Use Cycles to Provide a Market Timing Edge
Our Approach
We combine fundamental analysis and technical analysis with cycles to create investing, portfolio management, and trend-trading strategies for people who are seeking a timing edge in the financial markets. We focus on Cycles, Conditions, and Strategies:
Cycles: A Timing Edge
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Business Cycle
The Business Cycle is driven by Fed policy, liquidity, inflation, interest rates, and growth. This drives asset and sector rotations opportunities.
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Technical Cycle
The Technical Cycle make sense of market oscillations and consistently create swing trading opportunities.
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Seasonal Cycle
We follow the Seasonal Cycle combined with the Four Year Presidential Cycle. This can be applied to indices, industries, sectors and stocks.
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Time Cycles
The Gann Master Cycle, 20-Year Stock Market Cycle, 18-Year Economic Cycle, and 18-Year Real Estate Cycle could impact one’s net worth.
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Planetary Cycles
Planetary Cycles could have a huge impact on market sentiment. Using planetary aspects could really provide an edge.
Conditions: Understand the Market’s Mind
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Fundamental Analysis
Macro, Intermarket, and Valuation analysis help us understand where we stand in the business cycle and provides insight into what drives investors’ actions
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Technical Analysis
Trend-following, price structure, oscillators and options-derived levels combine well to provide a technical picture
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Market Internals
Analyzing volatility, breadth, volume and sentiment could help an investor know whats going on beneath the surface of the market
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Players Analysis
Understanding what the big money is doing can help you predict the next move
Strategies: Different Strategies Fit Different People
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Investing
For: Passive buy-and-hold investors with a longer-term time horizon and the goal of wealth accumulation
Focus: Invest in the right asset classes and sectors at an advantageous time
Time Horizon: Years
Cycles: Business, 18-Year Economic and Presidential/Seasonal Cycles
Tactics: Stage Analysis on the Weekly Chart and Income Compounding
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Portfolio Management
For: More active investors who are comfortable utilizing options to provide an edge to ETF and stock positions
Focus: Create alpha on strong risk/reward multi-month moves in various investments
Time Horizons: Months
Cycles: Technical, Time, Planetary Cycles, Presidential/Seasonal Cycles
Tactics: Ichimoku Cloud and Options Strategies
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Trend Trading
For: Active traders who are seeking to use cycles in addition to technical analysis to trade trends.
Focus: Make money on short-term movements in various investments
Time Horizon: Weeks or Days
Cycles: Technical, Time, Presidential/Seasonal and Decennial Cycles
Tactics: Moving Averages and Price Structure
Cycle Updates
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Update - The economy is in Stage 6 where all assets contract.
Description - The business cycle is a sine wave with 6 stages:
Stage 1 - Economy is contracting and bonds turn up as interest rates decline. Economic weakness favors loose monetary policy and the lowering of interest rates, which is bullish for bonds.
Stage 2 - Marks a bottom in the economy and the stock market. Even though economic conditions have stopped deteriorating, the economy is still not at an expansion stage or actually growing. However, stocks anticipate an expansion phase by bottoming before the contraction period ends.
Stage 3 - Shows a vast improvement in economic conditions as the business cycle prepares to move into an expansion phase. Stocks are rising and commodities are anticipating an expansion phase by turning up.
Stage 4 - Marks a period of full expansion. Both stocks and commodities are rising, but bonds turn lower because the expansion increases inflationary pressures. To combat this, interest rates start to move higher.
Stage 5 - Marks a peak in economic growth and the stock market. Even though the expansion continues, the economy grows at a slower pace because rising interest rates and rising commodity prices take their toll. Stocks anticipate a contraction phase by peaking before the expansion actually ends. Commodities remain strong and peak after stocks.
Stage 6 marks a deterioration in the economy as the business cycle prepares to move from an expansion phase to a contraction phase. Stocks have already been moving lower and commodities now turn lower in anticipation of decreased demand from the deteriorating economy.
Note that in a deflationary environment, bonds and stocks would move in opposite directions.
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Update - The S&P 500 is below all moving averages and trending down. Breadth and technical oscillators are not yet oversold, so more downside is possible. As of 9/16/22 it has been in a downtrend for 19 days.
Description - The Oscillator Cycles has four parts: moving averages, the relative strength index (RSI), the volatility (VIX) and breadth Indicators. The market moves from overbought to oversold in movements that can last 10 to 40 trading days. Price trending above the moving averages is the key, however the other indicators tip us off when then trend will change. This cycle is most important for short term traders.
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Update - We are in a 2 year, which tend to have a lot of downside volatility. In more detail, there will be a 9/30/22 bottom, followed by a strong uptrend until 12/1/22.
Description - The 10-year “Decennial” Cycle provides a tendency for years that end with a certain digit:
0 crash, 1 chop, 2 drop, 3 to 6 up, 7 to 8 crash, 9 recover
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Update - September and October tend to be bearish during Midterm Election years.
Description - The market tends to have bullish and bearish seasons and months. The best 6 months are from November to April and the worst 6 months are from May to October. April, July and December tend to be bullish months due to holiday rallies. February, March, September and October tend to be weak due to tax reasons. Additionally, this cycle is affected by the Presidential Cycle.
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Update - We are in a Year 2 Midterm Election year which is the most bearish.
Description - This is a 4-year cycle:
Year 1 - Post Election years tend to be mildly bullish.
Year 2 - Midterm Election years tend to be the most bearish.
Year 3 - Pre-Election years tend to be the most bullish.
Year 4- Election Years tend to be mixed with sharp bearish times and strong bullish times.
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Update - The Gann Master Cycle points to lower prices for the S&P 500 until a bottom on 9/30/22. The market will then rise until 10/13/22, and decline to a double bottom on 10/27/22. The market will then enter a bullish phase until the next top at 5/4/23.
Description - This is the time cycle used by legendary trader W.D. Gann.
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Update - The North Node is in Taurus, as business volume moves from normal to below normal. The NN moves to Aries on 7/13/23, where it continues to deteriorate.
Description - This is an 18-year cycle that predicts economic activity and is based on the North Node cycle. When the North Node passes through Scorpio and Libra, business goes through a transition phase from normal to above normal, creating a period of prosperity and bull market. When it reaches Leo, it hit a high point. When it passes through Cancer and Gemini it moves from high to normal. When it cycles through Taurus and Aries, business volume goes from normal to below normal. When it passes through Pieces and Aquarius business volume is low. Business volume hits a low as the North Node moves out of Aquarius. As the NN moves through Capricorn and Sagittarius business volume moves from below normal to normal. The cycles then repeats.
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Update - The next downturns will come in January 2023 and September 2023
Description - The Professor Weston Cycle is a 20-year stock market cycle governed by the Jupiter-Saturn Cycle. It is good at predicting downturns in the market.
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Update - Mercury retrograde dropped the market around 9/10/22. This will turn direct on 10/3/22, alleviating downward pressure on the market. Venus will leave Virgo on 9/29/22 also providing a tailwind to the market.
Description - This is a mix of planetary cycles and aspects that tends to move the markets.
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Update - We are expected to start a 4 year bust cycle in 2024.
Description - The real estate market goes through an 18-year cycle of 4 years of bust, 7 years of recovery, and 7 years of boom.