US Stock Market at the Cliff — Don't Be a Lemming | Lars von Thienen

[...] The chart below depicts a composite model of all identified cycles in the P/E Shiller data from 1900-2024. Notably, the "cliff" phenomenon, where all cycles synchronize their peaks at a single point in time, has only occurred in 1929, 2000, and now appears to be happening again in 2024. 

 

 Composite Cycle Analysis Model for the P/E Ratio of the S&P500 from 1900-2024 | December 6, 2024.

[...] The 42-Month Cycle has the highest strength and is the dominant cycle in the dataset. This 42-Month Cycle is generally significant for financial markets, as it has been identified across numerous financial assets. Let's take a closer look at what makes this cycle so special in this case. Starting with the current situation, the 42-Month Cycle has topped at major market peaks, such as the internet bubble in 2000, the financial crisis in 2007, and 2021. Additionally, the bottoms of this cycle have been synchronized.

 

42-Month Cycle in the P/E S&P 500 Ratio | 1900-1950.

42-Month Cycle in the P/E S&P 500 Ratio | 1999–2024.

[...] A cycle that remains remarkably stable in length and phase over 120 years is quite uncommon. As shown in the upper chart, the 42-Month Cycle is also currently reaching its peak and transitioning into a downward phase, which is expected to continue into 2026.

Quoted from::
Lars von Thienen (December 8, 2024) - The Cliff - Don't Be a Lemming. 

P/E Ratio of S&P500 stocks reveals a cliff of red downward pointing cycles.

 

See also:

Lars von Thienen (October 23, 2024) - The next wave on the horizon for the US stock markets – it is time to prepare.

Lars von Thienen (November 1, 2024) - The 41-Month Kitchin Cycle Topping Patterns in US Stocks.

Richard Smith (October 29, 2024) - Equities Endgame? Spectrum Cycle Analysis of US Indices.

TPR (December 10, 2024) - 2025 in J.M. Funk’s '56-Year Cycle of Prosperity and Depression'.

2025 in J.M. Funk’s '56-Year Cycle of Prosperity and Depression'

In J.M. Funk's chart of the "56-Year Cycle of Prosperity and Depression," the year 2025 belongs to the sequence of 1801-1857-1913-1969. This sequence is connected by a long clock hand or needle to the center of the chart, labeled "Panic. Dumping." 

 

2025 in the 56-Year Cycle of Prosperity and Depression.

(J.M. Funk's original chart of 1932, redrawn by David Williams, 1982)

 

» A knowledge of the present and history is therefore a key to the future. Until Government Standards are based upon the recognition of exterior forces (which govern human conduct) history will repeat itself. THE CHART WILL PREDICT THE FUTURE because the human make-up includes, aspiration, greed, intemperance, fickleness, etc., which traits are governed by endurance; 

endurance is governed by exterior forces which fluctuate in rhythm and tempo 

as constantly as the Sun in its journey through the heavens. «  

James Morris Funk, 1932.

 

• The Panic of 1801 marked the end of the first phase of the Napoleonic Wars and brought an abrupt halt to the prosperity the US had been experiencing from the carrying trade. Stock prices on the NYSE fell by about 25%.
• The Panic of 1857 was caused by bank failures, railroad overextension, and falling commodity prices, leading to a financial collapse. The stock market lost about 30%, and numerous businesses and banks failed. The crisis resulted in a severe recession, which lasted until 1859.
• The Panic of 1913-14 was triggered by the Balkan Wars (1912-13), which foreshadowed war among Europe's major powers. This resulted in a gradual liquidation of US securities by European investors, culminating in a 40% loss by August 1914, when the NYSE closed for four months.

 

 DJIA (daily closes) 1912-1915.

• Throughout 1969, the S&P 500 continued to decline from its November 29, 1968 peak, falling by 37% to its low on May 25, 1970 (18 months)—marking the worst bear market since 1937-38.  

 

  DJIA (daily bars) 1965-1973.

 Through the 9-year subcycle, 2025 is also related to 2016, 2007, 1998, etc. 

 

There are two other long needles extending from the center of Funk's chart, pointing to the sequences 1817-1873-1929-1985 and 1837-1893-1949-2005: According to Funk, in each 56-year period three major panic periods occur at 20-20-16 year intervals.  

 

So, was there a panic or significant decline in 1985? No. The DJIA closed the year up by 28%. But then in fact, 2005 was the first "fifth year" of any decade in the history of the DJIA to close in the negative, with a shocking decline of 0.6%. Since the 1880s, the fifth year in each Decennial Cycle has been, on average, the most profitable year of the entire cycle, and this pattern may well repeat itself in 2025 as well. The best argument against a positive outlook for 2025 is the fact that the US stock markets have already surpassed the crest of the 42-month cycle, which is expected to bottom out in the first quarter of 2026.

 

 Dow Jones industrial Average 1985 and 2005 (weekly bars).

Then there is this needle from the outer white ring, pointing to 2024, with the label "High Prices. Sell Save" (which corresponds to the major high of November 29, 1968 and, as expected, a major high in December 2024), and another needle from the inner white ring, pointing to around the cusp of 2026-2027 is labeled "Low Prices. Buy" (which corresponds to the January and May 1970 major lows in the S&P 500 – for more details, see the monthly chart below).

 

Since the 1760s, all major financial crises in the US and Western Europe have consistently clustered around Funk's 56-Year Cycle and its subcycles, which all appear to be closely connected to Moon-Sun tidal harmonics. David Williams concluded: "The results show conclusively that regardless of wars, rebellions, population changes, industrialization, technological, and monetary changes, American business has been dominated by a 56-year rhythm." 

 

The 56-Year Pattern of American Business Activity since 1761 vs. Planetary Cycles & Table with the

Accuracy of Major Planetary Aspects of the Jupiter-Uranus Cycle and the Jupiter Saturn Cycle at 

Business Cycle Turning Points 1929-1982 (Williams, 1982).

  

However, also note that the projections of the Four Year Presidential Cycle (see also HERE), the Decennial Cycle (see also HERE), and the Benner Cycle present distinctly different scenarios and outcomes for 2025 and the coming years. And, by the way, BlackRock just canceled the Business Cycle.

 

Reference:

J.M. Funk (1932) - The 56-Year Cycle in American Business Activity. Privately published. Ottawa. IL.

LCdr. David Williams (1947) - Rhythmic Cycles in American Business. 

LCdr. David Williams (1959) - Astro-Economics.
LCdr. David Williams (1982) - Financial Astrology. 

 David McMinn (1997) - The Sun, the Moon, and the Number 56.

David McMinn (1999) - Astrology and the 9/56 Year Cycle. 

David McMinn (2018) - 9/56-Year Cycle and Financial Panics. 

David McMinn (2019) - J.M. Funk and the 9/56 Year Cycle.

Lars von Thienen (2022) - Cycles of Financial Crisis: Using Long Term Static Cycle Models. (video)

 

 S&P 500 Index (daily bars) vs 56 Year Cycle.
December 11, 1968 to December 11, 2024 = (365.2422 * 56) = 20,454 days apart.

Blue line = S&P 500 daily closes shifted forward 20,454 days = Funk Cycle.

  S&P 500 Index (monthly bars) 1966 - 1972.

» Throughout 1969, the NYSE continued to decline from its December 1968 peak 

[= December 2024], falling by 37% to its low in May 1970 [= May 2027]. «

See also: 

TPR (2015) - 2015 in J.M. Funk’s 56-Year Cycle of Prosperity and Depression.

Tom McClellan (December 6, 2024) - Presidential Cycle Effects with a New President.

Lars von Thienen (November 1, 2024) - The 41-Month Kitchin Cycle Topping Patterns in US Stocks.
Richard Smith (October 29, 2024) - Equities Endgame? Spectrum Cycle Analysis of US Indices.

TPR (2022) - Periods When to Make Money: Samuel Benner's Cycle Projection into 2026 High.
TPR (2012) - 2025 in W.D. Gann's Financial Time Table (1784 - 2121).

 

Google Search Result: "Funk Cycle"

S&P 500 vs VIX Put/Call Ratio | Jason Goepfert

Volume in VIX puts was more than two times that of calls on Friday.
That's one of the highest turnovers in 15 years.
It has typically spiked at times of extreme anxiety.

Jason Goepfert, November 4, 2024.

 

 Preliminary CBOE Put/Call Volume Ratio on Nov. 4 at 2PM ET 

is officially "pretty far up there".

Tom McClellan, November 4, 2024.

 

 S&P Cycle Analysis - Time and Price Projections | Steve Miller, November 4, 2024.

 

 S&P 500 E-mini Futures (daily bars) | November 4, 2024.

The 41-Month Kitchin Cycle Topping Patterns in US Stocks | Lars von Thienen

The weekly S&P 500 shows that the nominal 180-week cycle, currently at 177 weeks, is in an early topping stage. This long-awaited time cycle has been monitored since the end of 2023 and has been cited as a key driver for the upturn lasting into this window. Now that we have arrived at this point, we need to pay close attention to the shorter-term cycles and technical indicators.

Weekly S&P 500 with nominal 180 weeks / 41-Month Kitchin Cycle topping | October 23, 2024

Before moving to the daily cycle analysis, it is worth noting that the cyclic-tuned RSI indicator has reached the upper band, indicating a "bull exhaustion" mode. This condition can turn within days into a "bulls tired" and/or "bulls exit" state, signaling that we are primed for a longer-term reversal. The same weekly cycles situation can be observed on the NASDAQ.

NASDAQ weekly cycles | October 23, 2024

Let's now examine the daily cycles, starting with the S&P 500 model.

 » The daily composite model suggests a topping pattern either now or potentially by the end of the year. «

 S&P 500 daily dominant cycles model | October 23, 2024

The main cycles are the 192-day and the harmonic 89-day trading cycles. The daily composite model suggests a topping pattern either now or potentially by the end of the year. The cRSI indicator shows we are nearing the upper band, which could also signal a final year-end rally before both daily cycles align with the downward-trending weekly cycle noted earlier. A similar perspective can be observed in the Nasdaq daily data.

Nasdaq Composite daily dominant cycles model | October 23, 2024

The shorter-term daily cycles with lengths of 80 and 200 trading days on the Nasdaq model are rolling over now and will likely continue into the end of 2024. These cycles are also coming into alignment with the next long-term downward swing, which is in sync with the long-term cycles shown earlier.

It's worth noting that we're seeing a divergence forming, as the market experienced a clear topping pattern in June of this year: At that time, the composite model peaked while the cRSI was breaking down below the upper band, issuing a sell signal. The price never went back to achieve a higher high, and the cRSI is indicating an even bigger divergence between the price action and the signal line. The technical indicators shown below have been adjusted to the cycles detected and mentioned above. The highlighted red or green shaded areas indicate that the higher timeframe - here the weekly S&P 500 - is also taken into consideration. 

S&P 500 - cRSI cyclic indicator | October 23, 2024

The multi-timeframe cyclic technical indicator is showing a clear divergence between price and the signal. While the weekly chart confirms another overbought situation at the time the divergence signal emerges, this provides technical confirmation of a possible top in place. A similar technical condition can be observed on the NASDAQ.

 

Nasdaq Composite | October 23, 2024

Quoted from:
Lars von Thienen (October 23, 2024) - The next wave on the horizon for the US stock markets – it is time to prepare.

See also:
Richard Smith (October 29, 2024) - Equities Endgame? Spectrum Cycle Analysis of US Indices.

Sergey Tarassov  (September 8, 2024) - Kitchin Cycle Suggests DJIA Decline Until End of 2025. 

Sergey Tarassov  (June 26, 2024) - 2024 DJIA vs 40 Month and 42 Month Cycles.

Edward R. Dewey (1971) - The 41-Month Kitchin Cycle in Stocks. 

 

  Carol S. Mull (1989) - The 3 1/3 - Year Kitchin Cycle.

 

Joseph Kitchin (1923) - Cycles and Trends in Economic Factors.

Fed Policy-Driven Super Rallies and Corrections in US Stocks | Sven Henrich

The US market is at a critical juncture with a contentious election, a Fed meeting, and numerous earnings reports on the horizon. A significant liquidity rally is underway, raising hopes for a year-end rally, yet concerns about a potential corrective move linger, especially after an 11-month rise. Despite strong bullish sentiment, skepticism remains due to insufficient changes in underlying conditions and earnings not meeting expectations. The S&P 500 is now at approximately 5,800, with some analysts projecting levels as high as 6,600, but these optimistic forecasts prompt concerns about sustainability.

Super rallies and corrections in the S&P, driven by interest rate cuts and hikes (2016–2024).

 

Liquidity-driven super rallies, influenced by Fed policy on interest rates, are characterized by prolonged market increases with minimal price discovery. The first major super rally in the above chart followed the earnings recession of 2015-2016, fueled by tax cuts and global quantitative easing. Subsequent rallies occurred despite rate hikes, indicating a strong influence from central banks and government policies. These rallies often persist until liquidity conditions shift, such as through rate increases or unexpected events. 

 

Currently, global central banks are signaling easing policies, contributing to the ongoing liquidity rally. Fiscal dominance, marked by significant deficits, plays a crucial role in this environment. The unprecedented $1.6 trillion deficit in 2023 raises questions about recession potential amid fiscal stimulus. Past experiences show that downside movements typically arise when liquidity changes. The current market situation highlights a disconnect between strong policy support and underlying economic conditions. Overall, these factors suggest that the rally extend through the end of the year or into 2025, but risks remain.

 

Reference:

Sven Henrich (October 27, 2024) - NorthCast Market Update: Markets at a Crossroad. (video)

Markets expect the Federal Open Market Committee to 

cut interest rates again by 0.25% on Thursday, November 7.

 

The median Nasdaq 100 (NDX) return from October 27th to December 31st is +11.74% since 1985.  
The median S&P 500 return from October 27th to December 31st in election years is +6.25% since 1928. 

— Goldman Sachs, October 27, 2024.

 

See also:
Sven Henrich (January 14, 2024) - The Cynic’s Guide to Markets.

Equities Endgame? Spectrum Cycle Analysis of US Indices | Richard Smith

 NASDAQ (4-hour closes) - at the top of an 82-day cycle swing.

  E-mini S&P 500 (daily closes) - at the top of an 81-day cycle swing.

S&P 500 (weekly closes) 2017-2024 vs. 180-week cycle composites of all major US stock indices.

Reference:
Richard Smith (October 29, 2024) - Equities endgame? Cycles are screaming caution! (video)

 

Hurst Cycles Market Update — David Hickson, October 28, 2024.

Hurst Cycles in the S&P 500 — David Hickson, October 9, 2024.

Hurst Cycles Update for S&P 500, NASDAQ, Gold, and Bitcoin | David Hickson

Reference:
David Hickson (October 14, 2024) - Early Cycle Troughs - Hurst Cycles Market Update. (video)

Hurst Cycle Projection for the NASDAQ and S&P 500 | David Hickson

 

There is uncertainty regarding the 20-day cycle trough's exact timing. The average length for this cycle is 17 days. Positioning the trough on August 22 aligns better with the 40-day cycle, which should be forming around September 9.

 

In the NASDAQ, similar trends are observed. The crest of the red dashed line of the Hurst Cycle Composite is around Quadruple Witching Friday, September 20 ± a few trading days.

Reference:
David Hickson (September 9, 2024) - The 40-Day Trough - Hurst Cycles Market Update. (video)

 

See also:

Jeffrey A. Hirsch (September 5, 2024) - S&P 500 September 2024 Seasonality.

Wayne Whaley (August 31, 2024) - S&P 500 Soared 7% in Summer, Shifts Weakness to October.

Robert Miner (August 31, 2024) - S&P 500 Uptrend May Extend to 5,800 Into Equinox. 

Kitchin Cycle Suggests DJIA Decline Until End of 2025 | Sergey Tarassov

 » DJIA correction begun, and the 41 Month Kitchin Cycle suggests a decline until the end of 2025. «  
 —  Sergey Tarassov, August 5, 2024.

 

» Multiyear High in the DJIA between June and October 2024, i.e. sometime
between the crests of the 40 Month Cycle and the 42 Month Cycle.  «    
 —  Sergey Tarassov, June 25, 2024.

Reference:
Sergey Tarassov (August 5, 2024) - Tune Up 41 Month Kitchin Cycle for DJIA. (video)
Sergey Tarassov (June 25, 2024) - Review of Forecasts for DJIA, Gold, Bitcoin, IOC and Mexican Peso. (video)

 2024 in W.D. Gann's Financial Time Table: » Major Panic - CRASH! «

 

Panic Cycles Week July 15 - 19 & Week September 9 - 13.

—  Martin Armstrong, June 14, 2024.