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The Turn in the US Markets?

Are we looking at the turn in the US markets—the top? Cycles of all sorts are suggesting a top is imminent. Below is a summary of what I’m seeing:

The Largest Bubble in History
Let’s start with a very sobering look at the size of this bubble (in the US stock market) and the level of debt that goes hand in hand with it. From about 1985 through today (2014), the DOW has risen over 800%. The blue line in the bottom of the chart on the left is the volume. You can see as the last wave has gone straight up into the stratosphere, volume has dropped right off. There’s hardly anyone left in the market! (That’s not good news.)

Compared to debt for the US alone, this bubble is far greater than that of 1929.

bubblebig-web 1929Molehill(2)

World debt and debt in the US—although they’re not the worst offenders, by any means—has grown to gargantuan proportions.
Here’s a link to a chart that shows the relative size of debt by country (zerohedge.com).
Here’s a link to a Wikipedia chart with much more information at to public debt vs. GDP for countries.

Elliottwaves
If you’re an Elliotwave trader, you know we’re likely finishing an ending diagonal as part of a final five waves (DOW). In the chart below, you can see the trendlines signifying the boundaries of this ending wave. The DOW may do what we call a “throwover” by extending somewhat above the top trendline. Then we’ll be looking for a motive five waves down and a three wave countertrend move to confirm the top. Click for a larger view.

DOWending2day-web

85 Year Cycle (Unified Cycle Theory)
When you add smaller yearly cycles together (2.12 + 6.36 + 19.08 + 57.24), they come to 84.8. The top of the 1929 market was the beginning of September, 1929. That’s just about 84.8 years (almost bang on) to June 1 of this year (as it works out to 85 years less about 3 months).

172 Year Cycle (Unified Cycle Theory)
The 172 year cycle is one of the major cycles in the Unified Cycle Theory. It marks major depressions. For the 172 year cycle, it starts with the top in 2007, then goes back to the depression in 1835 and then back to the depression of 1663, followed by the Blubonic Plague (1665) and Great Fire of London(1666). 172 year anniversaries hit these right on the nose. From the charts below, you can see how the weather became exceedingly dry, which happens in conjunction with a depression. It’s happening to our weather today.

1835 1665

Sunspot Maximums (Unified Cycle Theory)
Sunspot cycles last 11.2 years. Market tops typically follow on the heels of a sunspot top. We’ve just experienced one as this chart of June 1, 2014 shows. This fact is well known in certain trading circles. Here is a link to John Hampton’s site “Solarcycles,” which focuses on solar events to determine market tops and bottoms.

cycles23_24

Sunspots of course have lots of studies to show how they adversely affect humans psychologically. We’re in cycle 24 – at the top, by the looks of it. Markets typically crash after a sunspot high. It’s interesting to me that the Sept 11, 2001 attacks were right at the high of sunspot cycle 23.

Full Moon (Unified Cycle Theory)
Market highs also tend to follow on the heels of a full moon, although this isn’t a leading factor. The most important factor is a synchronization with a 6.36 or 19 year cycle, then a sunspot maximum, and then a full moon. There was a full moon on May 14, 2014 and another one at June 13. There was a new moon on May 28, 2014.

6.36 Year Cycle (Unified Cycle Theory)
If you measure from the top of the SP at 4/7/2000 to the next top at 10/29/07 – that’s about 6.5 years. If you measure from the 2007 to today (early June, 2014) it’s almost exactly 6.36 years.

visuals for unified.009-001

Climate – based on the work of Dr. Raymond H. Wheeler
As of 2007, when the overall market topped, we seem to have entered a very dry period. You only have to listen to the news to hear of the devastating drought hitting the mid and western US.

Dr. Raymond H. Wheeler (in his studies of recurring climate cycles over 20 centuries) predicted a very dry period accompanying a depression starting around the year 2000. He made this prediction in the 19450s.

Sentiment – Level of Advisors Who are Bullish on the Market
If you’re a trader of any strature, you know the importance on being a contrarian regarding the markets. When the number of bulls or bears reaches an extreme level, the market typically turns and heads in the other direction. We have a record number of bulls right now (record optimism).

sentiment26 year high

Margin Debt
Along with sentiment rides the level of margin debt, which is at an all-time high. This is the amount of leverage in the market. It signifies the amount of borrowed money that supports the positions of those in the market. It doesn’t take a big drop in the case to create panic as traders attempt to cover their loans.

MW-BW206_margin_20140307154620_MG

TPD Cycle (Turning Point Distribution Principle—Unified Cycle Theory)
This principle describes an array of reversal points that tend to surround a major turning point. In terms of the US stock market, the following cycle anniversaries surround the end of May and first part of June, 2014.

  1. The 86.1-day UWS cycle.
  2. The 16.4-week cycle
  3. The seasonal cycle (sell in May and go away)
  4. The 2-year cycle — Every 2nd year, the seasonal cycle is more bearish from May to October. This is the year when the seasonal cycle is especially bearish. For example, the May-October periods for 1998, 2000, 2002, 2004, 2006, 2008, 2010, 2012, and now (2014??) were far more bearish than the years 1997, 1999, 2001, 2003, 2005, 2007, 2009, 2011, and 2013.
  5. The 3.5-year cycle has been very powerful in the stock market for nearly 2000 years. It peaks in June.
  6. The 6.37-yr, 19.1-yr (Dewey’s real estate cycle), and 57.3 yr (Kondratieff cycle) are already in down-phases.

This is an extraordinary set of warning signs that the current US market is mature. Currencies (euro, pound, Swiss franc) have already topped and are headed down, At the same time, the US dollar has bottomed and is heading up.Based on history and recurring cycles, along with the magnitude of bubble we’ve experienced, the expected drop will be the largest transfer of wealth in history.

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