Long Wave Theory - Kondratieff Wave Already Bottomed? | Martin Armstrong

Nikolai D. Kondratieff - The Long Waves in Economic Life

Market & Solar Activity

Yesterday a rapid increase in Sunspots went along with the market's decline.

Geomagnetic forecast suggests weakness also for next Monday, April 23. 

Recent STD Red Weeks

April 16-17 major High - sharp decline into April 20-23 Low - rally into mid May 
(follow upper STD scheme)

The Sun, the Moon, and the Number 56 | David McMinn

The Kondratieff Cycle and Its Subdivisions

The economic long wave is a boom-and-bust cycle that drives the global economy, first discovered by Russian economist Nikolai Kondratieff in the 1920s. Kondratieff was researching debt, interest rates, production, and prices when he uncovered the economic long wave. The ideal Kondratieff long wave cycle (K-Wave) is 56 years in length, though it can vary, running longer or shorter in Fibonacci ratios relative to the ideal duration (between five 11-year sunspot cycles and three 22-year Hale cycles).

 

 56 year cycle in commodities, bonds, wages, and foreign trade.

 

The current long wave is of the extended variety and began in 1949. Current analysis suggests that this K-Wave will end in 2013, running eight years, or 14.5%, longer than the ideal 56-year duration. 

 

 The long wave, the long wave seasons, and 16 Kitchin cycles.

Harvard economist Joseph A. Schumpeter, author of 'Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process', believed that the economic long wave is the single most important tool for economic prognostication.

 The ideal K-Wave spans 56 years and is divided into four 14-year seasons, each consisting of 4 Kitchin Cycles (approximately 42 months each). Each Kitchin Cycle is further broken down into three Kitchin Thirds (about 14 months each). Within the Kitchin Third Cycle, there are three Wall Cycles (each lasting 20 weeks or 142 calendar days), and the Wall Cycle is further subdivided into four Quarter Wall Cycles (approximately 35 calendar days each). These cycles give rise to recurring patterns in financial markets and business trends.

 

The current long wave is now in the Kondratieff Winter season. Most investors wish they had access to this long wave season chart in 2007. Every long wave has four seasons, just like a year. The approximate length of a long wave season is 14 years, though they can be shorter or longer. Each season typically contains four Kitchin cycles, with an ideal length of 42 months. However, long wave seasons can have fewer or more Kitchin cycles than the usual four.

 

Kitchin Cycles: Joseph Schumpeter concluded that every long wave was made up of 18 smaller business cycles, or Kitchin cycles. In more recent years, with more sophisticated charting technology and market analysis, the research conclusions of market analyst P.Q. Wall—that the long wave is made up of only 16 Kitchin cycles—have been validated. This is an essential distinction in cycle research. 

Schumpeter’s model of how all the cycles worked together to produce long waves included Kitchin cycles (the regular business cycle of 3-5 years) and Juglar cycles (7-11 years), with three Kitchins in each Juglar. Schumpeter also wrote about the Kuznets cycles (15-25 years), but didn’t include them in the charts above. The charts depict the flow of the Kitchin and Juglar cycles integrated into 56-year long wave cycles. Note that Schumpeter’s model presented 18 business cycles in a regular long wave.

 

Market cycles differ from business cycles in that they are identified on an index chart, rather than necessarily in the economic data as a business cycle. However, they often correlate with the regular business or trade cycle. Every long wave appears to be made up of 16 market "Kitchin" cycles. The 16 Kitchin cycles that make up a long wave are ideally 42 months in length, though they are rarely ideal and fluctuate in length, both shorter and longer. In each Kitchin cycle, there are ideally 36 dips or 36 Hurst "5-week" lows.

Kitchin Third: The ideal Kitchin cycle is 42 months, or 1,277.5 days, in length, while the ideal Kitchin Third is 14 months, or 425.83 days. A Kitchin cycle is made up of 9 Wall Cycles, so each Kitchin Third consists of three Wall Cycles. P.Q. Wall had a general rule: the third is often the last and weakest. This applies to the final Kitchin Third in a Kitchin Cycle, as well as to Wall Cycles #3, #6, and #9—the final Wall Cycle in each Kitchin Third. The Kitchin Cycle often unfolds in three Kitchin Third sections, but the Kitchin Third is not typically as distinct as the other cycles.

 

 

Wall Cycle (aka 20-Week Cycle): The Wall cycle is the ideal trader’s cycle. Accurate technical analysis of the Wall cycle is essential for traders. Dividing the ideal 56-year long wave by 144, one obtains the ideal Wall cycle. The mathematical relationship of these cycles indicates that the Wall cycle is a miniature long wave. The approximate 20-week cycle (141.9 days) fluctuates shorter and longer by Fibonacci ratios to the ideal length. 

 

 
Quarter Wall Cycle (aka Trader’s Cycle): As the name implies, the Quarter Wall cycle reflects that the Wall cycle tends to unfold in four sections, or Quarter Wall cycles. The Quarter Wall cycle is a mini version of the long wave season. The ideal Quarter Wall cycle fluctuates in Fibonacci ratios relative to its ideal length of 35.475 days. The Quarter Wall is the critical cycle for traders. Just like the other cycles, the Quarter Wall will run shorter and longer relative to the “ideal”. The forecasting power of the Quarter Wall forecasting tool is often startling.

 

 

"There is a tide in the affairs of men.

Which, taken at the flood, leads on to fortune;

Omitted, all the voyage of their life

Is bound in shallows and in miseries.

On such a full sea are we now afloat,

And we must take the current when it serves,

Or lose our ventures."

  Julius Caesar, Act 4, Scene 3 — William Shakespeare, 1599.

"By the Law of Periodical Repetition, everything which has happened once must happen again,

and again, and again - and not capriciously, but at regular periods, and each thing in its own period,

not another’s, and each obeying its own law [...] The same Nature which delights in periodical 

repetition in the sky is the Nature which orders the affairs of the earth. 

Let us not underrate the value of that hint."
The Mysterious Stranger — Mark Twain, 1898.

 

Reference:

David Knox Barker (2010) - Fibonacci in Time and Price.

David Knox Barker (1996) - The K-Wave: Profiting from the Cyclical Booms and Busts in the Global Economy.

Al Larson's Natural Times

May 9th, 2002 [Al Larson @ http://daytradingforecasts.com]

Every now and then God blesses me with a new insite into the marvelous workings of the universe. A few weeks ago, I saw a new phenonema operating in the S&P. This I call Natural Times. These are times of energy impulses in the S&P. Most of the time, there is no planet aspect at these times. They are not as simple as that. These points tend to be pretty accurate, and seem to account for many of the turns during the day.

Apparently Al Larson's Natural Times is a set of fixed cycles dividing the 24 h-day in 4 major cycles of 6 hours each, and moving back 4 Minutes per day. About 4 Minutes because the geocentric movement of the Sun (or rotation of Earth towards Sun) = average 1° every 4 min [1 Day = 1440 minutes/360°], sometimes more, sometimes a little less … check solar ephemeris for solar angular speed per day.

The basic rhythm between these times is always [in minutes]

00:30   00:23   00:19   00:25   00:33   00:53   00:48   00:44   00:23   01:01   =   05:59 hh:mm
00:30   00:23   00:19   00:25   00:33   00:53   00:48   00:44   00:23   01:01   =   05:59 hh:mm  
00:30   00:23   00:19   00:25   00:33   00:53   00:48   00:44   00:23   01:01   =   05:59 hh:mm  
00:30   00:23   00:19   00:25   00:33   00:53   00:48   00:44   00:23   01:01   =   05:59 hh:mm

e.g.

2012-Apr-12 (Thu)   08:17    08:50    09:43    10:31    11:15    11:38    12:39    13:09     ...

2012-Apr-13 (Fri)    08:13    08:46    09:39    10:27    11:11    11:34    12:35    13:05 ...

2012-Apr-14 (Sat)    08:09    08:42    09:35    10:23    11:07    11:30    12:31    13:01  ...

2012-Apr-15 (Sun)    08:05    08:38    09:31    10:19    11:03    11:26    12:27    12:57  ...

2012-Apr-16 (Mon)    08:01    08:34    09:27    10:15    10:59    11:22    12:23    12:53 ...

Solar Forecast for SPX

STD-Green-Red-Blue-Pattern in the SPX & ST Outlook

This week was a 'Blue Week' = M-shaped. Ideally the right M-shoulder-high was today.

Next week is a red week = trending = high of week on Monday - low of week on Friday or inverse

tomorrow Friday = last Monday or inverse = blue = W-shaped 
= choppy 
= (9.40H) 10.00-30L 12.45H 1.40L 3.00-30H

Next Monday = today Thursday or inverse 

SLT - LT - IT Delta-Pattern in current Stock Indices

 

German DAX

W.D. Gann's Cycles for Stock Market, Soybeans & Corn

www.harmonictiming.com

In the stock market and commodity courses that W.D. Gann published during the 1930's he had a section on cycles. Gann listed his major cycles as:

82 to 90 Years, 60 Years, 45 Years, 30 Years, and 20 Years

Some analysts state that Gann's 60-Year Cycle was his "Master Time Factor" because it is twice his 30-Year Cycle and three times his 20-Year Cycle.

Gann listed his minor cycles as:

10 Years, 5 Years, 3 Years, 2 Years, and 1 Year.

Gann taught his students to go back in time to see what the market under study was doing 82 to 90 years ago, 60 years ago, 45 years ago etc. This method of Gann Cycle Analysis is quite useful as it gives one a roadmap of what pattern may unfold during the coming year or so.

If one finds in the market under analysis the pattern that unfolded 60 years ago has comparisons to the pattern that unfolded 30 years ago, or 20 years ago, the probabilities favor a comparable pattern unfolding at the current time.

However, there are additional ways to use Gann's Cycles. Smaller intervals of Gann's Cycles are useful tools as they align with highs, lows, and accelerations.

One-fifth (the 17-year cycle) divisions of Gann's 84-Year Cycle regularly align with major highs and lows in stocks. The depression era low of July 1932 to the beginning of the post WW II bull market in 1949 is 17 years. The low of 1949 to the high of 1966 is another 17 years. From early 1966 to August 1982, it is 17 years. August 1982 to January 2000 is another 17 years. January 2000 to December 2016 will be another 17 years.

Obviously, the one-fifth (17-year) division of Gann's 84-Year Cycle is quite important in the stock market.

Various intervals of Gann's smaller cycles are just as significant.

Let's now look at Gann's 84-Year Cycle in soybean prices.

This chart shows the sawtooth, high-low pattern of one-sixth divisions of Gann's 84-Year Cycle in soybeans. In soybeans, measurements of Gann's 84-Year Cycle are taken from the spike high in soybean prices of February 1, 1918. One revolution of the 84-Year Cycle completed at the historic low of October 2001. It is amazing that after 84- Years, this interval of the cycle continues to align with historic highs and lows.

The 84-Year Cycle shows there is a one-third division to the lows and a one-third division to the highs. The only exception to the sawtooth pattern was the historical low of October 2001. The probabilities favor the turning point in 2016 will revert to the pattern and be a significant low.

Let us now take a look at smaller divisions of the 84-Year Cycle in soybeans. This chart shows an approximate 48 to 50 Week Interval of Gann's 84-Year Cycle measured from February 1, 1918.

... A major bull market in beans began on June 8, 2010 just as this interval of Gann's 84-Year Cycle bottomed and turned up.

STD-Yellow-Green-Pattern in SPX

Solar Forecast for SPX - April 8

SPX vs Solar Forecast | April 6

April 9 L

April 10-11 H

April 16 L

April 17 H

April 20 L

SPX vs Delta

Eurodollar COT Indications for Stock Market Tops | Tom McClellan

www.mcoscillator.com - February 03, 2012 

... For almost a year, we have known that a top was due to arrive in February 2012.  And sure enough, stock prices have been rising nicely in recent weeks as fulfillment of that expectation.

Now this leading indication says that things are going to get less fun for investors for a while. The next 3 months show a sideways to downward structure in the eurodollar COT data, and the implication is that the steep price advance that we have been seeing should transition to a more sideways market ...

Eurodollar futures COT chart (from last year) sees the S&P 500 correcting until June, but then rallying hard. The next major inflection point is due in early June, when this leading indication says that a big multi-month rally is due to begin. 

_____________________________________________

www.mcoscillator.com - May 05, 2011 

There are some informational jewels in the CFTC’s weekly Commitment of Traders (COT) Report, and sometimes in ways that most people would not imagine. This week’s chart looks at data on commercial traders’ net positions in eurodollar futures, but with a twist: that data is shifted forward by one year to reveal that it actually leads the movements of the stock market. 

... The term “eurodollars” should not be confused with the exchange rate between the dollar and the euro.  It refers to dollar denominated time deposits in European banks, and the term predates the creation of the euro currency.  Eurodollar deposits typically follow the LIBOR interest rates.

... I am taking data from the eurodollar market, and applying it to an analysis of the US stock market.  The key discovery that I made a few years ago is that the movements of the SP500 tend to echo what the commercial eurodollar traders were doing previously.  I played around with alignments to get the best fit, and found that a one-year lead time gave the best correlation.


Let’s pause a minute to let that deep point sink in.  Commercial eurodollar traders seem to “know” a year in advance what the stock market is going to do.  It is not a perfect correlation, but it is a darned good one.  I’m not sure what makes this work, but I have seen that it has worked great since about 1997.  It may help to understand that the commercial traders of eurodollar futures are typically the big banks, who are using these futures contracts to manage their assets and fund flows.  So what we are seeing in their futures trading are responses to immediate banking liquidity conditions, and those actions give us a glimpse of future liquidity conditions for the stock market.  These liquidity conditions are revealed first in the banking system, and then the liquidity waves travel through the stock market a year later.  But even if we cannot identify exactly what makes something work, after a few years of seeing that it does work we can learn to accept it.