March 29 before Trading Session |
March 29 EOD |
FORECAST SOLAR CYCLE 24
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Cycle Sol. Start Sol. Max Max SSN Length Rise to Max Max to End
Year Mth Year Mth Yr Mth Years Mths Years Mths
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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.
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.
A secular nominal bottom, panic or crash occurs within 2 years of a solar minimum.
A - Extreme low stock prices, strikes, repression, despair, and beginning of new business generation for 18-3/5 years. 4 years of rising stock prices and improving business, markets bare of goods. Young men becoming prominent.
B - High stock prices.
C - Panic
D - Low stock prices.
E - High stock prices.
F - Panic
G - Low stock prices.
H - Very high stock prices most prosperous year, waste over extravagance, most money in circulation, much speculation.
J - Major Panic-CRASH! 4-years of falling prices, business stagnated, breadlines, soup kitchens, despair, and unemployment.
K - Same as A plus strikes, unemployment, many prominent deaths.
Year
1. A year in which a bear market ends and a bull market begins. 1901, 1911, 1921.
2. The second year is a year of a minor bull market, or a rally in a bear market will start at some time. 1902, 1912, 1922, 1932.
3. Starts a bear year, but the rally from the second year may run to March or April before culmination, or a decline from the 2nd year may run down and make bottom in February or March, like 1933. 1903, 1913, 1923.
4. The fourth year is a bear year, but ends the bear cycle and lays the foundation for a bull market. Compare 1904, 1914.
5. The fifth year is the year of Ascension, and a very strong year for a bull market. See 1905, 1915, 1925, 1935.
6. The sixth year is a bull year, in which a bull campaign which started in the fourth year ends in the Fall of the year and a fast decline starts. See 1896, 1906, 1916, 1926.
7. Seven is a bear number and the seventh year is a bear year because 84 months or 840 degrees is 7/8ths of 90. See 1897, 1907, 1917, but note 1927 was the end of a 60 year cycle, so not much of a decline.
8. The eighth year is a bull year. Prices start advancing in the 7th year and reach the 90th month in the 8th year. This is very strong and a big advance usually takes place. Review 1898, 1908, 1918, 1928. (2008 did not follow this pattern, which is where a little real estate cycle knowledge was helpful in this instance.)
9. Nine is the highest digit and the ninth year is the strongest of all for the bull markets. Final bull campaigns culminate in this year after extreme advances and prices start to decline. Bear markets usually start in September to November at the end of the 9th year and a sharp decline takes place. See 1869, 1879, 1889, 1899, 1909, 1919 and 1929, the year of the greatest advances, culminating in the fall of that year, followed by a sharp decline.
10. Ten is a bear year. A rally often runs until March and April; then a severe decline runs to November and December, when a new cycle begins and another rally starts. See 1910, 1920, 1930.