Giving Thanks – 24 November 2012 11


Thanksgiving is a North American holiday, but as someone with many friends in North America I feel I can join in to some extent. The holiday has its roots (according to Wikipedia) primarily in “giving thanks on successful completion of the harvest”, which strikes me as a particularly cyclic holiday and it seems very appropriate this week, as the expected 20-week cycle trough looks as if it has now formed in price. And so in my own small way I am giving thanks: amongst other things, for the completion of a market cycle, the start of a new one, and for the completion last week of a successful olive harvest (we are now enjoying freshly-pressed olive oil!)

Of course the holiday this week has also provided us with the third week this month in US markets with shortened trading or distorted prices, but nonetheless the cyclic picture seems clear.

S&P 500

I suggested last week that the 20-week cycle trough might have formed in the US markets on Friday 16 November 2012, and this week the S&P 500 steamed upwards making that assertion seem ever more likely.

Bouncing upwards

Nasdaq

The Nasdaq, having led the downwards charge into the 20-week cycle trough bounced the hardest (in terms of percentage), leaving little doubt that the 20-week cycle trough has indeed formed.

A well-defined trough

Euro/US Dollar

The Euro was also infused with the holiday spirits and bounced strongly this week. We have been expecting a bounce out of the 40-day cycle, and the bounce this week fits that bill and more. It has been just over 17 weeks since the 18-month cycle trough of 24 July 2012, and so it is just possible that the cycles have compressed and the Euro is enjoying the bounce out of an early 20-week cycle trough as its cycles fall back into step with the stock markets, but it is too early to tell yet whether that is the case. In the meantime we need to treat this move as a 40-day cycle bounce, but give it room to exceed our expectations.

A 40-day cycle trough, or more?

Gold

Gold’s thanksgiving spirit lasted all of Monday, and then nothing very much happened until Friday. Perhaps too much tryptophan from all that turkey? On Friday Gold overcame its sleepiness and continued upwards (largely because of a falling US Dollar). It is possible that Gold is only now forming a late 40-day cycle peak (cycles do run long in Gold), but either way I do expect Gold to achieve yet higher prices as it climbs to an 80-day cycle peak expected by about the end of the year.

Looking bullish into the end of the year

30 Year US Bonds

Bonds fell hard this week, leaving in place a prominent peak which might be an early 20-week cycle peak, which would bring the Bond cycles into harmony again (inversely) with the stock markets and perhaps the Euro. We were expecting a 40-day cycle peak to occur, and that might be all this peak was, but if this downwards move continues as it started we will be placing the 20-week cycle peak on last Friday’s high.

Getting back in sync?

Crude Oil

Even Crude Oil mustered a thanksgiving bounce, although the whole struggle upwards out of the 7 November 2012 20-week cycle trough is looking weary and bearish, providing for a bearish outlook as discussed last week.

Not so full of bounce

US Dollar Index

The US Dollar has needed to come down to form the 80-day cycle trough, which it did this week, slipping downwards rapidly on Friday. This sharp move down is not yet an indication that our bullish placement of the 54-month cycle trough in September is wrong, but if it continues to fall and turns this cycle shape more bearish then we will revert back to phasing that trough as a trough of the 20-week cycle.

Falling into the 80-day cycle trough

Two final “thanks-giving” notes: thank you Robyn for suggesting many years ago that I should “take a look at the work of a man called Hurst”!  And this was the first week of actual trading for students in our FLD Trading Strategy course. Each student progresses at their own pace, and of those students who were ready to trade this week it is very encouraging that every single one of them ended the week in profit! It is very early days of course, but nevertheless encouraging. It is also rewarding (is that the right word?) to see some of them beating me at my own game!

There has been tremendous interest in the FLD Trading Strategy course, and many people have emailed us to ask when we will be starting another one. The good news is that we will be starting our next course in December and so make sure that you are receiving our emails about the FLD Trading Strategy if you missed out on the first course.

Have a good week, and profitable trading!


About David Hickson

I have been trading for over 20 years, but only had any success after discovering Hurst's cyclic principles. Unable to find any software to speed up the analysis process I created Sentient Trader software, which now pretty much does all the analysis for me. I am a film maker and a TV director, but nowadays I mostly provide consultation services to professional traders and fund managers, helping them to integrate Hurst analysis into their trading. I'm South African and live with my family in Italy.


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11 thoughts on “Giving Thanks – 24 November 2012

  • tom russo

    thnx david, i took the nasdaq trade thnx to u and already have taken profits as per the rules set forth in the 20 day fld course

    for anyone who is considering this software: It has kept me out of soooo many losing trades

    sentients focus is time..

    and if u get the time right, well the rest is history

    as Gann said: When the time is up, the trend is over….

  • Elmer Lehman

    When looking at Gold and US Bond, since you use cycle peaks, rather than troughs, is the A through H trading pattern still the same or is it opposite? That is, A, C, and E short, with D, F and H long.
    Thanks
    Elmer

    • Paul Johnson

      Hello Elmer,

      In principle the trade sequence A to H, under the FLD Trading Strategy, should be inverted. However, this has never been tested by David. We would be interested to hear how you get on if you decide to try it. We will be covering this very subject in Module 6 of the FLD Trading Strategy course.

  • Karl

    David, thanks again for a great update. You’ve mentioned previously that you thought this 20w cycle would be fairly week, with only a couple of weeks before it may top. A quick eyeball seems to confirms this looking at the past few 20 week cycles that were also the final 20w in a 80w (18m) cycle. There must be a better way to determine what the averages of past cycles in similar situations were via the Sentient Wave Shapes and Statistics.

    I’ve spent most of the day today looking at this and really couldn’t figure it out. Hopefully you can help a bit. How can I use the information for the “next wave” (and does this mean the next cycle at the same length?) and what about filtering the on the bars per leg and % return? Is there a way to display this information for a subset in a way I’ve described above? Thanks a bunch!

    • David Hickson Post author

      Hi Karl. You can save all the wave statistics as a .csv file and then open that up in a spreadsheet – that is the best way to really analyze the cycle shape statistics. To determine the average price move and number of bars for the current move then you should average the wave one stats for 20-week cycle with negative short underlying trend (which means 40-week and 18-month cycles are falling)

  • William

    If 11/16/12 is a 20 week low, where are the prior two 20 week lows? Are you suggesting that the wave from 6/4/12 to 11/16/12 is one oscillation of the 20 week wave or two?

    • David Hickson Post author

      Hi William. The wave from 4 June 2012 to 16 November 2012 is one 20-week cycle, which ran slightly long at about 23 weeks. The 20-week trough prior to that could be debated, but I believe it occurred at the end of January 2012.

    • Paul Johnson

      Thank you for your question. Hurst proposed that Cycle Troughs, rather than Peaks, are synchronized and the vast majority of instruments exhibit this characteristic. However, whilst developing Sentient Trader, David Hickson observed that some markets have more “peaky” rather than “troughy” characteristics, e.g. some commodity and bond markets.

      Thus Sentient Trader was developed with the capability to select an inverted analysis with Synchronized Peaks and the software gives more accurate cyclic predictions with Synchronized Peaks for Gold, etc.

  • trader x

    hello
    I read the previous blog and David said this rally shouldn’t get to the highs in Sept on the SPX. When does the decline start?

    Thanks