Golfin, we are now learning why Hurst cycles work and elaborate speculative reasoning fails--and I include Schaeffer's commentary in that category.
Hurst analysis is not the mechanical application of fixed time periods on the market. It is not speculating on possible outcomes. It is signal processing--responding to the actual data coming across the wire (tape is too old-fashioned).
When we look at a chart from a speculative mindset, we can see infinite possibilities and tend to select the one that best fits our fantasies. The market consistently turns those fantasies into tangled wrecks.
The Hurst cycles on the other hand give us a framework that reasonably describes market behavior year after year, but these cycles must be interpreted flexibly from the point of view of signal processing. So at all times, we are asking, "What is the signal now? What is the signature of the smaller cycle, and what does it suggest concerning the larger? Are the cycles left or right translating? What is the sigma el? How will I recognize when it shifts?"
This disciplined approach minimizes speculation. And luckily--it is our great fortune--the cycles (with reasonable discrepancies) continue to behave as Hurst first observed 30 years ago.
I'm writing to myself here. Clarifying my own understanding with a tip of my hat to Airedale, Cash, USA, and others. If I have said something not quite right, please feel free to correct.
BB
AI
