Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Cycles Have a History, You Should Read About It

Stock-Markets / Cycles Analysis Aug 29, 2014 - 03:21 PM GMT

By: Harry_Dent

Stock-Markets

Last year, I was reading a sidebar in Barron’s where ex-fund manager and PIMCO director Paul McCulley was talking about a stock market peak later that year… at the same time sunspot cycles were forecast to peak.

This wasn’t the first time I’d heard respected analysts connect market activity to sunspot activity. Charles Nenner, a prominent cycle analyst believes there’s a plausible connection. So does Richard Mogey, founder of the Foundation for the Study of Cycles (and a speaker at our October IES Conference in Miami).


With McCulley joining the growing ranks of believers, it got me thinking… is there something to this theory? Do sunspot cycles affect the stock markets in any way? (Crazy, I know… but first, I’m no stranger to being called crazy and second, success isn’t found inside the box.)

As you know, NASA tracks and projects sunspot activity — that makes it more projectable. It’s discovered that movement on the sun’s surface ebbs and flows in cycles (just like everything else in life). As the cycle unfolds, the earth is bombarded by more or less solar radiation. The high cycles can knock out satellites and communication systems. They also raise temperatures and rainfall. (I explain this concept more in detail in my latest book, The Demographic Cliff — read a preview on sunspot cycles and activity from Google books.)

Of course, rising and falling energy cycles certainly could have some impact on human behavior…

What was more interesting to me though was that this sunspot cycle is reputed to peak every 11 years — that’s why I first rejected it as I saw no correlations on 11-year cycles. So I went back and documented the peaks back over a hundred years only to discover that the real average is 10.3 years.

That’s when I got really interested.

You see, there’s another cycle we follow closely, one first documented by Ned Davis. It actually has been one of the critical cycles in our research for decades. It’s called the Decennial Cycle and it tends to peak around the end of each decade and bottom in the second year of the next decade. And in the last cycle, there was a peak in early 2000 and a bottom in late 2002, right on cue.

The cycle then remains sideways to moderately up for stocks until the middle of the decade (i.e. late 2004 or late 2014), and then rises the most sharply again into the end of the decade.

Whether such cycles bottom earlier or later in the first few years of every decade has been related to when the four-year presidential cycle bottoms. That’s why we had major bottoms in 1962, 1970, 1982, 1990 and 2002.

These two cycles together — the 10-year Decennial Cycle and the four-year Presidential Cycle — created our best intermediate patterns for decades. The last time these two cycles should have bottomed together was late 2010 and a major crash and recession would have been expected more broadly between 2010 and 2012. But that didn’t happen…

When the economy weakened in 2010 to near zero growth, the Fed stepped in with QE2. It did it again in mid- to late 2012 forward with two phases of QE3. All of which, I assumed at first, threw the otherwise reliable cycles out of kilter.

Or is there another explanation…?

As I said before, the average sunspot cycle is 10 years. The last top was in early 2000… right at the top of the tech stock bubble. But that sunspot cycle bottomed years later than normal, and would you believe it?! The recent stock market crash bottomed in early 2009… at exactly the same time the sunspot cycle bottomed.

NASA predicted a later than usual sunspot cycle to peak around mid-to-late 2013. And would you believe it?! That’s when our analysis of stock patterns suggested back then that we could see a top in the markets. We thought the Decennial Cycle failed for the first time in 50 years, but if sunspots are the cause, we just got an eccentric cycle that pointed down from late 2013 into late 2019, when our Spending Wave and Geopolitical Cycles also pointed down at the same time.

Subsequently, months of research into this sunspot cycle has shown that 88% of the major crashes, recessions, depressions and financial crises came in the down cycle, and most of the rest came close on either side. This is clearly no coincidence!

But most important, this cycle peaked a little later than the scientists forecast, in February 2014.

Bottom line: this cycle, the most powerful I have discovered since the Spending Wave, looks like it peaked this past February and points down into around late 2019 or early 2020. The worst crashes come in the first 2.5 years after a peak just as Ned Davis’ Decennial Cycle suggested — so the greatest should be coming between late 2014 and late 2016.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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