Sunday, June 5, 2011

2011 and beyond - the outlook

Every few months I try to give you a longer term outlook based on what some longer term cycles are doing.  I often refer to the 20 week (Wall) cycle.  A Kitchin cycle encapsulates 9 Wall cycles (3.39 years or 40.68 months).  If I have analyzed the situation correctly the 7th of the 9  Wall cycles is now topping.  That means in around 50 weeks (let's say 1 year) from now we will be looking for a bottom in the Kitchin Cycle (the last bottom was near the March 2009 low). 

No I am not going to talk about the Super Cycle (30 years), the K-Wave (60 years), or the Grand Super Cycle (120 years).  Yes, those are supposedly coming in 3-4 years according to most cycle analysts, but we want to look at the setup as that time approaches for those cycles.

Now before the Kitchin Cycle bottoms there is another cycle that will bottom.  Some time ago I posted about the PI cycle:
You may want to read this before proceeding.  Martin Armstrong discovered the PI cycle.  He recently got out of jail (7 years for contempt!!!  Then 5 years for some bogus charge by the CFTC) and is able to write again.    He says 2011.45 (Jun 13-14) is an important date.  The PI cycle topped with the 2007 top and should bottom in early 2012.  Now if we accept the theory that the maximum down momentum for longer cycles is achieved in the last 12.5% (in this case about 6.5 months) of the down leg then that maximum down side for the PI cycle should start around mid June.  Is this what Armstrong is referring to - 6.5 months of down side push?  Google "Martin Armstrong cycle" and read his article for yourself.

So we have the PI Cycle reaching maximum down side momentum soon and pushing down into early 2012.   This is followed by the Kitchin reaching maximum downside momentum by around March 2012.  Finally there is a third longer cycle of interest - the 10 year cycle.  This cycle last bottomed in late 2003 or early 2004.  This means a bottom in late 2013 or early 2014.   I would think given this that the 10 year cycle will reach maximum down side velocity sometime in late 2012 (maybe a little later?)...

I believe these cycles could lead to a sizable pullback and set the table for the extremely long term cycles that should start bottoming  2013-2015.  We will take a look at these longer cycles at a later date, but if you are interested now there is a lot of information online (Google it).

Here is the visual of the 3 cycles discussed:

GL - hope this makes the longer term outlook clearer.

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