STOCK MARKET TIMING U.S. STOCKS

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Historic sequences of long-term and near-term stock-market studies for the NYSE Composite, DJIA, and NASDAQ indexes, and their predecessors are added as research develops new observations. 



Table, c36 Cycle
   
The multitude of natural cycles is vast. For practical purposes, the number is infinite. All interact with each other. Some are reasonably visible to anyone, for example the days and nights, seasons, and tides. Others are less obvious, like c36. All are irregular due interactivity and ellipticity. The 36-year cycle is prefixed with a "c" to indicate this irregularity ("c" standing for circa which in Latin, as my ecclesiastical contemporaries know or used to know, means "around" or "about" or "approximately").
   
c36 in the stock market has some very interesting characteristics which are relevant at this time (year 2001+). They appear in this table.
           

STOCK MARKET COMPARABLE DATES

from Base Date 1 Jan 2001

c36 Cycle

Years to

Previous

Months

Max %

recover

Cycle Date

to high

decline

highs

Mar 2 1857

-6

-45

5

Aug 25 1892

-5

-42

6

Jan 23 1929

7

-89

25

Jul 11 1965

6

-41

17

            Click on dates to see charts

   
The inference is that on January 1st, 2001, the stock market has already entered or is about to enter (50/50 probability) a protracted period ranging from 5 to 25 years (table above) during which no further gains will be made in the stock-market averages. (See below for the 28-year cycle.)
   
The current episode has some cycle characteristics similar to those of 1892. This suggests that the high in the current market may have already occurred some months back in the year 2000 and that the decline may carry the market 40 to 50% lower and then defer reaching new highs again until 2007 or beyond.
   
There was no NASDAQ during the previous cycles. Therefore the analysis pertains to the Dow Jones Industrials Average and Standard & Poor's 500 Composite Index. The NASDAQ Composite since its inception has always been more volatile; therefore its decline in value from its peak already is or will be considerably worse than those of the other two.
   
The episode of December 26,1821, does not fit well with the others. Its peak value was coincident with its date. And, in further contrast, its maximum decline was -14%, part of an 11-year, wide swinging trading range before the next, big new highs. Chart



Table, c28 Cycle   (See top for the meaning of "c")
   
Similar to c36, this long-term cycle recurs over the past 200 years in the stock market with enough regularity to merit attention. The big caveat is the number of all these long-term observations is too few for rigor in a statistical conclusion.
           

STOCK MARKET COMPARABLE DATES

from Base Date 15 March 2001

    c28 Cycle

Years to

Previous

Months

Max %

recover

Cycle Date

to high

decline

highs

Oct 8 1805

11

-41

9

Oct 12 1833

22

-66

19

Jul 15 1863

17

-11

14

Jul 17 1889

10

-40

9

Jun 27 1917

-1

-31

2

Apr 12 1947

-3

-6

2

Apr 25 1973

-3

-38

10

                        Click on dates to see charts

   
Taking both c28 and c36 (above) into consideration, the general profile for the year 2001 and the environment for the following years appears to be one of large up and down price volatility in limited bull markets unlike the steady, dramatic progress of the great, repetitively rising, superb bull markets of the last two centuries in the United States, 1813, 1921, 1949, and 1982.



Outposts of Expected Price Change -- 100-week Cycle
                                    
Click here to view charts
   
As I mentioned on the Home page of this section, the notion of alternation has been around for many years--probably thousands. It is hard to miss. Everywhere you look you perceive cyclic alternation--breathing, pulse, weather, relationships among people and nations, and so on.

Whatever man perceives, he measures. So it is unsurprising that he measures time with respect to alternating phenomena. How much time elapses between the observable repititions of defined events?

Research along these lines in stock-price cycles is beset with at least two obvious limitations, q.v., plus a third: the difficulty of mathematically defining the similarities in a series of events to determine that they possess enough comparable identity to justify inclusion in a time-sequential measurement study.

Nevertheless, it is worthwhile to examine and define the presence and extent of types of cycles in stock-market price behavior.

The 100-week cycle appears noteworthy enough to pay some attention to. Click here to view charts of a prior example.


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