“Secular High……sort of” 2


I am of the opinion that in 2015 we are both fortunate yet possibly hampered but the work started by JM Hurst probably 50 years ago. A quick Google search incorporating his name, Cyclitec, and anything known about him yields very little that we don’t already know and so we must rely only on the work that he left. And so inspired first by David and then by William, I have spent a great deal of time rereading and reconsidering what it all means and have come a conclusion which generates a new question.
The conclusion: His work, and by that I mean the core, is profound yet securely guarded in chapter 11 and the appendices of Profit Magic; you know the part of the book that everyone who reads it skips due to the appearance of equations consisting of summation signs, polynomials regression, and worse .In fact, I would wager than the number of people who have worked through it all could be counted on the fingers of one hand (I have no factual data to back this up except to say not too many traders are profitable and not too many traders use Hurst(correctly). Profound? Sure…look at William’s work!
But now the question: Hurst wrote in the 1970’s. Profit Magic, true to the time of its writing, references what to do in the event of a war, but does not deal at all what do with a world wide debt laden fiat money system clearly under control of Central Bankers. And he also wrote that most of the price action(75%) consisted of the long term, slowly changing trend with a small but significant additional component of “cyclicality.” But what happens to all of this under our present conditions where the concept of price discovery may be a fond memory causing the market to cruise in”trend” mode?
Given the potential of a 4.5 year high, and going back to 1987 I can extract 2 long term oscillations: from 1987 a 92 mo wave and from 2002 a 41 mo wave. Not exactly perfect harmonicity, but that is what the math says so we go with it. I’m fine with 41 mo but 92 mo is outside of the approved Hurst range and so should be weighted less strongly in our consideration.
ST 1 3192015
Simply taking this information, informing ST to phase it not with “The Nominal Model” but with a model consisting this market generated data, results in 2 slightly different analyses that both call for a least an 18 mo cycle top. I have not adjusted ST in any other way; all I have done is “tune” it to dominant oscillations found in the market through the application of a custom nominal model.
256511
256521
What I believe is notable in both of these analyses are the relative shallowness of these really long term troughs as indicated by the Sentient Trader pattern projections. If correct, we should not get too excited about getting short for a “normal corrective decline” resulting in a low risk, Graham and Dodd low PE entry point but should instead look forward to yet more time to be uncomfortably long. This conclusion rhymes with the ongoing currency wars and unprecedented world wide Central Bank intervention that we all know to be present. Life in 1970 anyone?


About Stuart Mendel

I am a Dentist who is interested in the integration of Hurst cycles with other methodologies of technical analysis. My first exposure was a casual reading of Profit Magic supplemented by my early interaction with David and The Hurst Trader (which has grown into Sentient Trader).


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