Zbigniew Piekarski on Cycles repeat
"Vibration is fundamental; nothing is exempt from this law; it is universal, therefore applicable to every class of phenomena on the globe."
- William Delbert Gann (1878-1955)
On Thursday, March 11, the Dow Jones Industrial Average (DJIA) closed at 10,128.38. In the recent Bear Market rally it had first reached this level on Tuesday December 12 2003. Four days of selling undid around 50 days of buying. Just in case you accept the Jabberwockies' explanation that it was all due to the bombs in Madrid, let us examine the evidence.
The markets began falling on Monday, March 8 and the decline accelerated each day. On Wednesday, the DJIA closed at 10,296.89 after losing a total of 171. On Thursday, it fell on open and within 30 minutes bounced off 10,232 and headed for the day's high of 10,321.26 at 12:45EST. Then it consolidated to 10,268 and tried for another high, reaching 10,309.53 at 14:15EST. In the next hour and 45 minutes it lost a total of 88 points, bottoming at 10,120.38. As the bombs in Madrid occurred a full 8 hours before the USA market opened, they were worth 64 points (10,296-10,232) before being discounted. Something far more important took 88 points off the index in less than two hours that afternoon.
Three predictive stock market systems have stood the test of time: the Dow Theory, the Elliott Wave Theory and the Hurst Theory of Cycles. Each has consistently predicted important turns in the market, both bull and bear. The fundamental basis of each rests on the belief that changes in social mood power the behaviour of the masses; that social or crowd behavior trends and reverses in recognizable patterns; that these patterns repeat. Because they repeat in predictable ways, our probable future can be seen before it happens.
Charles Henry Dow (1851-1902) was the founder of the Dow Jones & Company in 1896 and of the Dow Jones Index. His work was never codified into a set of objective rules but introduced over a period of 30 years in editorials in the Wall Street Journal.
The venerated dean of Dow Theory is Richard Russell (1924 - ) who began publishing Dow Theory Letters in 1958. He called the top of the 1949-66 bull market. Almost to the day he called the bottom of the great 1972-74 bear market, the beginning of the great bull market which started in December 1974, the crash of 1987 and the top in March 2000. He can be reached on www.dowtheoryletters.com.
Ralph Nelson Elliott (1871-1948) begat the Elliott Wave Theory. His work is codified in two books and numerous articles. The Wave Principle, published in 1938 explained the empirically derived patterns of progress and regress and their fractal nature. Nature's Law, subtitled The Secrets of the Universe, (1948) re-discovered fundamental ratios in the mathematics of Leonardo Pisano, better known as Fibonacci (1170-1250).
The leading current proponent is Robert Rougelot Prechter (1949 - ) who founded Elliott Wave International (EWI) in 1978. EWI is now one of the world's largest independent providers of market research and technical analysis on global markets to institutional investors 24 hours a day. Prechter has won numerous awards for market timing as well as the U.S. Trading Championship, culminating in the Financial News Network (now CNBC) granting him the title 'Guru of the Decade.' He predicted the start of the bull market in 1982 and the market correction of 1987. In 1990-1991, he was elected and served as president of the national Market Technicians Association in its 21st year. In 1999, he predicted the end of the Bull Market and his book Conquer the Crash was on the New York Times Bestseller List. His organization can be found at www.elliottwave.com.
J.M. Hurst remains an enigmatic figure. His seminal work is The Profit Magic of Stock Transaction Timing published in 1970, which consisted of the theory of channel and envelope analysis, with time cycles and classic trendline analysis. He claimed 90 percent accuracy in actual trading results with his techniques and developed a loyal following of those who were gifted enough to understand and apply it. He disappeared at the height of his popularity taking most of what he knew and understood along with him.
An irreverent practitioner of this art is Doc Stepan N Stool, the world famous Chairman of The American Academy of Stock Proctology, who has participated in the markets for over 40 years. You can access him via www.capitalstool.com
These are the three most accurate and time tested predictive systems of stock-market behavior in existence today. All three respective adherents may sell their services to the financial institutions but are not an intrinsic part of the financial system. They are independent practitioners who have proved their worth in the past and are proving it on a daily basis. All three have made the same prediction, which is that this Bear Market rally has come to an end and that the Bear has returned.
According to Doc, this has marked the peak of the four year cycle and the markets will head lower for the next two years or so. There will be counter-trend rallies, there always are, but they should be used to liquidate long positions and add to shorts. Consider the fact that on Friday, March 10, 2000, the Nasdaq Composite Index reached its all-time high of 5,132, a mere 158 percent above its current levels. Yet the American Association of Individual Investors reports that the present level of bearishness is only at 13 percent and Market Vane, which surveys institutionalized investors, reports a near hysterical level of bullishness at 69 percent.
These levels remain at never before seen extremes. They were not this high in March 2000 and approached current levels just before the crash of 1987. This kind of exuberance not only represents, but actually creates the kind of conditions that can lead to a crash. Our message is simple - beware the Ides of March. The blasts in Madrid occurred 911 days after 9/11. Cycles repeat.
- William Delbert Gann (1878-1955)
On Thursday, March 11, the Dow Jones Industrial Average (DJIA) closed at 10,128.38. In the recent Bear Market rally it had first reached this level on Tuesday December 12 2003. Four days of selling undid around 50 days of buying. Just in case you accept the Jabberwockies' explanation that it was all due to the bombs in Madrid, let us examine the evidence.
The markets began falling on Monday, March 8 and the decline accelerated each day. On Wednesday, the DJIA closed at 10,296.89 after losing a total of 171. On Thursday, it fell on open and within 30 minutes bounced off 10,232 and headed for the day's high of 10,321.26 at 12:45EST. Then it consolidated to 10,268 and tried for another high, reaching 10,309.53 at 14:15EST. In the next hour and 45 minutes it lost a total of 88 points, bottoming at 10,120.38. As the bombs in Madrid occurred a full 8 hours before the USA market opened, they were worth 64 points (10,296-10,232) before being discounted. Something far more important took 88 points off the index in less than two hours that afternoon.
Three predictive stock market systems have stood the test of time: the Dow Theory, the Elliott Wave Theory and the Hurst Theory of Cycles. Each has consistently predicted important turns in the market, both bull and bear. The fundamental basis of each rests on the belief that changes in social mood power the behaviour of the masses; that social or crowd behavior trends and reverses in recognizable patterns; that these patterns repeat. Because they repeat in predictable ways, our probable future can be seen before it happens.
Charles Henry Dow (1851-1902) was the founder of the Dow Jones & Company in 1896 and of the Dow Jones Index. His work was never codified into a set of objective rules but introduced over a period of 30 years in editorials in the Wall Street Journal.
The venerated dean of Dow Theory is Richard Russell (1924 - ) who began publishing Dow Theory Letters in 1958. He called the top of the 1949-66 bull market. Almost to the day he called the bottom of the great 1972-74 bear market, the beginning of the great bull market which started in December 1974, the crash of 1987 and the top in March 2000. He can be reached on www.dowtheoryletters.com.
Ralph Nelson Elliott (1871-1948) begat the Elliott Wave Theory. His work is codified in two books and numerous articles. The Wave Principle, published in 1938 explained the empirically derived patterns of progress and regress and their fractal nature. Nature's Law, subtitled The Secrets of the Universe, (1948) re-discovered fundamental ratios in the mathematics of Leonardo Pisano, better known as Fibonacci (1170-1250).
The leading current proponent is Robert Rougelot Prechter (1949 - ) who founded Elliott Wave International (EWI) in 1978. EWI is now one of the world's largest independent providers of market research and technical analysis on global markets to institutional investors 24 hours a day. Prechter has won numerous awards for market timing as well as the U.S. Trading Championship, culminating in the Financial News Network (now CNBC) granting him the title 'Guru of the Decade.' He predicted the start of the bull market in 1982 and the market correction of 1987. In 1990-1991, he was elected and served as president of the national Market Technicians Association in its 21st year. In 1999, he predicted the end of the Bull Market and his book Conquer the Crash was on the New York Times Bestseller List. His organization can be found at www.elliottwave.com.
J.M. Hurst remains an enigmatic figure. His seminal work is The Profit Magic of Stock Transaction Timing published in 1970, which consisted of the theory of channel and envelope analysis, with time cycles and classic trendline analysis. He claimed 90 percent accuracy in actual trading results with his techniques and developed a loyal following of those who were gifted enough to understand and apply it. He disappeared at the height of his popularity taking most of what he knew and understood along with him.
An irreverent practitioner of this art is Doc Stepan N Stool, the world famous Chairman of The American Academy of Stock Proctology, who has participated in the markets for over 40 years. You can access him via www.capitalstool.com
These are the three most accurate and time tested predictive systems of stock-market behavior in existence today. All three respective adherents may sell their services to the financial institutions but are not an intrinsic part of the financial system. They are independent practitioners who have proved their worth in the past and are proving it on a daily basis. All three have made the same prediction, which is that this Bear Market rally has come to an end and that the Bear has returned.
According to Doc, this has marked the peak of the four year cycle and the markets will head lower for the next two years or so. There will be counter-trend rallies, there always are, but they should be used to liquidate long positions and add to shorts. Consider the fact that on Friday, March 10, 2000, the Nasdaq Composite Index reached its all-time high of 5,132, a mere 158 percent above its current levels. Yet the American Association of Individual Investors reports that the present level of bearishness is only at 13 percent and Market Vane, which surveys institutionalized investors, reports a near hysterical level of bullishness at 69 percent.
These levels remain at never before seen extremes. They were not this high in March 2000 and approached current levels just before the crash of 1987. This kind of exuberance not only represents, but actually creates the kind of conditions that can lead to a crash. Our message is simple - beware the Ides of March. The blasts in Madrid occurred 911 days after 9/11. Cycles repeat.
