The 80-day cycle trough in the US markets came in about a week earlier than I have been anticipating in this blog, on 14 April 2014. As we start the next ten-week cycle I find it useful to look back at the shape of the recently completed cycle, and consider what shape the next cycle will take.
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The 3-month view charts on Hurst Signals are very useful for considering the shape of the 80-day cycle, and so here are the 3-month views of the US markets. Here is the S&P 500:
The yellow dashed lines show the bullish M-shape of the 80-day cycle from early February to mid April. It is a bullish shape because the peak occurs late in the cycle and the final trough is higher than the start of the cycle, but it is also evident that the bull started losing strength fairly early in the cycle in the first week of March.
The Dow Jones Industrial Average has a very similar shape:
The shape of the cycle in the Nasdaq is very different:
The shape of this cycle is more bearish because of the early formation of the peak, and the final level was about equal to the starting level, resulting in an overall bearish shape.
The important thing is how this helps us to know what to expect from the next 80-day cycle. It is too early to be very specific, but in general terms we expect the next cycle to be less bullish (or more bearish) than the previous cycle because this is the second 80-day cycle in the 20-week cycle which started in early February 2014.
“Less bullish” implies that we should expect an earlier peak to the cycle, and a stronger move down to a lower trough which will form some time in June.
Have a great week and profitable trading!
