George Lindsay’s 15 and 12 Year Cycles

I have mentioned a few other George Lindsay patterns on this blog before, such as the Counts from the Middle Section and Three Peaks and a Domed House. Another Lindsay theory suggests that there is a 15 year interval between major lows and major highs, and a 12-13 year interval between major highs and major lows.

I am skeptical of long-term patterns with fixed time intervals. I’m not into superstitious numerology. However, it is possible that some of these time intervals are a result of repeating patterns in economics, sociology, or psychology. So, I decided to examine U.S. market history over the past 100 years to see if I myself could find evidence of these patterns.

I have found enough instances of these intervals to think that, they may actually have some significance if you give or take a year. So, here are the instances I found on the Dow Jones Industrials Average.

15-year low-to-high intervals

1914 low – 1929 high

1921 low – 1937 high

1932 low – 1946 high (~1 year off)

1942 low – 1956 high (~1 year off)

1960 low – 1976/1977 highs

1974 low – 1990 high

1982 low – 1997/1998 highs

 

12-13 year high-to-low intervals

1919 high – 1932 low

1929 high -1942 low

1937 high – 1949 low

1962 high – 1974 low

1969 high – 1982 low

1976-77 highs – 1990 low

1990 high – 2002/2003 lows

1998 high – 2011 low

One possible explanation for the intervals is that different cycles (whether in business, sociology, or psychology) overlap each other. If most of them are in downward phases concurrently, then you get severe bear markets associated with recessions. However, if one type of cycle is approaching its low point, but other cycles are in upswings, you may only get a correction.

Anyhow, if a 15 year interval began at the 2002 low, it would project a top in 2017-2018. If a 12-13 year interval began from the 2007 top, it would project a low around 2020.

These projects fit with other patterns I have been tracking that project a bull market top in the U.S. stock market during 2017-2018. From there, I would expect a bear market to last at least two years, so a bottom around 2020 could make sense.

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Looks like the July Bottom Scenario is Coming

The Brexit actually happened. As I type this in the early morning of Friday, June 24, the Dow futures are down over 700 points!

As I described in my last post, the Middle Section count that I have been tracking since 2014 suggested a possible low in July. The precise date was July 12, but I think there’s a decent chance the actual bottom could be somewhat earlier given that the Brexit is likely to make the markets fall dramatically.

I expect that the Jan-Feb lows of 15,400 on the Dow and 1800 on the S&P will hold. If we fall more than halfway back to those levels, I would consider it a fulfillment of a Middle Section projection, and I would be inclined to start using the upcoming bottom to project the ultimate top of this bull market.

US Markets Update (6/15/2016)

In my last update on the Counts from the Middle Section that I am following, I wrote that it was possible the U.S. stock market could have a steep correction that would bottom out in June. However, I did a more precise calculation recently by counting exact calendar days between the critical points in the Middle Section pattern. That actually gives us a target of July 12.

However, if this scenario plays out, I think the window for the correction bottom could be anywhere from late-June to late-July.

It’s really hard to tell what the market’s next move is going to be. It’s been going sideways since mid-April right below the 2015 highs, and unless we get a decisive breakout above the 2015 highs, I’ll refrain from making any calls.

As for the upcoming “Brexit” vote, I think that if the U.K. votes to leave the EU, the impact for markets will be rather short-term. The market may drop for a couple weeks, but ultimately, stock markets have repeatedly shown an ability to discount world events rather quickly as long as the events are not associated with clear signs of macroeconomic deterioration.

But whatever happens in the short term, I expect the U.S. stock market to make new record highs in the 2nd half of this year.

New Bull Market in Greece? (06/01/2016)

Some very significant developments may be underway in the Greek stock market. I commented on Greece and other European markets in January 2015. At that time, I considered Greece’s ASE index to be in a bear market that would need to take out its 2012 low before bottoming out.

The ASE index has now done so, and it appears that a massive Elliott Wave bear market pattern (that began in 1999) may have concluded in February of this year.

Greece stock market complete expanded flat 2016ASE index chart from tradingeconomics.com – labeling mine

The chart has a clear 3-wave zigzag pattern, with the C-wave subdividing into five waves as would be expected.

I think the bottom is real. At the February low, the index was down 93% from its 1999 peak. It is really hard to image what could not have been priced in by a drop of that magnitude. During America’s great depression, the stock market bottomed out after a decline of ~90%.

In Greece’s stock market this year, what started as a rally that could have been just a bear market rally seems to have developed legs after consolidating in March-April then breaking out to the upside.

This rally is definitely something to keep an eye on. If the Greek stock market has bottomed out, I would expect the economy to start recovering within the next 6-12 months. Economic growth would help prevent recurring debt crises in Greece, which would take a significant burden off the Eurozone economy and allow other European countries to return to healthier growth rates, leading to greater stability in financial markets globally.