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

Stock Market 4 Year Cycle Low - Next Leg of the Downtrend Expected

Stock-Markets / Cycles Analysis Mar 11, 2007 - 12:12 AM GMT

By: Tim_Wood

Stock-Markets As the market advanced up out of the June/July 2006 low, many began proclaiming those lows as having marked the 4-year cycle low. With the last obvious 4-year cycle low having occurred on October 10, 2002 at 7,197.49 and when the October 2006 low that most were expecting did not occur, most pointed at the June/July lows as having marked the 4-year cycle low. I can understand why on the surface most people would have thought this. But, that was the easy answer for the market not making the low in October that so many were expecting.


I can promise you that cycle analysis is much more involved than simply counting from one point to the next. By nature, cycles contract and expand. But, this expansion and contraction does not invalidate the cycle, as it is the overall ebb and flow, or rhythm, that makes the cycle. However, it is because of the fact that market cycles are not precise mechanical events that we must also incorporate other tools such as statistical analysis and the use of technical indicators.

Everything in nature is a cycle of sorts and if you think about it, there are variations in most all cycles and the stock market is no different. Our heartbeat is a cycle as is our breathing. This doen't mean that they are so mechanical in nature that they are exact. Our heart may beat 70 beats one minute at one time of the day and 85 during another part of the day. The seasons of the year are also cycles, but here too, we can have a late, an early or even a mild season. However, these variations do not invalidate the cycle. A late spring does not mean that spring will not come.

The same goes for the migration of birds. Just because it may be late in the year and the geese haven't begun migrating doesn't mean they won't. True, there are other cycles in nature that are very mechanical or rigid such as the phasing of the moon and the tidal changes in the sea. The stock market does not have mechanical cycles and is more like the changing of the seasons in which there is a degree of fluctuation within the cycles. I could go on and on, but I think you get the point.

Now, let's get back to the stock market. As the market began to advance out of the June/July lows last year I publicly said that the summer rally had begun and that the market was going to move higher. At the same time, I also said that my statistical analysis surrounding the 4-year cycle said that we were still pushing into that top. In fact, I first published that I was looking for the 4-year cycle low in 2007 rather than 2006 in my February 2006 newsletter. This expectation was all based on trend quantification work and statistical analysis. I have not wavered from that analysis since because nothing has occurred to invalidate the statistics.

Anyway, as the Industrials approached the May 2006 high in September I did begin to question the rally. However, I repeatedly told my subscribers that in spite of my skepticism, as long as the intermediate-term Cycle Turn Indicator remained positive, higher prices were nonetheless still possible. So, yes I have been bearish since about September in regard to the 4-year cycle because the data told me that the market was pressing into a major top. But, at the same time I also acknowledged the fact that the intermediate-term Cycle Turn Indicator was positive and that higher prices were possible as the market continued to press up into the 4-year cycle top.

As it turned out, the Cycle Turn Indicator remained positive all the way into December, at which time it too began warning of an ominous top in the making and has since triggered an intermediate-term sell signal. As I now see it, the decline we saw last week was most likely the initial leg down into the 4-year cycle low, which still lies ahead. Further confirmation of this by my statistical "DNA markers" surrounding the 4-year cycle top are still developing. Yet, in spite of the existing market risk and the 533 point loss we saw for the week ending March 2nd, complacency is still high. Very few understand the market risk here and it still seems that most people who are aware of the 4-year cycle still believe that the low came in connection with the June/July 2006 low.

Also, in the wake of one of the worst single week declines in market history, I hear no one in the mainstream media, or even other market analysts talking about the possibility that the 4-year cycle low could still lie ahead. I was recently asked why this is.

The answer is simple. Mainstream is out to skew the story in the most bullish light they can and to heck with the truth. Do you really think that Cramer is going to come on the air and tell the public to sell because the market is at risk of a major decline into a cycle low? The mainstream media has not ever warned anyone of a decline that I'm aware of. I've studied the writings around the 1929 top and mainstream said then that all was fine.

Following are a few examples and please compare these quotes to the price action in the first chart below.

September 1929
"There is no cause to worry. The high tide of prosperity will continue." -- Andrew W. Mellon, Secretary of the Treasury.

October 14, 1929
"Secretary Lamont and officials of the Commerce Department today denied rumors that a severe depression in business and industrial activity was impending, which had been based on a mistaken interpretation of a review of industrial and credit conditions issued earlier in the day by the Federal Reserve Board." -- New York Times

December 5, 1929
"The Government's business is in sound condition." -- Andrew W. Mellon, Secretary of the Treasury

December 28, 1929
"Maintenance of a general high level of business in the United States during December was reviewed today by Robert P. Lamont, Secretary of Commerce, as an indication that American industry had reached a point where a break in New York stock prices does not necessarily mean a national depression." -- Associated Press dispatch.

January 13, 1930
"Reports to the Department of Commerce indicate that business is in a satisfactory condition, Secretary Lamont said today." - News item.

January 21, 1930
"Definite signs that business and industry have turned the corner from the temporary period of emergency that followed deflation of the speculative market were seen today by President Hoover. The President said the reports to the Cabinet showed the tide of employment had changed in the right direction." - News dispatch from Washington.

January 24, 1930
"Trade recovery now complete President told. Business survey conference reports industry has progressed by own power. No Stimulants Needed! Progress in all lines by the early spring forecast." - New York Herald Tribune.

March 8, 1930
"President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days." - Washington Dispatch.

May 1, 1930
"While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States - that is, prosperity." - President Hoover

June 29, 1930
"The worst is over without a doubt." - James J. Davis, Secretary of Labor.

August 29, 1930
"American labor may now look to the future with confidence." - James J. Davis, Secretary of Labor.

September 12, 1930
"We have hit bottom and are on the upswing." - James J. Davis, Secretary of Labor.

October 16, 1930
"Looking to the future I see in the further acceleration of science continuous jobs for our workers. Science will cure unemployment." - Charles M. Schwab.

October 20, 1930
"President Hoover today designated Robert W. Lamont, Secretary of Commerce, as chairman of the President's special committee on unemployment." - Washington dispatch.

October 21, 1930
"President Hoover has summoned Colonel Arthur Woods to help place 2,500,000 persons back to work this winter." - Washington Dispatch

November 1930
"I see no reason why 1931 should not be an extremely good year." - Alfred P. Sloan, Jr., General Motors Co.

January 20, 1931
"The country is not in good condition." - Calvin Coolidge.

June 9, 1931
"The depression has ended." - Dr. Julius Klein, Assistant Secretary of Commerce.

August 12, 1931
"Henry Ford has shut down his Detroit automobile factories almost completely. At least 75,000 men have been thrown out of work." - The Nation.

The same sort of headlines applied as the market began to decline out of the 1966 and the 1987 tops. More recently, do you remember anyone on TV warning you about the 2000 top and the decline that followed as price began to drop into the 2002 4-year cycle low that followed? No, we were all told that everything was fine and not to worry.

Well, my statistical analysis surrounding the 4-year cycle top in 2000 not only allowed me to make the call, but I missed the price target by a mere 200 points. That article was written in July 2001 with the Industrials well over 10,000 and this was later published in the November 2001 issue of Technical Analysis of Stocks and Commodities Magazine. It is these same technical and statistical methods that have and continue telling me that the odds are the 4-year cycle low is still ahead of us and that in all likelihood the 533 point decline seen for the week ending March 2nd was likely only the beginning.

For your convenience I have again included charts showing the ebb and flow of the 4-year cycle since the inception on the Industrials in 1896.

I can tell you that in spite of what the mainstream and most other analysts are saying about the market, my statistical analysis surrounding the current 4-year cycle appears to be on track in that the statistics still favor the 4-year cycle low being ahead.

By Tim Wood
Cyclesman.com

© 2007 Cycles News & Views; All Rights Reserved
Tim Wood specialises in Dow Theory and Cycles Analysis - If you are interested in a statistical and technical based source that also utilizes Dow theory and provides statistical probabilities as to what should occur, then Cycles News & Views may be for you. I also provide web-based updates giving short and intermediate-term turn points on the stock market, gold, bonds and the dollar, utilizing my Trend and Cycle turn Indictors. A subscription also includes short-term updates three nights a week. Please see www.cyclesman.com/testimonials.htm .


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


Comments

Wilfred
22 Mar 08, 17:32
4-yr cycle low

I do think we have seen the 4-yr cycle low in June/July 2006. This market decline we're seeing right now, I believe is culminating into the next 4-yr cycle low in 2010! With the credit crisis just beginning to unfold, this decline has a long way to go.


Post Comment

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

6 Critical Money Making Rules