Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Trend Tracking the 45 Day Cycle

Stock-Markets / Cycles Analysis Jan 26, 2010 - 01:41 AM GMT

By: Jim_Curry

Stock-Markets

Best Financial Markets Analysis ArticleThrough my outlooks in recent years, I have often pointed out that the most dominant cycle in US stocks is the nominal 10-week component - which, at the present time, has a current 'expression' of 45 trading days from trough-to-trough.


Recently, this component has begun to contract even further, with the average now being closer to 38-40 trading days. That is not that telling, though I should point out that cycle lengths will tend to contract in more bullish trends - and expand in more bearish ones. Obviously, the contraction in this cycle is due somewhat as the result of the larger uptrend seen coming off the March, 2009 bottom.

While there are differing opinions as to whether a major top was made last week in the SPX, what I want to do here is to take a closer look inside this 45-day wave, to see what statistical inferences (if any) could be drawn; this may give us some idea of how the action could play out going forward. The chart below shows the approximate position of this 45-day cycle:

Going back to the second week of November, 2009, this 45-day component had turned to the upside, then confirming an original target to the 1130 - 1153 region on the SPX; this was finally met in December. However, as this target was being approached, the same cycle confirmed an additional upside projection to the 1148 - 1172 range; this was also regarded as firm resistance level for the index, and was favored to contain the upward phase of the same.

Last Wednesday's reversal back below the 1130.16 figure was the downside 'reversal point' point for this 45-day wave. In other words, taking it out was a better-than-average indication that it's downward phase was back in force, which takes us to where we are at the present time.

In taking a look at a statistical/pattern analysis of this cyclical component, it had to have registered the pattern of a 'higher-high' at the 1/19/10 peak of 1150.45 SPX CASH. And, when seen in the past, the average time decline was around 10 trading days from peak to trough; currently, we are only 4 days along from that high.

Going a bit further, the current 45-day downward phase looks like it is going to take out the 1085.89 figure on the SPX - which was the last confirmed bottom for the this component. In other words, if seen. then it would indicate that the pattern we are witnessing would be that that of a 'higher-high/lower-low'. And, when this particular pattern has occurred in the past, the action was more bearish - with the average time decline being in the range of 24 days off the highs - while about 85% of these had seen declines of 14 days or more before bottoming.

Taking the above information, we can infer that the probabilities tend to favor a longer-than-normal 45-day down phase - and more especially if the 1085 level is taken out on the SPX. In terms of time, a decline of 10 days off the top would favor the low for this cycle not to be made prior to 2/2/10. However, using the more bearish pattern/statistics, should the SPX take out the 1085 figure then a decline of 14 days would put the odds in favor of a low being held off until 2/8/09 or later. Lastly, should the average of 24 days be seen, then the next 45-day low could potentially stretch out until 2/22/09 or later, though this seems a less-plausible scenario here - but not one that can be ruled out.

In looking at a statistical analysis of price with this 45-day component, should the SPX see the pattern of a 'higher-high/lower-low' (by taking out the 1085 level), then the average decline phase in the past has been in the range of 8.4% off the peak. If seen on the current rotation, this would favor a move to the 1053 level or lower before the 45-day cycle attempts to bottom in the days/weeks ahead.



Lastly, in getting a quick view of the cycle channels we can gain additional information, along with some added visibility. On the chart above you can see that the (smaller) 45-day cycle channel meets with the larger wave (which is deemed to be pointing slightly higher at the present time) at or near the same 1050 level () for the SPX. The 45-day channel also offers a bit more input, in that the top of the same currently comes in at or near the 1120's on the SPX (10 points) - and thus is now going to act as firm resistance to any short-term rally attempts.

I should be quick to add that the statistical assumptions won't always be met; nothing is ever 100%. However, we have found over the years that they do tend to play out a good-majority of the time, certainly better than random. Even said, there is always the potential that the cycle could confirm an earlier turn than is suggested - which is why it always pays to monitor the accompanying technical action. We'll reassess the again at some point in the near-future - including taking a look at potential alternate scenarios for the larger channel pathway.

By Jim Curry
Market Turns Advisory
email: jcurry@cycle-wave.com
website: http://cyclewave.homestead.com

Jim Curry is the editor and publisher of Market Turns advisory, which specializes in using cyclical analysis to time the markets. To be added to our mailing list click HERE

Disclaimer - The financial markets are risky. Investing is risky. Past performance does not guarantee future performance. The foregoing has been prepared solely
for informational purposes and is not a solicitation, or an offer to buy or sell any security. Opinions are based on historical research and data believed reliable,
but there is no guarantee that future results will be profitable. The methods used to form opinions are highly probable and as you follow them for some time you
can gain confidence in them. The market can and will do the unexpected, use the sell stops provided to assist in risk avoidance. Not responsible for errors or
omissions. Copyright 1998-2007, Jim Curry

JIm Curry Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in