As an update to one of my recent articles on market cycles
, I wanted to feature some of the additional cycle tools that I use to analyze markets. In the chart below, I have isolated the top-5 market cycles ranked by statistical significance and amplitude strength.
The current market cycles are as follows:
1. 100-Day / Amplitude 1800.56
2. 12-Day / Amplitude 207.42
3. 34-Day / Amplitude 519.50
4. 220-Day / Amplitude 2827.76
5. 36-Day / Amplitude 449.63
Click to enlarge
Additionally we have consolidated the standing waves into one composite wave that is used to forecast the overall projected movement of the market. This is different from the previous post in that we are not targeting any one or two of the strongest market cycles but rather looking at all the cycles underlying the S&P 500
(INDEXSP:.INX). You can see that the composite cycle peaked on Jan. 14, 2013 and has been suggesting a trend reversal. But what is keeping the market up?! Well, it’s easier to see the reason by analyzing the independent cycles. You can see the 100-day cycle in red had peaked on Jan. 18, 2013 and with the 220-day cycle, a move down seems imminent.
Note: We have isolated a particularly significant time frame in which all major cycles are in a down swing March 7, 2013 - March 20, 2013. This will be a time that we believe will have very strong downtrend for the index.
Click to enlarge
We can go even further and add yet another major market cycle in terms of amplitude strength (but less statistically significant) -- the 47-day cycle / with 550.37 amplitude -- to see yet another cycle that is holding this market in its upswing that peaks Jan. 29, 2013. All these cycle plots are anchored to the May 6, 2010 flash crash low.
This article by Alex Bernal was originally published on See It Market.
Alex Bernal has a position in OTM call spreads in S&P 500 options.