airedale, I have been lengthening the shorter cycles, but that is not the basis for my projection of an upcoming 4.5Y low in the SPX. The basis for this projection is as follows:
From the March 03 low, I have five nominal 9M cycles that average 9.6 months, with the shortest being 8 and the longest 12. The last 9M low was March 07. A measuring strip marking the shortest and longest 9M cycle (8 and 12 months) put the the next 9M/18M/4.5Y low in the range from November 07 to March 08. This is strictly according to Hurst's methodology and requires no extraordinary lengthening of cycles.
In August 07, I marked the first nominal 20W low from the Mar 07 9M low. The actual length was 22 weeks. At that point, on my weekly chart, I had five 20 week cycles averaging 18.2 weeks with the shortest 15 and the longest 22. A measuring strip of the 20W cycle from the August low put the next 20W/40W/80W/4.5Y low in the range of late November to mid-January.
Given that my average 9M cycle of 9.6M would place the 9M low in late Dec./early Jan., I thought in August that this would be the most likely spot for the 4.5Y low. But then in September the Fed began aggressively cutting interest rates, and has been doing so ever since. There is perhaps no greater short term fundamental event that affects stock prices than surprise and emergency changes in the fed fund and discount rates. I'm not saying there is a direct causal relationship between interest rate cuts and the lengthening of shorter term cycles, but it is undeniable that these cuts were intended to and in fact did temporarily prop up the stock market.
But regardless of the interest rate cuts, I was still anticipating, as early as August 07, that the 4.5Y low could come as late as March 08 based on the measuring strip analysis of the 9M cycle. So, here I had a 20W projection that only took me out to mid-January and a 9M projection that stretched all the way to March. But again, disparities of this nature are frequently exhibited in Hurst's Cycle Course. Its not unusual.
As we entered the Nov-March time frame for the 9M low, weeks passed and I saw no evidence of a change in the downtrend in the form of right translated cycles and overshoots of targets to the upside, so I concluded the 4.5Y low still lies ahead of us. In order to conform to the principle of Harmonicity I have been lengthening the shorter cycles.
As I indicated during the Jan. 22-23 plunge and reversal, the Jan 23 low met my price and time targets for a 4.5Y low and I would be watching for upside target overshoots and right translated cycles for evidence of this, but that I still was expecting one more 7 week cycle into the 4.5Y low.
The upside targets out of the Jan. 23 low were not met, despite the perfect set up of a cascade pattern. That this moved fizzled even with the benefit of a .75 and .50 rate cut in less than two weeks convinced me that the trend is still strongly down.
Thanks for the inquiry!
AI
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