Stock Investing & the 40-Year Cycle; Uncanny Parallels to 1978 – 1980. What’s Next?
11/30/19 INSIIDE Track: “Equity markets remain in a 2 – 4 year period (2018 – 2021) that was expected to be marked by a lot of sideways action, on balance, with multiple declines of 5 – 10% and at least two declines of 10 – 20% sandwiched between corresponding rallies that would often take the indexes back to the highs that preceded those declines…
In sync with the 40-Year Cycle, the outlook has often been compared (loosely) to the stock market action of 1978 – 1982, during which the DJIA traded similarly to what was just described. Throughout the first two years of this period (2018 – 2019), some of the parallels have been uncanny – with market action in 2018 mimicking particulars of 1978… and 2019 mirroring certain aspects of 1979.
Just to again clarify, the 40-Year Cycle does not usually portend a repeat – or even a close replica – of what occurred 40, or 80, or 120 years ago. That is NOT how that cycle (or most others) is utilized. In this instance, there were enough corroborating parallels, and converging cycles, that a closer repeat was forecast… at least for the initial years…
From a wave perspective, the Aug. ’19 low was a type of ’4th’ wave in the DJIA – completing successive declines of near-equal magnitude and duration while setting the stage for a culminating, ~3-month advance. To illustrate the symmetry of that…
In May/June ‘19, the DJIA sold off for 22 trading days, losing about 2,000 points before encountering intermediate support and bottoming (a ‘2’ wave).
In July/Aug ‘19, the DJIA sold off for 22 trading days, losing about 2,000 points before encountering intermediate support and bottoming (a ‘4’ wave).”
Stock indexes continue to closely adhere to the 40-Year Cycle – replicating the swings seen in 1978 – 1979. They are poised for a quick, sharp sell-off in December with the Transports again leading a reversal – showing more weakness than the primary indexes. Focus is beginning to shift to late-Jan./early-Feb. ’20 – when the uncanny 2-Year Cycle will join the 40-Year Cycle (as well as the 8-Month & 16-Month Cycles).
What Would early-Dec. Sell-off & Low Signal?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.