Short Term Trading Member Forum

[airedale88]

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..


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