Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Look at the Stock Market 4-year Presidential Cycle

Stock-Markets / Cycles Analysis Apr 03, 2014 - 06:39 AM GMT

By: Clif_Droke

Stock-Markets For all the bullish 2014 expectations among Wall Street analysts, few if any consider the impact of the long-term cycles. After all, it’s in late 2014 when several major long-term yearly cycles are scheduled to bottom in unison, from the widely followed 4-year cycle to the well-known 10-year cycle and on to the even bigger 40-year and 60-year cycles. Each of these cycles tends to stamp its unique presence on the stock market when they bottom individually. How much more then can we expect to feel their presence when they’re bottoming contiguously?



Putting aside the bigger implication of the long-term inflation/deflation cycle of 60 years, let’s examine just the 10-year cycle. This is one of the components of the long-term “super” cycle. As long-time readers of this report will recall, the last time the 10-year cycle bottomed was in 2004. This cycle always bottoms in the “four” year of each decade.

When it’s bottoming by itself the 4-year cycle doesn’t always create bear market conditions, but it does tend to increase stock market volatility – especially as the bottom draws closer (late September/early October). You’ll recall that 2004 was essentially a lateral or sideways trading range for the stock market with stocks making no net progress that year. While the year 2014 is still young, it’s worth noting that already the S&P 500 Index (SPX) has made no net progress to date while the Dow 30 Index is below its 2013 high. It’s too early of course to establish any intermediate-term patterns, but the makings of a trading range are already evident.

Even if you’re not a proponent of Kress cycle theory, consider that we’re in the second year of the 4-year presidential cycle. The second year following a U.S. presidential election year is almost always marked by increased market volatility. Not uncommonly the second year of a 4-year presidential cycle witnesses a bear market. Let’s examine the “second year curse” of the past few presidential cycles for some examples:

· The second year of President Regan’s first term in 1982 witnessed a volatile market environment with the S&P declining through the first half of the year; it marked the bottom of the 1970s/early ‘80s bear market. The second year of Regan’s second term in 1986 saw the S&P rally in the first half of the year; in the second six-month period of ’86 the stock market went nowhere and was range-bound until stocks took off again in 1987….

· The second year of President Bush’s term in 1990 was a bear market and witnessed the worst part of the S&L crisis; most of the damage was done in the July-October period when both the 4-year and 12-year cycles were bottoming.…



· The second year of President Clinton’s term in 1994 saw a mini-bear market. The S&P was down for the year after a number of extreme gyrations as the 4-year and 10-year cycles bottomed. The second year of Clinton’s second term occurred during the final “blow-off” phase of the ‘90s bull market, yet it witnessed the shortest bear market on record: a 20% Dow decline over two months in the summer of ’98 as the so-called Asian Contagion and the LTCM meltdown roiled global markets….

· The second year of President GW Bush’s first term witnessed a major bear market; the second year of his second term witnessed at least one major bout of volatility in the spring and early summer of the year 2006….

· The second year of President Obama’s first term saw the infamous “flash crash.” One can only guess what the second year of his second term will bring later this year.

The above overview of the presidential cycle reveals some common denominators. The first one is that years in which the 4-year cycle bottomed along with a bigger cycles, such as the 10-year or 12-year cycle, saw unusual periods of market volatility and selling pressure, particularly in the second half of the year. The second is that volatility tended to increase during the second year of a president’s second term. Both of these factors apply to 2014.

Based on our survey of the last 30+ years we can conclude that the second year of the sitting president’s term is typically a year when bad things happen. Why this should be is self-evident; a presidential administration has a vested interest in implementing policies designed at “juicing” the economy in the first year of the term in order to consolidate political support. The second year of the 4-year term is when most tax and regulatory increases are implemented. It’s assumed by presidents that they will be able to again juice the economy in the third and fourth years, and that voters will likely forget the bad times of the second year by the time the next election rolls around. Incidentally, the second year of a president’s term always coincides with the down phase of the 4-year Kress cycle.

The reason for taking pains to review the 4-year presidential cycle in tonight’s report is because there are strong reasons for believing it will come into play at some point this year. Maybe not in the next couple of months, but certainly by the summer we should see signs of increasing market volatility and accelerating selling pressure, especially as we head closer to the final bottom of the 60-year deflationary cycle this fall. If China and/or other emerging market countries are experiencing turmoil (as I expect) it will likely only serve to exacerbate the volatility.

Already we’ve seen a brief preview of what the next global market crisis could look like. The problems have originated in China and Russia with other countries (e.g. Brazil, Chile, Turkey) playing supporting roles. This is very similar to what happened in 1998 with the financial crisis that rolled across the globe beginning with Asia and extending to South America, Russia and finally hitting the U.S. like a tsunami. Few market analysts in 1998 (a super boom year) believed the “Asian contagion” would infect U.S. markets, but they were dead wrong. It happened very quickly in ’98 with most of the damage occurring in July through September – the final “hard down” phase of the 4-year and 8-year cycles.

Again, this summer the 4-year, 8-year, 10-year, 12-year, etc. cycles through the 60-year cycle will also be cascading into their final bottoms around late September/early October. It would be surprising indeed if the financial market somehow emerged unscathed by this crescendo, especially given the fragile state of the global economy.

Kress Cycles

Cycle analysis is essential to successful long-term financial planning. While stock selection begins with fundamental analysis and technical analysis is crucial for short-term market timing, cycles provide the context for the market’s intermediate- and longer-term trends.

While cycles are important, having the right set of cycles is absolutely critical to an investor’s success. They can make all the difference between a winning year and a losing one. One of the best cycle methods for capturing stock market turning points is the set of weekly and yearly rhythms known as the Kress cycles. This series of weekly cycles has been used with excellent long-term results for over 20 years after having been perfected by the late Samuel J. Kress.

In my latest book “Kress Cycles,” the third and final installment in the series, I explain the weekly cycles which are paramount to understanding Kress cycle methodology. Never before have the weekly cycles been revealed which Mr. Kress himself used to great effect in trading the SPX and OEX. If you have ever wanted to learn the Kress cycles in their entirety, now is your chance. The book is now available for sale at:

http://www.clifdroke.com/books/kresscycles.html

Order today to receive your autographed copy along with a free booklet on the best strategies for momentum trading. Also receive a FREE 1-month trial subscription to the Momentum Strategies Report newsletter.

By Clif Droke

www.clifdroke.com

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit www.clifdroke.com

Clif Droke 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