteParker:
ReplyDeletePrechter in his April EW Theorist identifies a 7,25 year cycle, with a low in June 2016. Its a must read. It seems that the 16.6-16.9 year as well as the 34 year cycles are also coincident at that time.
Yash P.
The Half way point is important as well, which is September-October 2012, 3.6 Yrs from 3/6/09 Low.
ReplyDeleteParker,
ReplyDeleteI am new to this and must be calculating this wrong, but basis this chart: http://ttheory.typepad.com/file
/mfi.spx.20101202pdf.pdf
The MFI High is 9/21 and counting from 7/1 Lows = 82 Calender Days (CD), which If I use 9/21 as the center point, brings you in CD to 12/12.
In Trading Days 7/1L +56 TD = 9/21 + 56 = 12/9.
What is this incorrect? Are these calculation sometimes a couple of days off?
TIA.
Craig & Yash
ReplyDeleteInteresting about Prechter. Thanks for the info. He's been wrong on gold for so long that I stopped paying attention to him years ago.
SPX
I can't bring up the chart you reference, but it's trading days and starts on July 2. So the actual SPY top date according to the daily Money Flow T is December 8. However, if you look at Money Flow Ts on the 30 minute time frame, I get a top either at the close of December 6 or the open of December 7.
See the Refining the Daily S&P Money Flow T blog entry I made on Friday.
parker - you have mentioned about berish 40 yr cycle and so your feeling that top will happen in first half. Last time 40 yr cycle was berish probably 1966-1974 area .. but during that time too top came last half of cycle like 1972-1973 top I think.
ReplyDeleteSaw Terry's sunday updates. 1-2 more updays and it will break through green solid line. Then centerpost of T may have already gone past at last low.
Parker, I enjoyed reading the comments you and the others made on the long term cycles. One has to have a primary and a backup plan in case the cycles vary, which they do a lot. Taking the info from the other guys here and getting down to the cycle that "SPX and NDX TimeandCycle" stated, one has to be ready for that 10/2012 low point within the larger cycle. The midpoint between 03/2009 and 10/2012 is about 12/2010, the perfect half way topping point. I believe another long term cycle will hold it up a few more months, so I will look for the next top to be in the spring/early summer of 2010.
ReplyDeleteCycleguy, are you the Dow Theory expert that I think you are?
ReplyDeleteCSW, no I am not a Dow Theory expert. I read Tim Wood's work on FinancialSense.com whenever he posts there. I have worked on cycles for a few decades. After getting hurt in the 70's, I wanted to learn more. By the way, I made an error on my top date yesterday. It should read "spring/early summer of 2011".
ReplyDelete