A.I.M. Users Bulletin Board

[SFSecurity]

Looking at the two charts they are almost identical. Amazing. Based on them you are obviously correct that they are slowing. BTW, what are the symbols for both of those?

You are absolutely right that only looking backward is guaranteed to lead you to a crash down the road. As Satchel Page was known for saying, "Don't look back, they might be gaining." But when the sun is in your eyes it makes some sense to see where you have been as seeing asphalt back there is a reasonable predictor that it is asphalt in front of you until at least the road bends and you hit either the center divider or the weeds at the edge of the road.

The X-axis doesn't have a fixed time frame. The scale can be short to very long. Right now the bulls have 5+ years and counting on their side.

Very true. I wish I knew how to squish the chart to match the skewed time frames. Looking at the historical record from National Bureau of Economic Research, (1945-2009, 11 cycles)

Peak to Trough - 11.1 months
Previous Trough to this Peak - 58.4 months
Trough from Previous Trough - 69.5 months
Peak from Previous Peak - 68.5 months

one can see that this bull market is getting a bit long in the horn and the bear will bite sometime soon. On the whole, though, the market cycles have gotten longer compared to 1858-1948.

The two longest bull markets have been 106 and 120 months so we may well have a while to go but we are a bit beyond the average at 62 months. My best wet finger in the wind is that we may well have another 12 to 18 months to go. How long may depend on the results of the November elections. According to Investment U the results are typically this:

Year 1: The Post-Election Year
The first year of a presidency is characterized by relatively weak performance in the stock market. Of the four years in a presidential cycle, the first-year performance of the stock market, on average, is the worst.

Year 2: The Midterm Election Year
The second year also sees historically below-average performance. Bear market bottoms occur in the second year more often than in any other year.

Year 3: The Pre-Presidential Election Year
The third year is the strongest on average of the four years.

Year 4: The Election Year
In the fourth year of the presidential term and the election year, the stock market's performance tends to be above average.

This generally matches what has happened this year and in the previous 3.

The whole article, http://www.investmentu.com/article/detail/27782/election-year-stock-market, is worth a read but I suggest a bit of salt might be needed as it is from the Oxford Club.

Best,

Allen