Stock Market Crash Cycles in 2007/2008

“…DJIA could be heading for a 20 – 50% correction in the next 1-3 years.
…17 & 34-year multiples…greater synergy of cycles…in late-2007.” 

06/27/07 INSIIDE Track:: “2007 — 2008:

17-Year Armies Gearing Up… and Dieing Off…

Armies Marching Up…

            06-27-07 – Last month, we revisited an intriguing cycle in the markets, in the earth, and in the Middle East.  It is the 17-year cycle that governs the life cycle of the aptly named 17-year cicada… AND the stock market… AND wars in the Middle East.  Each one involves different armies that come marching up and back down with remarkable regularity.  The table on page 2 synopsizes what was discussed last month.

While the last brood of cicadas is dieing off, a new generation is hatching and will soon head to their underground ‘bunkers’ for the next 17 years.

The story could soon be the same for the current brood of stock market investors.

Similar to 17 years ago (1990) and 17 years before that (1973) and 17 years before that (1956) and 17 years before that (1939), the DJIA could be heading for a 20 – 50% correction in the next 1-3 years.

The 1973 & 1990 tops occurred 10-15% above the previous record highs in the DJIA.  In 2007, the DJIA has exceeded its record high (of 2000) by 15%.

If history is any indicator, the Fall of 2007 could see the fall of stock prices… just as in 1939, 1956, 1973 & 1990…

So, we are now entering the pre-transition period, the final 60 days of an old cycle.  As in the case of the cicadas, the final days of this cycle could be very noisy and somewhat disconcerting… at least on the surface.

The cicada life cycle is a perfect illustration of what frequently happens in the stock market… And everyone acts as if it is completely unexpected and noone had any way of anticipating extreme actions of this nature.

Breaking Down the 17-Year Cycle:

Last month, I described the makeup of the 17-year cycle – and its ‘sister cycle’ – the 34-year cycle.  A perfect example of the 34-Year Cycle involved the low-high-high Cycle Progression that impacted the S+P & Nasdaq 100 in 2000 (1932 – 1966 – 2000).

At its core, this cycle is a multiple of the 2+-year cycle that governs stock market action.  More specifically, this family of stock market cycles involves time frames of 2.15, 4.3, 8.6 & 17.2 years (and 34 years).

            The 2, 4 & 8-year cycles were obvious in the market moves from 1966–1974–1982–1990.

They have also been seen in the market lows in 1990, 1994, 1998 & 2002.

However, when the 17 & 34-year multiples come into play, it represents a greater synergy of cycles converging at the same time. Such is the case in late-2007.”