David Hickson in his January 23rd blog, presented an analysis showing the March 2009 cycle low being the beginning of a new 9 year cycle—which ended with the comment—what do you think! My first reaction was I wasn’t buying it. Since previous placements claimed that the March 2009 lows was the location of a 6 year cycle trough, with the most recent 54 month trough occurring in October of 2011. Without having access to enough data to run cycle analysis using Sentient Trader, I went to my Prophet Charts and tried to work my way backwards locating prior 6 year cycle lows. This exercise helped me to identify 18 year cycles lows in October of 1974, October of 1990 and March of 2009. I also noticed that where the 6, 9 and 18 year troughs synchronized into a nest of lows the pull backs were pronounced. I likewise noted that in some cases the 6 year troughs are hardly discernable (including the most recent one) but at other times they are quite pronounced—as in October 2002. So instead of disagreeing with his placements, my analysis is suggesting that in March 2009, we had a complete synchronization of nominal troughs from the 18 year on down—which included in this nesting of lows a 6 year (non-nominal) cycle trough. See the chart below.
Above is a Sentient Trader Chart showing what the first charts cyclic analysis looks like from the fall of 2002 to the present. This ST chart shows the placement of the three most recent 6 year troughs in October of 2002, March of 2009 and October of 2014. It also shows the formation of the 9 year cycle trough in March 2009. What I didn’t have was enough data to show was that the March 2009 trough was also a trough of the 18 year cycle—which I’m proposing it was. The above analysis is in agreement with both David Hickson’s October 31, 2014 and his January 23, 2015 postings where he first discussed possible formation of a 6 year trough and the second where he suggested that in March 2009 we had the possible formation of a 9 year trough.
Applying this information to the current situation (see chart below) if my analysis is correct then the current configuration of cycles greater than the 20 day cycle tells us:
- that five cycles are rising: 18y, 6y, 54m, 18m, 40w
- that four falling cycles are falling: 9y, 20w, 80d, 40d
- for a Summation +1 or slightly bullish
After the 20 week cycle trough forms, the result will be 7 cycles pushing up (18y, 6y, 54m, 18m, 20w, 80d, 40d) and 2 pushing down (9y, 40w) yielding an ULT of +5 which is strongly bullish. Certainly this should be enough strength to provide the cyclic energy for even more new highs being made in the SPX.
Past cyclic history also supports this assumption. Please note on the first chart above, after the formation of the first 6 year trough following an 18 year trough, the bullish action continued for a good while. And in each case price significantly moved up before giving way to either a possible down-trending 54 month cycle and/or a down trending 9 year cycle. However, even after the formation of the 9 year cycle trough the markets made even higher highs before being drug down by the 18 year cycle.
This analysis then provides for an overall bullish outlook on the SPX and US markets in general for some time to come. This analysis also seems to be in agreement with the various US economic and corporate earnings reports that have been coming out over the past year.