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This chart and its text is a reprint. It was created and published on the website two years ago on June 12, 2006. It shows an enlarged version of the big chart used in Systems Tips two weeks ago and illlustrates the last three bars from that chart here in more detail.
It is easy to read. The first two clusters of bars, 1936-37 and 1971-72, precede severe declines in stock prices. The last cluster of bars ('outposts') on the right were calculated in early June 2006. At the time, they projected a further quick rise in prices followed by a deep and lasting decline. We will see what happened in a moment.
The short open bars along the bottom axis measure how long it takes from peak to trough prices.
The long open bars measure the recovery time to get back to break even.
Cycle turns are really not points at all. They are episodes which take time to accomplish. The turning episodes above are roughly consistent with earlier, similar turning episodes on the big chart.
The next chart shows you what happened updated through today.
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