It is often stated that the world stock market indices have similar cyclical structures. This is particularly true with respect to the US indices and the European indices (British,French,German). After watching David’s latest HTR video I decided to take a look from a spectral viewpoint. It turns out that they are virtually identical. There are differences in the underlying trend and amplitude modulation which causes some minor phasing differences, but that is to be expected. The underlying spectral structure is identical. I ran the same filters on the S&P 500 and the FTSE 100.(If I get enthused I may run them on the DAX).
This first chart below is a weekly chart of the FTSE. The price wave at the bottom is what I believe to be the 40 week wave. It averages about 33 weeks over the last few years which is very close to the historical (100+ years) average of the 40 week of the US indices. As a matter of interest the 40 week wave on page 152 of Profit Magic averaged 34.6 weeks over a 17 year period so I’m close enough for government work! The underlying trend is down as evidenced by the downward sloping center-line through the price action.
Here is the same chart for the S&P 500, the main difference being that the underlying trend is still up.
The next two daily charts show the very dominant 80 and 40 day price waves. There was an increase in the average period of the waves after the February 2014 low. I’m watching to see if this increase remains intact or if they contract over the next couple of oscillations.
Last but not least is a daily chart of the 20 day price wave and the ubiquitous 20 day FLD.
The big question now is how high will the price action go before falling into the next 80 week low sometime in the second quarter next year, assuming this analysis is reasonably accurate. Since the S&P 500 has been the strongest, any sign of weakness there will spell trouble for the other indices.