SPX daily chart cycle phasing of current 5 and 10 wk cycles. if sigma el has or is about to turn back up a rapid rally may begin.

arjunah...........
"I have attributed the Fed's repeated intervention for extending the current nominal 4.5Y cycle to 5 years".........

Hurst..."fundamental factors do influence price. they do so by interacting with cyclic phenomena, generally causing changes in wave amplitude, wave(cycle) periods and phases are unaffected, thus transaction timing is not deranged by fundamental considerations"..........

there have been many fed interventions in the past, none seeming to cause cycle periods to change. recent times have seen multiple fed moves as a reaction to the growing enormity of the credit crisis and we've seen high amplitude swings even in short cycles. why would a fundamental event that in the past has not caused cycle period to lengthen now cause it to?

arjunah, yeah, i posted that right before the french SOC GEN bank had to blow out all it's long positions their rogue trader was hiding 7 bill+ losses on. that event took everything down.

updated chart SPX 1/2 hr. this projection off the 10 wk cycle low remains in force. market was able to shake off more negative fundamentals after a morning drop.

born, i'm counting from two "cleaner" cycle troughs to estimate the current 10 wk low. oct 22 (or 24) and count two 10 wk cycles, and nov 26 and count three 5 wk cycles. early mid this week. let's see....

price rallys off the nominal 10 wk nest of cycle lows. both downside amplitude into the low and amplitude moving up off the low continue to show increase due to fundamental effect. a price projection to the 1342/1352 area has been generated. if this projection is not achieved it will indicate negative fundamentals are still overwhelming cyclic impetus.

reb, this should be the 10wk,5wk nest coming up next couple of days.

jerry, as a P and F guy, what's your current thoughts on the various BP charts?

i expect a 10 wk cycle low early next week. can it hold in here?

arjunah, while i'd love to have a cyclic phasing that correctly explained price action without noting possible fundamental interaction, i can't see any other explanation. Hurst discusses fundamental effect and states that fundamentals will affect cycle amplitude but will not change cycle phase (length) so the location of cyclic troughs will not change. i have difficulty accepting the recent interest rate cuts causing a postponing of a cyclic trough of any degree. the cycle course examples of pseudo trend (caused by longer event fundamentals)explains the amplitude increase that occurs as the cyclic troughs still bottom when expected. that may be the case here, subprime/credit problems are of enough duration to label the movement as pseudo trend.

born, nov 06, yep. thnx.

born, 12 to 13, 24 to 26, 48 to 50.eom

so what the hell has happened since??
here's the daily chart into mid january. i've noted the 10 and 5 wk nests of cycle lows since the aug 07 4.5 yr low. the first 10 wk cycle acts as expected, new highs and right translated. it was 47 days long, right on the button for avg 10 wk sample size of approx 48 days. it also divides nicely into it's two component 5 wk cycles. a rally off the 10 wk low starts and then the we have a failure. during the 1st 5 wk cycle off the oct 10 wk low, prices break down below the oct 10 wk low and drop all the way into nov 26 the exact time window for a 5 wk cycle low. the fundamental effect of the expanding sub prime crisis is starting to overwhelm cyclic impetus. prices rally off the 5 wk low but now have to contend with fundamental effect and an upcoming 20 wk cycle low due in the first day or so of the new year. i was encouraged that prices held above the nov low, were holding well above the aug low, and damage seem contained to the credit sensitive sectors of the SP500 such as XLF and XLY. the first few days of a new year are often wild cards for cyclic analysis as often there is large scale movement of portfolios in or out of stocks. the first 6 days saw a very minor attempt to bottom (right where a 20 wk low should) and then 4 more days down into a reversal bottom. prices consolidate for 3 days and then collapse into the january lows. this sudden collapse IMO was the result of the liquidation of the french Soc.Gen. bank holdings. traders saw it coming and no one was going to bid. that selloff combined with the credit fears have created a cyclic pause zone that the market seems trapped in for now.

the chart..

i posted a chart a few days back indicating an expected 10 wk low next week. i don't know at what price level that may occur, higher or lower than where we are. prices are in a pause zone. the fundamental fears generated by the subprime/credit problems still appear to dominate trading. various sentiment measures indicate a growing level of pessimism. once the current fears exhaust themselves i believe we will see new highs as the 4.5 yr cycle's uptrend will reassert itself.

Hurst has a great tool for resolving cycle phasing problems, the commonality phasing model. since the cyclic model in some form is common to most equities, examination of a set of them can usually reveal where a cycle may have bottomed on a chart that does not clearly show it. this chart used the stocks of the DJIA to create the model. we see that 20 out of 30 DJIA stocks did show visually evident bottoms in the expected time period, spread primarily over a 3 wk period. various DJIA stocks bottmed and rallyed while others were still dropping into their lows. this muted any real downside on the index itself. if they all bottomed at the same time as often happens the 78/80 wk nest of lows would have been more pronounced.

the commonality chart

commonality allows us to more accurately label the 78/80 wk/40wk nest of lows and also corrects back to normal sample size what at first appeared to be a lengthened 20 wk low of june 06. this bigger chart now has labeled the 78/80 wk low of aug 04, the 78/80 wk low of late jan/early feb 06, and extended out in time indicates a 3rd 78/80 wk nest of cycle lows (and thus a 4.5 yr cycle low)was due in august. we can note that the 40 wk cycle low of the 1st day of nov 07 shows very little amplitude, similar to the 40 wk low of nov 17 2003 on an earlier chart. the march 07 20 wk low again is higher amplitude as fundamentals (another hedge fund blow up)affect the cycle. Hurst discusses how fundamental events can change cyclic amplitude but do not change cyclic phase (length). the cycles still bottom on time.

the chart..


see next post...

these next charts are more close up. using measuring strips which have marked the actual lengths of the last three 78/80 wk cycles and the last three 40 wk cycles we extend from each cycles last known low to get an estimate of the time window for the next 78/80wk nest of lows (which also contains a 40 wk low). measuring strip analysis indicates jan/feb 2006 and lines are drawn at that time period.

the next chart shows price action at that expected time window. prices jump up the 1st wk of jan, about a wk or so before the area for a 40 wk low is indicated and a few weeks before the 78/80 wk low is indicated. at the time i accepted that as a shortened 78/80 nest of lows. based on that i expected a nominal 20 wk low in may 06. instead, prices declined into june. either this 20 wk cycle ran long than the average length, or my labeling of a short 78/80 wk cycle was wrong. the amplitude of the drop into the 20 wk low of june was also high. was this really a 78/80 wk nest of lows that ran much longer than previous samples? there was short term news at the time, a large hedge fund(s) was imploding . that could account for the high amplitude in may/june.

see next post.....

i've had some pm's and emails asking me about my Hurst cyclic phasing of the market in light of how price action has certainly not followed through with what i expected since mid november 07. these are some charts i created starting in january and never got around to posting.
this first chart is the weekly NYSE Comp going back to 1994. i used the stockcharts.com cycle indicator. it's fixed in length and can't be adjusted for minor cycle variation. the 78/80wk cycle is highlighted and i find it remarkably consistent through the last noted low of aug 2004. three 78 wk cycles are contained in each 4.5 yr cycle, noted by red arrows.


this next chart uses the cycle indicator to add on the nominal 40 wk cycle (half the span of the 78/80wk). with slight minor variation, this cycle is evident in the data and indicates late april into very early may 05 as a nominal 40 wk low.


see next post.......

born, re the 10 wk low. we're seeing a lot of amplitude spikes as news pieces hit the market. we are also in a pause zone as arjunah mentioned. price wise i do not have any estimation on the 10 wk low.

thnx arjunah. here's a chart with those cycles labeled. where would you place the 5 wk cycle low between the aug 20wk nest of lows and the nov 10wk nest of lows? have you labeled any 2.5 wk lows subdividing your 5 wk lows? thnx again.

arjunah, would you be kind enough to note the dates of your last two nominal 10 wk lows and the last four nominal 5 wk lows? i'm obviously very interested in your phasing and would like to keep track of it. TIA.

lobster, as far as a different reading, fundamental events affect amplitude of cycles but do not affect timing of troughs according to Hurst. as far as estimating time frames,i don't know. i definitely underestimated the effect and the duration of the subprime fiasco. as far as the bigger picture, i see no indication of a new bear market. all important flds are above price, no longer below. Hurst called it a "magnet" effect.

deva, there is a sigma el for any cycle examined. it's the sum of all longer term cycles' trends. the tricky part of reading sigma el is Hurst states that fundamental effect such as pseudo trend must also be included in sigma el estimation. cycle straddles are usually shorter term fundamental anomalies but the current duration of the negative news and market reaction to such is more typical of pseudo trend, a longer lasting fundamental event. it's my belief that sigma el over the nominal 9 yr cycle remains up, longer cycles such as the 18 and 36 yr are early off their recent bottoms, the last 4.5 yr cycle showed extreme high right translation. sigma el over the current 4.5 yr cycle(IMO starting from the aug 07 low)is down currently as fundamental interaction is overwhelming any cyclic impetus.

my estimate for the next nominal 10 wk cycle low....

born, yes i agree. eom

make that 1405 to 1430 area.eom

turn ups monday in 1/2 span mv avgs for the 2.5 wk, 5 wk, and 10 wk cycles all project to 1410-1430 area SPX cash index.

born, i think 2/11 is the better fit. after 2/07 there was no real movement to the upside (no higher highs on the price bars), there was a good pop after 2/11.

slinky, yep, right on time.eom.

zen, Hurst suggests using the midpoint of each bar for fld crosses for starters. sometimes that makes a cross clearer. that type of crossing you mention could possibly be indicating a pause zone. you may also want to use a range of fld offsets to compensate for slight cycle variation. lesson 9, section 3 of the Hurst course, "understanding the fld" will help with this scenario.

very close to an upside crossing and higher price projection from the nominal 10 wk cycle fld....

today should be the minor 3/3.5 day cycle low from monday's intraday low.

more bears than bulls everywhere, good time to be contrary on the big picture.....

reb, i think the recent fundamental events have burned themselves out, at least in causing high amplitude downside moves.

my tortuous rendering of events and their effect on the NYSE Comp.

IMO monday was the expected nominal 5 wk cycle low.

XLE and NYSE weekly chart.
NYSE commonality derived nominal 40 wk cycles are indicated. XLE shows slight variation at times and also helps resolve the ambiguous 80/40wk cycle nest of early 2006. in most of the 40 wk cycle samples a clearly evident 20 wk cycle (not highlighted) bisects the 40 wk, some with fundamental effect high amplitude.
IMO current price action since an expected 20 wk cycle low at yr end is a large fundamentally induced cycle straddle.

yes.i expect it monday +/- a day.eom

whaz, that projection was for the 2.5 wk cycle which is now due to bottom IMO. that projection measured from the jan low was undershot/not achieved. at times in the past i've found it more accurate to use the midpoint of a spike low to measure from to get a more accurate projection. that method or using closing price projections both would have been wiser to use. i was a little too bullish and went for the most aggressive projection. made a small gain on the trade when stopped out tuesday. not worth writing home about. i believe we are very near to a 5 wk nest of cycle lows and will expect new projections.

zen, SPX 10 wk fld is currently at approx 1453. the 6/7 day and 12/14 day (2.5 wk) flds are the ones to watch for next week.

arjunah,thnx for the detailed response.eom.

IMO we're approx 11.5 days along from the 1/23 low, which i have labeled as a 2.5 wk cycle straddle low. i expect this upcoming 5 wk cycle low to be approx 12 to 13 days from the 1/23 low. i believe this is an important low in determining whether or not the market is still weighted down by the fundamental impact of the subprime disaster. holding above the 1/23 low and undershooting the current 2.5 wk fld downside projection would both be short to intermediate bullish signs.
the chart below has my suggested cycle phasing applied to two different country indices and two different SP sectors. each has had different exposure to the effect of the subprime/banking events. they also show the 1st week of the new year portfolio changes mrusa mentioned in a reminder post last december, and the large 5 day drop as the soc gen holdings were sold. that french trader who hid over 7 billion in losses had his largest long positions in DAX futures. after the subprime damage and ensuing fear of more to come, there was no liquidity when those positions hit the various markets.

arjunah, what do you see in your phasing that suggests a few more weeks to the low? your phasing indicated the last two nominal 80 wk cycles, march 03 to oct 04, oct 04 to june 06, both ran 85 wks. the jan 08 low is 84 weeks from the june 06 low. we're 86 weeks from that june low and a few more weeks puts this cycle around 90 weeks. are you basing this on shorter harmonic cycles having lengthened? thnx.