Tag Archives: seasoal cycle

Racing for the October 2018 High

The relentless market has surprised a lot of people on the upside.  The December selloff was painful, the rise out of the low has been equally painful.  It has caught a lot of professional speculators such as the hedge funds unprepared.  Normally the market bases for a period of time around the low, seldom it pivots so quickly that produces a V-shaped bottom.

Indeed we have a V-shaped low and it is racing to take out the October 2018 high.  The October 2018 high is a 4-year cycle high, once this high is taken out, the previous 4-year cycle low is confirmed and the new 4-year cycle low to high rising phase will last at least until November 2020.  As we blogged before, we are currently in the middle of a 17-year cycle that is similar to the period of 1982-2000.  This December 2018 low is a 4-year cycle (February 2016-December 2018)  low and a half cycle low of the 17-year cycle (2009-2026).  We have steadfastly maintained a long term bullish outlook.  We have been looking very hard for entry points to deploy fresh capital for investment opportunities.  The indices continue to blow out resistance levels and now are marching for the old high.

It is 14 weeks into the current weekly cycle and it is very close to the old October 2018 high.  We still maintain the stance that the market is not going to breakout from here and enter a point of no return zone.  It will encounter resistance at the old high and enter a correction to reach below for the 200-day moving average. Back in October 1998, it made a 22.45% correction in 11 weeks to produce a 4-year cycle low, then it only took 7 weeks to take out the old July 1998 high, which was  a 4-year cycle high then.  The October 1998 4-year cycle low was confirmed in 7 weeks.  It then entered a point of no return zone to create the dotcom bubble.  This time it has spent 14 weeks already and it still hasn’t taken out the October 2018 high yet, and we are not foreseeing a dotcom bubble in the next two years, therefore this December 2018 low is very similar to the March 2009 and February 2016 lows.  It will experience a correction to provide entry points.

We have identified a few growth oriented investing ideas that are still in the early investing cycle.  We have conviction in these three companies that will be disruptive forces in the coming 4-year cycle.

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Seasonal Pattern in the Stock Market

2017 has been devoid of all seasonal patterns, will 2018 follow the seasonal pattern?  Certainly 2018 has been a lot more volatile, which can contribute to the formation of seasonal patterns.  Normally the stock market has a tendency to top in August thru October. 

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S&P 500 Cash Index Cycle Location 06292018

The major indices finished the first half of 2018 as a mixed bag.  S&P 500 and NASDAQ both finished with gains, while DOW finished in loss in the first half year.  This truly reflects the worries of a trade war because the DOW is mostly comprised of the multinationals, which are more sensitive to trade issues. 

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S&P 500 Cash Index Cycle Location

The stock market is currently in a holding pattern after a nine-day selloff via an A-B-C wave structure that produced a temporary high on August 8th.  The current 4-year cycle that started in February 2016 has been nothing but amazingly strong.  During the nine-day selloff

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SP 500 Cash Index Cycle Location

The S&P 500 cash index continues to press higher despite the negative news coverage about the new white house administration.  The value line geometric index broke out a 17-year old triple top on February 13, 2017.  The value line geometric index doesn’t get the headlines like the Dow Jones Industrial average, but it is the true representation of the real US economy.

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