Saturday, February 5, 2011

Long term cycles environment 2-7

Our weekly outlook discusses the medium length cycles.  But what is the longer term environment?  The 41 month cycle is down.  The 2 year cycle is up.  The 1 year cycle is down.  Here is the SPX:

Not shown is the 10 year cycle,  The more dominant cycles (historically) are the 10 year, the 41 month and 2 year cycles.  The 10 year cycle will not bottom until spring of 2012.  The 41 month cycle will bottom in the same time frame as the 10 year cycle.  The 2 year cycle will bottom after the 10 year cycle in 2012,  Supposedly there is a K-wave (about 56 years) cycle that will bottom sometime between 2012-2014. 

So the long term cycle environment is fairly negative and these longer cycles should start exerting more influence as they push toward a bottom.  I would expect that influence to become more pronounced after mid-Oct when the 2 year cycle tops.  Keep in mind - even though a long term cycle may have a large amplitude that influence is spread over many, many  days so the daily influence may be small and more than offset by shorter cycles whose daily influence is spread over a much shorter time (fewer days) and have a larger daily influence.  In the long run though the persistence of the long term cycles will make its effect felt.  That influence becomes most pronounced as the cycles approach a bottom as the shorter cycles become unable to offset the persistent effect of the longer cycles.

GL traders.


  1. This chart seems to show a complete E-Wave from the bottom in 2009 to the bottom in 2010 and we started a new (large)E-Wave which we are due to complete the first 1-2 Wave Pattern. The 3rd wave is typically the best one to ride this will have the largest CCI move and probably last most of the year...this could line up nicely with the Bradley dates.

  2. Shadow7 - I am not an Elliott Wave practicioner. I find it has way too many rules and exception to those rules. Also, interpretation of moves seems to be open to a lot of individual opinion.

    While cycles may not have as rigid a structure IMO the concept is much easier to understand. Sure, it is open to individual interpretation - but the concept with a little common sense applied is fairly straight forward.

    The concept of cycles can be explained in 5-10 pages of text and hit most of the high points. I have always felt "simple is better". EWers and I have been known to have serious discussions about which method is superior.

    So I let others pursue EW and I check their opinions from time to time to see if we agree/disagree.


  3. Yeah...I know what you mean about EW and it's complexities...but I have a pretty good system that I use to confirm real EW waves vs. "false" waves. Through trial and error I have found RSI helps in determining a waves beginning and end. I don't use EW outright..but more for a guide. And yes it is always easy to read the past how you want it vs. tell the future as it will be.