The Four-Year Cycle:
The Bear's gift from God...or a Bear Trap? Louise McWhirter wrote in her 1938 book, McWhirter's Theory of Stock Market Forecasting: The rise and fall of price is governed by the law of Supply and Demand, which is in turn governed by the law of the universe, hitherto unknown or ignored, but known as the law of Action and Reaction. Periods of business prosperity and depression are not man-made nor the result of chance; they come at regular intervals, the same as the seasons, and the same [universal] laws which govern nature govern man and all man's activities. In this quotation, Mrs. McWhirter lays the foundation for our understanding of the inherent nature of all market cycles and of the operation of the market itself, namely that of action and reaction, impulse and correction, buying and selling, supply and demand. This concept of action and reaction is a product of the idealized market cycle, which is composed of two equal parts - an ascending phase and a descending phase. That is to say, according to "conventional" business theory, the 4-year Business Cycle, or Presidential Cycle, peaks after a 2-year ascent, then falls for an equal two-year declining phase. However, we at PTR have our own "Cycle Theory" that is much closer to the "concepts" laid out by W.D. Gann and R.N. Elliott. In our Cycle Theory, any cycle period is divided into eighths (like 1/8th to 8/8ths) and the "peak" of a cycle will, "more often than not, peak on or very-very near one of those 1/8th divisions of "time," and then decline (or maybe crash down is a better word) to to make it's "tough" (bottom) at or near it's regularly schedule time period. Furthermore, it is even possible that a Bull Market can be so strong, on the fundamentals, that the big Perma-Bull institutions, in cooperation with their friendly, and illegal, Central Banker of course, can actually "blow-out" this cycle. The only two times that "I see" where that has happened in the U.S. Market was in 1926 and again in 1986. Of course, the 1986 "cycle failure" (to bottom in 10/1986) resulted in a lame market through 1987 until the monster crash on 10/19/1987. Also, the 1926 "failure" was successful until 9/1929, and then gave Herbert Hoover his well deserved retirement reward in 1932. By the way, Allan Pressman was not the U.S. Fed "Chairman" in 1986, but he was at the Fed in that year, and he was then the Chairman in 1987 when the now "regularly scheduled 3-4 year bubble popping routine" began. Also, the "excuse" used to pop that bubble, in the fall of 1987, was the "exceptional and excessive appreciation of the Dollar vs. the Yen." Sound familiar? Needless to say, the shell game is the same, only the players have changed from Japan and the U.S. to Europe and the U.S. Dow Longwave chart with 4Y and 32Y-42Y cycles Richard Hoskins, author of " War Cycles/Peace Cycles," was one of the first observers to publish a chart which graphically depicted the 4-year cycle in the Dow Jones Industrial Average, but I don't have it, so in 1999 he writes: Every four years the stock market bottoms. Two years later near election day it peaks. Just knowing that gives you a whopping edge." Continuing on, he writes: "Pump money in to make things look good and after the election cut it off." Observe the years 1974, '78, '82, '90, '94 and '98 - all except '86, which occurred a year later. All the rest are market bottoms. Every four years - market bottoms! In the interest-free system of our ancestors there was no such thing as booms and busts such as we see today. But in a usury system where the usurers manipulate the economy to elect their hand-picked politicians, you have inflation and deflation to coincide with elections. Congress appropriates money, and the president spends it at the time most advantageous for him, just before election. This causes the stock market to rise and making voters happy on election day. With the money all spent, after the election the stock market crashes. A new four-year election cycle then starts all over again. If you didn't know this, you may have been fooled into selling at the bottom when others were buying, or buying at the top along about election day Ok, so will this market "crash" as Dick Hoskins suggest, or will the "always invested" crowd convince those who "typically" take this "well defined cycle" seriously that: ITS DIFFERENT THIS TIME !! And, we get a cycle blow-out like we did in 1926, 1946 and 1986? While I have no crystal ball to answer that question in advance, I'll just say that IF my longwave analysis is correct, and I'm "fairly confident" that it is, then in 1986 the U.S. stock market, or at least the Dow, DJT, and SPX, were "inside" a wave three of three of super-cycle degree, in Elliott Wave Theory terms, which in lay terms is, "usually," the most powerful section of a Bull Market, and we are currently in either a Bear Market still in progress from the 2000 all time highs, OR we are in a "much weaker " wave five of five heading for another monster top in 2008 (near DOW 13,900) One way or the other, I seriously "doubt" even Allan Pressman can "blow-out" this next four-year cycle low, due in, theoretically, October of 2006. Of course, when you have the power to print money out of thin air then anything is possible as long as there is a steady supply of fools willing to swap their goods and savings for some IOU's that will be "marked down" in value even before the ink dries...and I don't see much of a shortage in that line yet. However, the depth of that "line" is "clearly" only one of the powder kegs this U.S. market is currently setting on. While there is an excellent "time target" out in May of 2005, where the 31 months for the decline from the 3/2000 highs down to the 10/2002 lows would be equal to a rally up from 10/2002 to May 2005, I'm far from being convinced that this market can be outright "manipulated" long enough to reach that date. However, if it does, then that would open the door to the July 6th and 9/1/2005 monster time target; eventhough, we "doubt" the bulls can make hardly any advance after Memorial day, except a "double top" to the March highs. Never the less, we are going to hold onto this "expectation" until we see some serious "bear sign" to the contrary. Furthermore, we are going to start using a few hedges between here and that date, since Sir. Allan would just love to catch everyone long, and un-insured, so that he could "unwind" his whole mess in one easy swoop of the sword...just like he did with his dollar to yen scam in 1987, and his "Long-Term Capital" con in 1998. For the P TR Andrew J. Quiggly Editor. Copyright(C) 2004 All rights reserved Price-Time LLC Virginia Beach, VA USA |
