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Market Update: Checking On Cycles

  • Written by Syndicated Publisher 1 Comment1 Comment Comments
    May 12, 2012

    A subscriber wrote to ask how the current 9-Month Cycle relates to the current 4-Year Cycle, if at all. First, let’s look at the 9-Month Cycle chart. I have drawn a vertical dashed line on the far right of the chart to mark where the next 9-Month Cycle is projected to arrive — right about now. As usual, the projection could be early by up to six weeks, but it’s a guide, not an oracle. Assuming that the 9-Month Cycle trough hits this week, the next one is projected to arrive about February 12, 2013.

    (Excerpt from the May 11, 2012 blog for Decision Point subscribers.)

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    Screen shot 2012-05-11 at 12.10.40 PM


    The price congestion seen this week on the daily chart below could be evidence of the Cycle trough.

    Screen shot 2012-05-11 at 12.27.29 PM

    Next let’s look at the 4-Year Cycle chart. Prices have been rising for over three years, so a price top is overdue. The projection for the next 4-Year Cycle trough is March 5, 2013, which is only two weeks after the next projected 9-Month Cycle trough.

    Screen shot 2012-05-11 at 11.47.31 AM

    Conclusion: At this point, it would appear that the 9-Month Cycle trough we are expecting will not be a major low on the price chart; however, the fact that a 4-Year Cycle top is overdue could indicate that there will not be much of a rally coming out of this expected trough. More important is the implication that there could be a substantial decline going into the first quarter of 2013.

    Cycle work is more art than science, but I find it so mercurial that I don’t know if it is much good as art either. So I recommend that you not use it to weight your decisions, rather it should just be something of which you are aware. Cycle enthusiasts may grouse about that comment, but that is because they are probably better at cycle work than I am.

    Images: Flickr (licence attribution)

    About The Author

    Carl SwenlinCarl Swenlin is a self-taught technical analyst, who has been involved in market analysis since 1981. A pioneer in the creation of online technical resources, he is president and founder of DecisionPoint.com, a premier technical analysis website specializing in stock market indicators, charting, and focused research reports. Mr. Swenlin is a Member of the Market Technicians Association.


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