• 2 days How To Invest In The Cybersecurity Boom
  • 4 days Investors Are Patient With Unprofitable Giants
  • 6 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 8 days 5 Stocks To Keep A Close Eye On This Year
  • 9 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 10 days Central America Is Ready For The Bitcoin Hustle
  • 12 days China’s Video Game Restrictions Unlikely To Slow Down Booming Industry
  • 13 days Top Performing Stocks As Inflation Fears Grow
  • 14 days US Airline Stocks Take A Beating On New EU Restrictions
  • 15 days This IPO Could Open Sustainable Fashion Floodgates
  • 16 days Crypto Crime Nets Another $2B Fraudster
  • 18 days This Week’s Hottest Meme Stocks
  • 19 days Why World Markets Should Be Watching Germany Closely
  • 21 days Could ‘Cultured’ Meat Rival The Plant-Based Megatrend?
  • 23 days ‘Easy Money’: Crypto Is Still Attracting Newbie Investors
  • 25 days Foreign Syndicates May Have Stolen Up To $400B In COVID Benefits
  • 26 days Gold Jumps Above $1800 Ahead Of Jackson Hole Summit
  • 26 days International Banks Blacklist Afghanistan Following Taliban Takeover
  • 28 days China’s Tycoons Are Getting A Serious Reality Check
  • 29 days U.S. Cannabis Space Heats Up With Telling Tilray Acquisition
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

The State of the Trend

In a year full of surprises and challenges, the major averages had a very conformist performance deviating little from established precedents.

For example, in May '16, based on annual price advance and bottom reversal data, we gave an end-of-year price target of 2240 for the SP500.

The major averages followed the 20 year seasonal and 100 year decennial pattern very closely as well:

Dow Industrials Correlation

SPY Correlation

QQQ Correlation

The more pressing question now is what can we expect from 2017? Looking at the decennial pattern, the picture is mixed: 6 bullish and 6 bearish years. Year 17 in the 20 year cycle, however, tends to be more bearish than the average, and produces steeper declines.

20-Year Cycle

1987 stands out as the DJIA closed barely positive following a 43% drop in October. It should be noted, however, that the index had risen about 250% between 1982 and 1987. Currently, the DJIA is up 100% from the 2012 low, and 200+% from the '09 low.

In terms of longevity, this is the second longest lasting rally of the last 130 years. Therefore, odds favor a 20+% correction any time now.

Dow Historical Rallies 1896-2014

Going back to the decennial cycle we notice that bullish and bearish years follow a different seasonal path. Bearish years usually follow a down-up-down-up pattern (May 19, July 14, October 27), while bullish years follow an up-flat-up-down-up pattern (January 20, April 7, July 25, October 31).

For now, we'll start with a clean slate based on average projections and a few key angles:

S&P500 Daily Chart Projections
Larger Image

 

Back to homepage

Leave a comment

Leave a comment