Examining the secular cycle
#163 Insights from W.D. Gann how to find consistent cycles
Introduction
In a recent tweet, Kerry Balenthiran proposed a 17.6-year secular cycle in the stock market.
17.6 Year Stock Market Cycle 📈 🎯@KKBalenthiran・1d
After wondering whether the 17.6-year cycle truly exists, I decided to investigate using Gann's method. As per Gann's advice, we'll need to review if past cycles of a similar duration can be found. 🔍 🔍
Looking back
As W.D. Gann said, "Ancient hunters followed animal tracks backwards to find their lair." 🐾 Meaning, what is the origin of the cycle? Where does the cycle start? Moreover, is this a permanent cycle?
"The quickest way for you to learn how to determine future market movements is to study the past." - W.D. Gann🔍
The approach
Recently, I discovered new methods of forecasting by utilizing a set of long-term synodic cycles of planets, which always set the overall stock market trend.
I created a Mass Pressure Index for the DJIA based on planetary synodic cycles rather than solely on past stock market quotes. The cycle curve of the future in this Mass Pressure Index has a structure, a certain curve, that can be found back in the same Mass Pressure index that relates to a period in the past or future that is going to repeat. In this way, you can easily confirm if cycles exist.
This approach is similar to what Gann did, by looking back to understand the future. In this way, you can search for all the Gann cycles and their harmonics that are likely to occur in the forecast period, as the planetary signatures of the periods in the future and in the past are similar or highly correlated.
So, can we find a 17.6-year period aligning with the 2000 market top as suggested?
I examined DJIA data from 1885 to 2000 and studied the correlation with the Jupiter, Saturn, and Uranus Helio cycles. No high correlation was found, but a longer cycle was discovered.
84-year Cycle
Based on the analysis of actual DJIA market data, I have discovered that the 2000 peak was significantly influenced by the Uranus 84-year cycle, with a correlation of 71.1%. On the other hand, the 17.6-year cycle has a negative correlation of -5.7%😕, while a shorter 17.4-year cycle has a correlation of below 50%. You can refer to the chart below for a better understanding. However, this is just the tip of the iceberg, as there is more to be explored.
DJIA Mass Pressure Index
Based on the DJIA and the Jupiter-Saturn-Uranus Helio alignment, I have developed a DJIA Mass Pressure Index based on this planetary alignment. Please read my previous post “Unveiling the Gann Mass Pressure” for additional info.
Through my analysis, I have found that there is a 33% negative correlation between the 17.6-year cycle and the crest of 2000. However, I have also found a consistent 25-year pattern with a 92% correlation, which aligns with DJIA bottoms in 1974 and 1949. ✨📈
According to research, the 25-year secular cycle may follow a pattern of moving from low to low and low to high, with the next cycle period potentially being a high-to-high period. This information could be helpful for anyone interested in forecasting stock market trends. However, it's important to note that this analysis is based solely on data from the crest of the year 2000.
Thesis and conclusion
In my research, I did not discover a consistent 17.6-year cycle in the DJIA. Therefore, it is more probable that a 25-year secular cycle exists. This cycle aligns with the DJIA's lows in 1949 and 1974.
According to research, the 25-year secular cycle may follow a pattern of moving from low to low and low to high, with the next cycle period potentially being a high-to-high period. This information could be helpful for anyone interested in forecasting stock market trends. However, it's important to note that this analysis is based solely on data from the crest of the year 2000.
So, the debate will be amongst forecasters about what the right starting point is for a cycle. This can be done from a top or a bottom, looking back to find a similar period in the past that has the same cycle structure.
My thesis is that at the end of important trends, the Jupiter-Saturn-Uranus composite cycle needs to align with an almost similar structure as seen in the cycle period before.
It has been suggested that the time cycles discussed by Gann in his Stock Market Course may actually be planetary cycles. Relying solely on a Mass Pressure Index created from past market data and calendar periods can often be unreliable as it does not align with planetary cycles. Therefore, it is necessary to confirm market tops and bottoms with planetary cycles to ensure better accuracy.
Always look for consistent repetition of at least 3 cycles and align planetary composite cycles with market data to find similar periods in the past. 🔍📊🌍
I expect my subscribers to benefit greatly from this advanced cycle analysis method. Although I am still in the process of back-testing it, by the end of this month, I will be adding an appendix to my Fiorente2 Stock Market Outlook 2024 (free of charge) for the DJIA, S&P500, and possibly the Nasdaq. This refined approach should help provide more precise forecasts.
There may still be anomalies, and cycles can contract, extend, and invert. However, the alignment with a Jupiter-Saturn-Uranus composite cycle may help in timing. Only when the time (of this cycle composite) is up the trend will change.
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This analysis is intended for general informational & educational purposes only. Hypothetical or simulated performance based on past cycles has many limitations. Cycles can contract, extend, and invert. Anomalies can occur. Hence, past performance is no guarantee for the future. No advice. Please take a look at our full disclaimer.