Showing posts with label 4 Year Cycle. Show all posts
Showing posts with label 4 Year Cycle. Show all posts

Sunday, December 14, 2014

Crude Oil's 10-Year Leading Indication for DJIA | Tom McClellan

Tom McClellan - Chart In Focus (December 11, 2014)

Tom McClellan recently presented a 10-year leading indication relationship between oil prices and the stock market, as shown in the above chart. The current oil price slide says that sometime around 2024 some type of “echo” in stock prices from this year’s oil price drop can be expected. 

Stock prices echoing oil price movements with a 10-year lag has “worked” for over 100 years and there is enough evidence to accept it, even if we cannot explain it. For now, the message of this leading indication is that the oil price rally from 1998 to 2008 has yet to see the full extent of its echo during the 2009-2018 period. While the current dip in oil prices is going to be bad for stock prices about 10 years from now, it is not really a problem for stock prices in real time. 

The following chart zooms into this correlation between the S&P500 and the Crude Oil Price shifted 10 years into the future and suggests the S&P500 would continue moving down next week, then up into end of December before forming a major low around January 6. Another rally into early July - with a correction from around March 20 to April 24 - should follow.

Saturday, January 19, 2013

Decennial Cycle and Presidential Cycle in 2013


Michael Riesner and Marc Müller: Technical Outlook 2013 - Since 1900 the US market has marked an important long-term bottom in the first 4 years of EACH decade, without exception (see table of Lance Roberts at left) ... The last major low in the S&P 500 we saw in March 2009, which obviously belongs to the last decade. So either we see in the current decade the first failure of this pattern in more than 100 years or we will see another bear market and subsequent bottom in the next 2 years, which would then fit to both, the presidential and the decennial cycle. In this context it is very interesting that if we combine both cycles and look into the past, we are getting again a consistent picture of having a high probability for seeing a new bear market in the next 24 months. Since 1941 we had 7 presidential election cycles where the post-election and mid-term year fell into the first 4 years of a decade. In 5 out of 7 cycles (72% probability) we saw significant bear markets and more importantly, they were among the most painful bear markets of the last century! 
Conclusion: Our preferred scenario for 2013 is that we see an important March top in equities, followed by a distributive summer top building phase before seeing significant weakness from a potential August top developing into Q4. ... From a potential top of around 1550 to 1570 we could see the market correcting to 1180/1100. From a secular perspective this potential new bear market could bring us a very important long-term low for equities in 2014.
 

Friday, September 28, 2012

Major Stock Market Rallies of last 111 Years Compared

www.chartoftheday.com
 
The Dow made another post-financial crisis rally late last week. To provide some further perspective to the current Dow rally (and in response to several requests), all major market rallies of the last 111 years are plotted on today's chart. 

Each dot represents a major stock market rally as measured by the Dow with the majority of rallies referred to by a label which states the year in which the rally began ... a rally is being defined as an advance that follows a 30% decline (i.e. a major bear market) ... the Dow has begun a major rally 13 times over the past 111 years which equates to an average of one rally every 8.5 years ... As it stands right now, the current Dow rally that began in March 2009 (blue dot labeled you are here) would be classified as well below average in both duration and magnitude. However, when compared to the most recent post-major bear market rally (i.e. the rally that began in 2002), the current rally has already surpassed it in magnitude and required less time to do so.