The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at
I am always open to questions, comments, or suggestions on how to improve this blog.

Saturday, January 21, 2012

Cycle update

Thought I would update the bar count on the S&P500 cycles.  If you're not familiar with the Stevenson PTT you can refer to the link embedded here.

Spanning the years 1995 through 2007 the S&P enjoyed quite a symmetrical cycle phase.  We had:
- A 64-month rally from 1995-1999 followed by a 31-month selling phase for a total of a 95-month long cycle.
- The 2002-2007 rally lasted for 61-months, culminating in a 92-month long Inverted Cycle.
- With extreme volatility came the completion of our next Regular Cycle which lasted only 78-months due to the rapid selling which took place over the course of 18-months between Nov. 2007 & March '09.

 The end of one cycle and the beginning of another is determined (by Stevenson) by the close outside of its Cyclic Trend Line or CTL.  This actually happened back in July of 2011.  The chart below shows a closer image and adds the CTL (magenta trend line), highlighting the price close beyond that point:

 What is interesting is that IF the long time frame Inverted Cycle has concluded it would have done so in 44-months, which is pretty close to half the length of the previous three cycles (which would make sense given the extreme volatility).  We can't say for sure that the cycle is complete (as price did make a higher low) and price is just throwing back to the CTL, or if the cycle is still intact.  We can only say for sure that the cycle is still intact IF price takes out the May 2011 highs, in which case we would re-draw our CTL and consider the Inverted Cycle to remain intact.

Since the 2009 lows price has formed some pretty symmetrical intermediate cycles that have averaged 16 months in length, of which we are in the 9th month of an inverted cycle whose price and time target (red dash line) is just beyond the May 2011 high, projected to be within 7-months.  Again, prices beyond the May 2011 high means that the longer-term inverted cycle is still intact.


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todd said...

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