A cycle is a chain of events that repeats over time. The outcome might not be the same each time but the characteristics are quite similar. Take for example the four season weather.

Cycles [ChartSchool]

Each year we have spring, summer, autumn and winter. After winter we have spring again and the cycle of weather will begin anew itself again.

Stock Cycles Forecast

Cycle frequencies can both be short and long, it can last from minutes until thousands of years. Understanding long term cycles in stock market helps you determine the overall market trend and similarly short term cycles helps you determine your timing in the entry and exit points in the stock market.

The following chart shows some short and long term cycles. Perhaps one of the most extensive studies on cycles is done by Dr Raymond H. Wheeler, Chairman of the Department of Psychology, University of Kansas.

He commissioned researchers to work for 20 years to study the effect of weather on mankind and also cultural activities dated back to the dawn of civilization.

Over years of weather pattern was studied and so was 20, pieces of art and literature. After the extensive study he concluded that there exists a year climate cycle and phases that influence human behaviours.

The different phases can be described as the following: According to his calculations we are now in the Warm-Wet phase and should last until Further to this he also discovered the years world dominance cycle. His record dates back years during the Greek and Roman eras. The following are dates and events that took place since then. In other words there are cycles within a cycle. The most famous economic cycle is the Kondratieff Cycle years.

Kondratieff, a Russian economist whose cycle study is based on wholesale prices, interest rates, wage levels and production indexes from the period to The following chart shows the Kondratieff wave in action in the U.

Historians have found that 50 years business cycle has already been in existence since the biblical days. In the Old Testament it did mentioned about farmland being lie fallow in the seventh year of cultivation. The main question is where are we now in the Kondratieff cycle? From his study on economic cycles he found that the most valid recent peaks are occurring in , , and s and the next peak will be around s.

The 50 years Kondratieff cycle can be classified by the following phases which are divided into five equal decades. We reckoned that we are now in the fourth decade of the main cycle because currently global economies are engaging in competitive currency devaluations and also at the same time enacting protectionism policies.

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The following graph shows a more detailed succession of events leading to the current situation and also what to expect from now on. Edward R Dewey can be considered the modern day authority in cycle studies. What he found that the 9. He estimated that there is only 1 in chance that the occurrences can be coincidental.

Then we have Veryl L. John Hurst, another pioneer in cycle studies identified 12 dominant cycles existing in the stock market. Below we present to you a table of compilations of various cycles and different timeframes of the stock market that has existed and still valid till today although there might be some slight changes in the timeframes. As a Stock Market investor would it be nice to add a tool to your arsenal that may help you to determine the general trend of the market and also to buy or sell before the market reverses.

As you know Stock Market prices move in trends either up, down or sideways. For long term investors defined as holding stocks more than 1 year , a solid knowledge of long term market trend or cycles is sufficient. This is also known as the Primary Trend in the Dow Theory. For medium term investors who are holding their portfolio between three weeks to a year, it will be advantageous to have some knowledge of the Secondary Trend or cycle.

Secondary Trend refers to stock market trends that last between 3 weeks to a year.

Lastly for short term investors who are likely to hold stocks for not more than 3 weeks again it will be advantageous to have some knowledge of the Minor Trend or cycle in the stock market. The following chart represents a cycle in the form of a sine wave. It also shows the different stages of market activity in one market cycle.

During the trough stocks are accumulated and will be mark-up on the way up. We will demonstrate to you using a live chart and that is the FBMKLCI. The following chart of the FBMKLCI clearly exhibits the existence of cycles. There are two cycles in existence and the first is between October and December while the second starts from the beginning of December to Mid February If you have bought during the first low during the end of November and also the second low in mid February , we are confident that your investments will performed much better than other times during those periods.

So we hope that by now you should realised that with a clear understanding on market cycles and trends it will certainly help you make better informed decisions in your stock market investments. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis.

Individuals should consult with their personal financial advisors. Terms of Use Privacy Policy.

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Market Cycles

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