Tuesday, November 3, 2009

Cycle Summation

For GT Blog November 03, 2009

Hello fellow bloggers

The current corrective period that began with the cyclic peak of the TSX Financial Index on September 30, 2009 is frustrating the bulls and giving the bears more hope for the big down so they can finally get long and participate in the current bull market

Some cycle work of the late, great Ian S. Notley as set out in his May 1995 publication Cycles And Methodology may provide some clarity during noisy and confusing periods such as now – so let us look firstly at the longer term monthly cycle

The longer term cycle is monitored on the charts by investors using monthly observations with one cyclic bottom juncture approximately every 4 to 4 ½ +/- years. The bull phase generally persists for 28 + /- months duration and the bear phases are generally of 15 +/- months duration. The origin of the last juncture was a bear trough in most of the major stock indices on April 30, 2009 thus aging the current bull at only 6 months.

The shorter intermediate term cycle is monitored on the charts by traders using weekly observations. The intermediate trend cycles are measured trough to trough and are 20 +/- weeks apart. There are about three intermediate trend junctures per calendar year (one bottom and two tops or two tops and one bottom). The bull skew is 12+/- weeks and the bear skew is 8+/- weeks. The origin of the last juncture was the October 2 peak in most of the major stock indices – aging the current bear skew at 4 weeks.

The very short term cycle is monitored on the charts by speculators for trading OR by traders and investors seeking to time the entry and exit of the weekly and monthly top and bottom junctures. The very short term trend cycles as measured from trough to trough are about 39+/- days apart with the bear skew spanning about 14 +/- days. The origin of the last juncture was the October 23 peak in most of the major stock indices – aging the current bear skew at 8 days

Now with our three cyclic positions mapped out we can plot a course for the broader equity markets over the next several weeks

Over the next 4 to 6 trading days the very short term daily cycle will trough and exert upward pressure on the current bear skew of the intermediate weekly cycle. By mid November the intermediate cycle will trough and set up a condition we call summed cyclicality which is the sum of the movements of all three market rhythms – in this case upward for at least 12 weeks taking us to the peak of the next intermediate cycle sometime in mid to late January 2010

So get long and enjoy

2 comments:

Franz said...

Thank-you Bill. This is exactly the sort of information investors like me need to get past all the day-to-day media noise and be able to make some rational sense of the rhythm of the market. I check this site for your posts every day and always learn something, but with this post you have taught me so much more - you taught me how to fish!!!!!! Thanks again and looking forward to your next post.

Chris said...

Hi Bill this is great information. I agree with Franz. I read all your blogs and the section in the Toronto Star. Thanks again for the good information Garry.