Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stop Believing The 'Economy' Is The Same As The Stock Market - 12th Jul 20
Spotify Recealed as The “Next Netflix” - 12th Jul 20
Getting Ahead of the Game: What Determines the Prices of Oil? - 12th Jul 20
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

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

6 Critical Money Making Rules