The Four Year Cycle In The Stock Market
Stock market cycles are probably the most brilliant and worthwhile scientific studies that you can do. There are many different categories of cycles that happen in trading stocks. The one that I’ll be discussing today is referred to as the Four-Year Cycle.
The stock market has a regular tendency to bottom every four years going back to the late 1960s. This is truly remarkable when you see it. How does this strange cycle come about? Could possibly it relate to our four year political cycle?
Could you imagine the amount of money you may make if you realized as soon as the market would put in place a bottom?
You may generate profits by playing the short side on the third year of the Four-Year Cycle or you might go long the stock market immediately after the cycle low.
Most often, a four year bottom occurs in October. In rare instances, four year bottoms have developed during July and August similar to 2006. In other words, we might have set up a bottom last month. If this describes the truth, then now is a wonderful time for you to go long.
In any event, a significant bottom is due within the second half of 2010.
Next cycles should be used with additional technical indicators and chart patterns. What’s important is that if you pull up a chart of the S&P 500, you will see a Bullish Head and Shoulders bottom forming. All we want is a nice good run to close the right shoulder at the neckline.
I’m sure you may think that it doesn’t seem sensible for the market to take up a bull run right now with all the awful financial news but I challenge you to definitely remember January and February of 2009. At the begining of 2009, the news was so awful that many folks started pulling their money from banks. Without a doubt, a endemic economic failure was dispersing all through our economy as the government was in a panic aiming to stop the worst financial disaster since the Great Depression. Go and google the news stories back then and see for yourself just how bad things were. They were far worse than what they are today. But what actually transpired? The market started its biggest 9 month rally in more than 70 years! The wisdom to master from this is that the stock market is the future between 3 to 9 months. Lots of the bad news about the economy you are reading about today has already been priced in.
