Friday, March 30, 2012

9-Month Cycle | Tom McClellan


Chart In Focus
July 22, 2011

The 9-month cycle in the stock market used to be a very regular and important factor governing stock price movements.  But recent changes in the rules and structures of the markets may have made this cycle go the way of Saturday trading and paper stock certificates.  Or perhaps it has just changed itself into a new form.  Let's take a look.

My lead chart this week highlights what I am talking about.  Before 2007, there were important bottoms about every 185 trading days.  Cycles analysts for years have called this the "9-month cycle", or the "40-week cycle", even though the precise period was a little bit shorter than those numbers.  Big round numbers are easier to say, which is why those names were used.
In addition to the major cycle lows every 185 trading days, there was also a significant mid-cycle low that would appear somewhere in between the major bottoms.  The mid-cycle low was usually not as punctual, and could arrive early or late, even as the major cycle low would tend to be more on time.  This mid-cycle low was a "harmonic" of the frequency of the major cycle low, meaning that they were even multiples of each other.  Harmonic frequencies are a big deal for mechanical engineers dealing with solid structures, but they also show up in other arenas like the stock market.

Starting in 2007, this all changed, as delineated by the red vertical line.  It was hard to understand this change as it was occurring at the time, but easier to see now that we have the luxury of looking back at the historical data.  What appears to have happened beginning in 2007 was that the length of this cycle contracted dramatically, for both the major cycle and the mid-cycle periods.

One of the reasons why it was so difficult to understand this change in period as it was occurring in real time is because of another trait of this cycle, which is known as a "phase shift".  In my historical research, I have identified the 9-month cycle as working on the stock market all the way back into the 1960s, although curiously not so much before then.  One of the more interesting behaviors of this cycle over that time period is that about every 6-8 years, the 9-month cycle would seem to skip a beat, and then start up again on some new schedule.  Here is a great example of this behavior:

Flashback to 2002-06 and the 9-month cycle

In the lower portion of this chart, there is a modified sine wave pattern to help visualize the behavior of the cycle in the SP500's price movements.  The market was following this cycle pattern very nicely up until late 2005, and then it jumped onto a new schedule that just happened to be about a half cycle length off of the original schedule.

So with the knowledge that a phase shift was a possibility with this cycle, it was hard to understand what was happening in early 2008.  And this illustrates one of the big pitfalls with doing any sort of cycle analysis: cycles can change, and so while they may give us nice predictions of what should happen at some point in the future, there is no guarantee that the past behavior will remain in effect in the future.

It just so happens that 2007 was when this cycle changed, and it was also the year that the uptick rule for shorting stocks went away.  It is hard to understand why a rule change like this could make a difference on a market cycle, but I have an explanation that may help.

Imagine a wave pool in a laboratory, where scientists create waves to study how they travel through the water.  Now imagine that you remove all of the water, and replace it with 30-weight motor oil.  Because the oil is lighter but more viscous than the water, the behavior of waves in that wave pool would understandably be different.

So thinking of the financial markets, if the regulators were to do something that changes the "viscosity of money", making it flow more or less easily, then we would likely see changes in the way that waves propagate through that medium as well.  Such changes might include restrictions on shorting stocks, the advent of money market funds, the introduction of stock index futures and options, leveraged ETFs, etc.  All of these affect the ease with which money can flow into and through the stock market.

Now, if you look back at the top chart, you can see that the blue numbers are getting bigger again lately.  Those numbers represent the time period between the major lows of this cycle (formerly known as 9-month).  The lowest number was 159 trading days in early 2008, and it has climbed back all the way up to 177 as of the latest major cycle price low.  It may be that after the initial shock, this cycle is working on getting back up to is "natural" frequency.  Or it may be that 159 and 177 are just the widest extremes of a new range of cycle periods that average more like 168 trading days, and that this is the new natural frequency.  We won't know for sure for several more cycles' worth of time, and that's the big problem with this analytical technique.

For what it's worth, and to help your planning, 159 to 177 trading days from the most recent major cycle low equates to a timeframe of Oct. 31 to Nov. 25, 2011.



Advanced GET's Cycle-tool suggests this was the 9 Month Cycle crest. However, the tool is not adjusted according to Tom McClellan's findings.

Wednesday, March 28, 2012

ITD Delta Pattern & Solar Forecast & EAR - MAR Cycle = Low April 3-6




SPX vs EAR - MAR Cycle

23.09.2011  06:18 FR = EAR 0 MAR [H40]
11.10.2011  07:36 TU = EAR 0 MAR [H40]

28.10.2011  14:55 FR = EAR 0 MAR [H40]
14.11.2011  06:49 MO = EAR 0 MAR [H40]
30.11.2011  12:17 WD = EAR 0 MAR [H40]
16.12.2011  09:51 FR = EAR 0 MAR [H40]
01.01.2012  01:45 SU = EAR 0 MAR [H40]
16.01.2012  15:15 MO = EAR 0 MAR [H40]
01.02.2012  04:11 WD = EAR 0 MAR [H40]
16.02.2012  19:30 TH = EAR 0 MAR [H40]
03.03.2012  14:50 SA = EAR 0 MAR [H40]
19.03.2012  17:46 MO = EAR 9 MAR [H40]
05.04.2012  03:48 TH = EAR 18 MAR [H40]

21.04.2012  23:57 SA = EAR 27 MAR [H40]
09.05.2012  07:38 WD = EAR 36 MAR [H40]
27.05.2012  03:51 SU = EAR 45 MAR [H40]
14.06.2012  13:52 TH = EAR 0 MAR [H40]
03.07.2012  13:34 TU = EAR 0 MAR [H40]
23.07.2012  03:07 MO = EAR 0 MAR [H40]
12.08.2012  06:14 SU = EAR 0 MAR [H40]
01.09.2012  21:39 SA = EAR 0 MAR [H40]
23.09.2012  00:34 SU = EAR 0 MAR [H40]
14.10.2012  14:23 SU = EAR 0 MAR [H40]
05.11.2012  13:15 MO = EAR 0 MAR [H40]
27.11.2012  22:48 TU = EAR 0 MAR [H40]
20.12.2012  18:13 TH = EAR 0 MAR [H40]
12.01.2013  23:28 SA = EAR 0 MAR [H40]
05.02.2013  13:11 TU = EAR 0 MAR [H40]
01.03.2013  08:22 FR = EAR 0 MAR [H40]
25.03.2013  05:25 MO = EAR 0 MAR [H40]
17.04.2013  20:38 WD = EAR 0 MAR [H40]
11.05.2013  01:07 SA = EAR 0 MAR [H40]
02.06.2013  13:43 SU = EAR 0 MAR [H40]
24.06.2013  06:48 MO = EAR 0 MAR [H40]

Tuesday, March 27, 2012

SPX vs EAR-VEN Cycle [helio]






























30.08.2010  11:52 MO = Sun   36°  Venus
29.09.2010  00:48 WD = Sun   18°  Venus
28.10.2010  21:13 TH = Sun    0°  Venus
27.11.2010  19:20 SA = Sun   18°  Venus
27.12.2010  14:36 MO = Sun   36°  Venus
25.02.2011  11:29 FR = Sun   72°  Venus
26.04.2011  22:47 TU = Sun  108°  Venus
22.06.2011  22:42 WD = Sun  144°  Venus
16.08.2011  07:42 TU = Sun  180°  Venus
11.10.2011  13:09 TU = Sun  144°  Venus
12.12.2011  13:33 MO = Sun  108°  Venus
12.02.2012  17:18 SU = Sun   72°  Venus
10.04.2012  11:40 TU = Sun   36°  Venus
08.05.2012  12:41 TU = Sun   18°  Venus
05.06.2012  21:11 TU = Sun    0°  Venus
04.07.2012  12:50 WD = Sun   18°  Venus
02.08.2012  03:54 TH = Sun   36°  Venus
28.09.2012  05:09 FR = Sun   72°  Venus
24.11.2012  20:17 SA = Sun  108°  Venus
25.01.2013  09:11 FR = Sun  144°  Venus
28.03.2013  12:34 TH = Sun  180°  Venus
24.05.2013  13:15 FR = Sun  144°  Venus
17.07.2013  11:42 WD = Sun  108°  Venus
12.09.2013  02:28 TH = Sun   72°  Venus
11.11.2013  12:46 MO = Sun   36°  Venus
12.12.2013  02:51 TH = Sun   18°  Venus
11.01.2014  07:24 SA = Sun    0°  Venus
09.02.2014  21:38 SU = Sun   18°  Venus

 

Prediction of Sunspot Cycle 24-Peak & Long Term Trading Strategy



SIDC: The daily (yellow), monthly (blue) and monthly smoothed (red) sunspot numbers since 1994, together with predictions for 12 months ahead: SM (red dots) : classical prediction method, based on an interpolation of Waldmeier's standard curves; CM (red dashes) : combined method (due to K. Denkmayr), a regression technique coupling a dynamo-based estimator with Waldmeier's idea of standard curves. Peak: January 2013


NASA: The current prediction for Sunspot Cycle 24 gives a smoothed sunspot number maximum of about 59 in early 2013. We are currently over three years into Cycle 24. The current predicted size makes this the smallest sunspot cycle in about 100 years. Peak: January-February 2013


IPS: Peak: December 2012


Last updated 26 Mar 2012 13:03 UT

                         FORECAST SOLAR CYCLE 24
-------------------------------------------------------------------------------
Cycle  Sol. Start  Sol. Max  Max SSN     Length     Rise to Max     Max to End
       Year Mth    Year Mth             Yr   Mth    Years   Mths    Years  Mths
-------------------------------------------------------------------------------
24     2009 Jan    2012 Dec   90.2     11.0 132     3.9    47       7.1    86

IPS will adjust this forecast cycle as the new cycle unfolds. 
The difficulty is ensuring that adjustments are not made for short 
term variation, only for longer term cycle variation. 

NOAA: Given the predicted date of solar minimum and the predicted maximum intensity, solar maximum is now expected to occur in May 2013.


Here is the data supporting the shorter term strategy of buying at solar minimums and selling at the next cycle maximum for an average 70% gain:
Why might stocks consistently outperform in these periods from solar minimum to maximum, and underperform from solar peak down to the next solar minimum, particularly as higher solar activity can cause higher geomagnetism on Earth which affects humans biologically negatively and adversely affects stock market returns?
Well, there is a slight lag in geomagnetic peaks after solar cycle peaks, as shown below, and this fits well with why we have seen an economic recession follow each solar cycle maximum in the last century - it corresponds to the peak in geomagnetism. Historically, this post-solar-peak period has been one of human apathy and peace. Conversely, the period into the solar peak has been one of human excitability, pro-action and economic inflation, which fits well with stock market gains.
Source: Susan Macmillan, British Geological Survey

Solar Cycle 24 began around December 2008 with a solar minimum and it is predicted to peak in July 2013. An average gain of 70% for the Dow over this period would translate as 14500 by mid 2013 (which would mean a new nominal all time high).A recession has closely followed solar peaks for each solar cycle in the last 100 years. The average recession duration is 1 year. The average length of recession-induced stocks bear markets is 1 year 4 months. As the stock market is forward looking, and a leading indicator, we could therefore find the the stock market peaks around the beginning of 2013 and then declines into the solar peak in mid 2013, and then declines through a recession into 2014.

Dow-Commodities ratios and consumer price inflation should peak at extremes at the solar peak (as has occurred each time in the last century), suggesting commodities should push on all the way into mid-2013 whilst stocks lag in the last few months.  
In summary, there is a correlation between stock market performance and solar cycles. A profitable strategy over the last century would have been to buy at the solar minimum and sell at the next solar maximum, and repeat for an average 70% gain in each instance.

An even more profitable strategy would have been to buy and hold over 2-3 decades in between 3 specific half solar cycles. This strategy would have produced 10-fold gains each time, and pattern continuation suggests such a repetition from the solar minimum at the end of 2008 looking out to the 2030s, in line with a further secular stocks bull.

Looking shorter term to the solar peak around mid-2013, stocks should track yet higher, and this implies commodities much higher, as an extreme relative pricing of commodities over stocks should be reached around that solar peak, before a secular inversion.
John Hampson, April 2011 @ www.marketoracle.co.uk/Article27341.html

Monday, March 26, 2012

Tidal CITs @ Willets Point [NYC] March 15 - June 15





















2012-03-14 (Wed) = Third Quarter
2012-03-16 (Fri) = Tidal CIT
 
2012-03-22 (Thu) = New Moon 
2012-03-23 (Fri) = Tidal CIT
2012-03-26 (Mon) = Moon @ Apogee
2012-03-30 (Fri) = First Quarter
2012-04-02 (Mon) = Tidal CIT
 
2012-04-06 (Fri) = Full Moon = SuperMoon
2012-04-07 (Sat) = Moon @ Perigee
 
2012-04-08 (Sun) = Tidal CIT
2012-04-13 (Fri) = Third Quarter
2012-04-14 (Sat) = Tidal CIT
 
2012-04-21 (Sat) = New Moon 
2012-04-22 (Sun) = Tidal CIT
2012-04-22 (Sun) = Moon @ Apogee
2012-04-29 (Sun) = First Quarter
2012-05-01 (Tue) = Tidal CIT

2012-05-05 (Sat) = Moon @ Perigee
2012-05-05 (Sat) = Full Moon = SuperMoon 
2012-05-08 (Tue) = Tidal CIT
2012-05-12 (Sat) = Third Quarter
2012-05-13 (Sun) = Tidal CIT
 
2012-05-19 (Sat) = Moon @ Apogee
2012-05-20 (Sun) = New Moon = Solar Eclipse
 
2012-05-23 (Wed) = Tidal CIT
2012-05-28 (Mon) = First Quarter
2012-05-31 (Thu) = Tidal CIT
 
2012-06-03 (Sun) = Moon @ Perigee
2012-06-04 (Mon) = Full Moon = SuperMoon = Lunar Eclipse

2012-06-06 (Wed) = Tidal CIT
2012-06-11 (Mon) = Third Quarter
2012-06-12 (Tue) = Tidal CIT
2012-06-15 (Fri) = Moon @ Apogee
 
2012-06-19 (Tue) = New Moon

2012-06-22 (Fri) = Tidal CIT

Sunspots, GDP & the Stock Market

Theodore Modis: Sunspots, GDP & the Stock Market. In: Technological Forecasting & Social Change 74 (2007) p. 1508–1514 [www.growth-dynamics.com/articles/sunspots.pdf]











Solar Activity and Solar Tides caused by the Planets

Ching Cheh Hung (2007): Apparent Relations Between Solar Activity and Solar Tides Caused by the Planets. Glenn Research Center, Cleveland, Ohio. [NASA/TM—2007-214817 @ http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/20070025111_2007025207.pdf]



Conclusions

In view of the statistics and the issues presented and discussed in this report, one must acknowledge the possibility that some type of tide-solar activity relation may truly exist, despite the widely accepted thought that believes otherwise. Evidence of apparent relations between planet positions and solar activity was observed and presented:

(1) Twenty-five of the thirty-eight largest known solar flares were observed to start when one or more of the tide-producing planets (Mercury, Venus, Earth, and Jupiter) were either nearly above the event positions (<10° longitude) or at the opposing end of the Sun. The probability of this to happen at random is 0.039 percent. This observation supports the hypothesis that the force or momentum balance (between the solar atmospheric pressure, the gravitational field, and the magnetic field) on the plasma in the looping magnetic field lines in solar corona could be disturbed by tides, resulting in magnetic field reconnection, solar flares, and solar storms.

(2) From the daily planet positions during the period from 1840 to 2000, an 11-year cycle of the alignment of Venus, Earth, and Jupiter is observed. This cycle approximately matches the sunspot cycle. When the two cycles were least matched, the sunspot numbers were low (1875 to 1930). When best matched, the sunspot numbers were high (late 1950s). This supports the hypothesis of resonance and beat between the cycle of small tides caused by the planet alignment and the cycle of independent, large, and irregular nontidal solar activity. Mercury produces significant tides, but is not considered because it does not have an 11-year-cycle resonance with the nontidal solar activities, either by itself or by aligning with other planets. The observed relation between the predictable planet position and unpredictable solar flare suggests a way to forecast the times of the largest solar flares (X9.0 and larger, both near- and far-side from Earth) shortly after giant sunspots appear: They are most likely to start when these sunspots rotate into a region where at least one of the four tide-producing planets is either overhead or underfoot (within 10° longitude). They are least likely to occur when these sunspots are at 36° longitude or further away from the overhead or underfoot points of all these four planets.

The theory of resonance between the cycle of nontidal solar activity and the cycle of the alignment of Venus, Earth, and Jupiter forecast a low sunspot number in the coming solar cycle number 24 unless the current solar minimum would last for a few more years to reduce the current mismatch between these two cycles.



Thursday, March 22, 2012

SoLunar Ultra Long Term Forecast

www.solarcycles.net

Secular peaks in stocks occur around every 33 years, one luni-solar cycle, and occur close to the solar maximum

Secular commodities peaks also occur around every 33 years, one luni-solar cycle, and occur close to the solar maxium.


A secular nominal bottom, panic or crash occurs within 2 years of a solar minimum.


Peaks in inflation correspond to solar maximums, troughs to solar minimums. The biggest peaks in inflation correspond to commodity bull market peaks, marked C. US inflation and UK inflation shown.


Recessions follow solar cycle peaks, corresponding to the peaks in geomagnetism that lag solar maximums.


The 4 year period from solar minimum to solar maximum is typically one of growth and strong stock market gains. 

Crashes, panics and bottoms typically occur around solar minima

US secular stocks bulls last around 24 years, or 2 solar cycles. 

Secular commodity bulls last around 12 years, or 1 solar cycle.


Real (inflation-adjusted) stock prices are in a long term uptrend and follow a sine-wave of 33 year repetition.


Real (inflation-adjusted) commodities are flat over the long term, and follow a sine-wave of 33 year repetition, but of opposite polarity to stocks.


The Dow-Gold ratio is in a long term uptrend and also follows a sine-wave of 33 year repetition.

Super Long Term Delta Cycle in the SPX







































Monday, March 19, 2012

Alexander Tchijevsky's 'Physical Factors of the Historical Process'


The current prediction for Sunspot Cycle 24 gives a smoothed sunspot number maximum of about 59 in early 2013. We are currently over three years into Cycle 24. The current predicted size makes this the smallest sunspot cycle in about 100 years.


































http://solarscience.msfc.nasa.gov/images/f107_predict.gif
























Alexander Tchijevsky (1924): Physical Factors of the Historical Process. A short sketch. Kaluga [72 p.]


SUMMARY

The principles of modern natural science have urged me to investigate whether or not there existed a correlation between the more important phenomena of nature and events in the social-historical life of mankind. In this direction, beginning in the year 1915, I have performed a number of researches, but at present I am submitting to the public only those which are directed towards determining the connection between the periodical sun-spot activity and (1) the behavior of organized human masses and (2) the universal historical process.

The following facts are based upon statistics gathered by me while submitting to a minute scrutiny the history of all the peoples and states known to science, beginning with the V century B. C. and ending with the present day.

1. As soon as the sun-spot activity approaches its maximum, the number of important mass historical events, taken as a whole, increases, approaching its maximum during the sun-spot maximum and decreasing to its minimum during the epochs of the sun-spot minimum.
 
2. In each century the rise of the synchronic universal military and political activity on the whole of the Earth's territory is observed exactly 9 times. This circumstance enables us to reckon that a cycle of universal human activity embraces 11 years (in the arithmetical mean). (See. Fig. 2, 3 & 4, also historiometrical table, p. p. 30—31).
 
3. Each cycle according to its historical psychological signs is divided into 4 parts (periods):

I. Minimum of excitability ......3 years;
II. growth „ „ ........2 „
III. maximum „ „ ........3 ,,
IV. decline „ „ ........3 „
 
The number of historical events in each cycle are distributed approximately according to the data for 500 years (XV—XX cent.) in the following manner (in the mean):

I period ............5%;
II „ ...........20%;
III „ ............60%;
IV ,, …........15%;
(See diagram on p. 29).
 
4. The course and development of each lengthy historical event is subject to fluctuations (periods of activity and inactivity) in direct dependence upon the periodical fluctuations occurring in the sun's activity. Formula: the state of predisposition of collective bodies towards action is a function of the sun-spot periodical activity.
 
5. Episodic leaps or rises in the sun's activity, given the existence in human societies of politicoeconomical and other exciting factors, are capable of calling forth a synchronic rising in human collective bodies. Formula: the rising of the sun-spot activity transforms the people's potential energy into kinetic energy. (See Fig. 5).

My studies in the sphere of synthesizing historical material have enabled me to determine the following morphological law of the historical process:
 
6. The course of the universal historical process is composed of an uninterrupted row of cycles, occupying a period equaling in the arithmetical mean 11 years and synchronizing in the degree of its military-political activity with the sun-spot activity. Each cycle possesses the following historio-psychological peculiarities:
a. In the middle points of the cycle's course the mass activity of humanity all over the surface of the Earth, given the presence in human societies of economical, political or military exciting factors, reaches the maximum tension, manifesting itself in psycomotoric pandemics: revolutions, insurrections, expeditions, migrations etc., creating new formations in the existence of separate states and new historical epochs in the life of humanity. It is accompanied by an integration of the masses, a full expression of their activity and a form of government consisting of a majority.
b. In the extreme points of the cycle's course the tension of the all-human military-political activity falls to the minimum, ceding the way to creative activity and is accompanied by a general decrease of military or political enthusiasm, by peace and peaceful creative work in the sphere of state organizations, international relations, science and art, with a pronounced tendency towards absolutism in the governing powers and a disintegration of the masses. (See p. 51).

7. In correlation with the sun-spot maximum stand:
a. The dissemination of different doctrines political, religious etc., the spreading of heresies, religious riots, pilgrimages etc.
b. The appearance of social, military and religious leaders, reformists etc.
c. The formation of political, military, religious and commercial corporations, associations, unions, leagues, sects, companies etc.
 
8. It is impossible to overlook the fact, that pathological epidemics also coincide very frequently with the sun-spot maximum periods (see table on p. 47).
 
9. Thus the existence of a dependence between the sun-spot activity and the behavior of humanity should be considered established.
 
One cycle of all-human activity is taken by me for the first measuring unit of the historical process.

The science concerned with investigating the historical phenomena from the above point of view I have named historiometria.

At present I am working on a plan of organizing scientific institutes for determining the influence of cosmic and geophysical factors upon the condition of the psychics of individuals and collective bodies, and devising a working method for them.
 
A. Tchijevsky.
November, 1922.
10, Ivanovskaia, Kaluga, Russia.

Source: Sergey Smelyakov. Tchijevsky's Disclosure: How the Solar cycles Modulate the History (www.astrotheos.com)



SCHEMATIC SUMMARY OF PROPERTIES OF A COMPLETE HISTORIOMETRIC CYCLE
































When we study the secular and major peaks in stocks and commodities, we find that they all fall very close to solar cycle maximums, as maximum excitability drives maximum risk-taking. There are two relationships between stocks and commodities. They march together, when sentiment is pro-risk or anti-risk, spurring money into or out of both classes (versus safe havens of cash and bonds). But they also alternate secular manias, with stocks peaking more frequently than commodities. We also find a compelling relationship between solar cycles, inflation, growth and recessions. Peaks in inflation correspond to solar maximums, troughs to solar minimums. The biggest peaks in inflation correspond to commodity bull market peaks. In fact, we typically experience “growthflation” into solar peaks, i.e. both inflation AND growth.

So, drawing it all together, the period of rising solar activity (sunspots) into and around the solar maximum correlates positively with economic growth, inflation and risk-asset returns. What links these is risk-taking, spending and investing, or in other words, human excitability, which leads us back to Tchijevsky’s work. According to his studies, the period of declining sunspots after the solar maximum was one of change from activity to apathy. Perhaps appropriately, as the money stops circulating in the economy, this is typically a time of recession. Recessions follow solar cycle peaks, corresponding to the peaks in geomagnetism that lag solar maximums (http://www.solarcycles.net).


http://www.geomag.bgs.ac.uk/data_service/space_weather/forecast.html