Thursday, October 28, 2010

Why cycles?

Why cycles? In nature and the universe we are surrounded by cycles. There is day and night. There are low/high tides. Days of the week. Lunar cycles (just over 29 days). There are years. There are seasons usually divided by shortest day of the year, longest day of the year and soltices.

There are man created cycles (tax season, back to school, holiday season, vacation season, etc). All these things come in to play. Many are documented in the Stock Trader's Almanac.

I have not even begun to touch on cycles some use like planet alignment and other more esoteric things used by people like Arch Crawford. Many of these things I don't claim to understand and are beyond the scope of what I am trying to convey.

An open question is - how about government or Fed interference? I believe actions by these bodies can impact cycles. They can contribute to a cycle or suppress a cycle, but they can't totally eradicate a cycle. I think we can agree that the probability of QE by the Fed has supported the current market uptrend.

Then there is POMO. What is the purpose of POMO? When will it cease? I have a theory. There is a big IPO coming - GM. Now if you have followed my prediction I have said I expect the 3.39 year (a dominant cycle) to top around Nov 19. Guess when the GM IPO is scheduled - Nov 17-18. Coincident? I don't know, but I find it interesting. I think the GM IPO will mark the end of POMO. Of course, this is a theory and time will tell.

Just for fun I charted the last two days and show high tides.  Does it prove anything?  Probably not, but I am betting you find it interesting.

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