Long Term Cycle Analysis

DOW has retraced 50% of 1920 breakout which is 80yr rally since 1920 as shown on the DOW long term cycle analysis chart. I commented on the very long term market analysis in 2006 with comments on the the long term patterns of rally and consolidation period of alternating 16yr and 20yr cycles. Considering our economic condition, the better scenario would be a long term consolidation period during the 16-20 year period – from 2000 to 2018 +/- as long term cycles are not precise. Even though the DOW long term chart looks quite steep rise, DOW already retraced 50% of 1982 breakout, meaning that those who invested since 1982 would have lost 50% of their investment value. Of course, some are cashed out from financial markets. Nevertheless, since the Oct 2007, DOW has lost 50% of its value – 100yr + financial wealth. What we can hope for is that markets will consolidate in long term instead of sharp sell-off throwing our economy into severe depression. I am sure that most of us know someone who is either in economic trouble or will be in economic trouble if our economy does not rebound soon -- hopefully, we will see market stability.





A retracement to SPX 650 +/- is a fractal model of the Japanese 1990-2003.

Since the October 2007 top and with the recent financial sector crisis, we now have, many are acknowledging the resemblance between U.S. economic crises with the Japanese’s during 1990-2003. I posted my market cycle analysis during the Jun-Jul 2006 bottom calls showing the 4yr, 8yr, 8.6yr, 16yr, 20yr, 32yr, and 56yr VLT cycle analysis with long term chart analysis, for example, which I have previously shown the VLT 50yr SPX cycles and the comparative analysis chart of the SPX vs NIKK and SEC financial markets.

hiroko Tabuchi analysis on the US economic compared to the Japanese 1990s, “In Japan’s Stagnant Decade, Cautionary Tales for America” http://www.cnbc.com/id/29179715 is well served to realize what we, Americans, need to regenerate ourselves – which I commented on the subject since 2006 that we need to go through what Japanese went through to make ourselves competitive technologically and educationally performing superior to many around the world. Those who read my comments for several years would recognize my points even though I posted my thought too emotionally instead of presenting analytical points of my view.

We may have gone through, as noted many previous posts that the entire financial boom and bust is a well organized and predetermined long term economic boom and bust cycles by the big money which is controlled the world finance. As I promised, I will be less critical and judgmental, but I will express potential underlying force which is driving the world financial markets. Of course, the world economics will experience economic booms and busts, i.e. economic cycles, as planned including the magnitude or sizes of severity for this economic down which we are facing now. If we follow the Japanese model, the worst case is that US markets will retrace the decade of 1990s wealth. SPX has retraced to 1997 breakout support, SPX 741 during the Nov 2008 low. I commented on the 2010 low which the projected low can be seen on my VLT SPX monthly chart dated 12/21/2007 which I posted it for several times during 2008. We now see many traders and market analysts are mostly bearish projecting to the worst case scenario which is following the Japanese 1990s model wiping out 78% of the equity value of 1980s rallies. The comparative model of the US markets during 1990s and the Japanese NIKK during 1980s is so far showing a fractal formation suggesting that the US financial markets could also experience the similar severity of the NIKK during 1990-2003 retracing 78%. The worst case scenario projects SPX to retrace to the 1990s breakout near to SPX 370 instead of consolidating in a long term correction formation similar to the NIKK formation during 1993-2000 in a long term trading range. This is the scenario which I recently commented that the US markets are undergoing the “A” corrective wave of the Supercycle (VVLT) “V” in March 2000 instead of “C” of the Supercycle “V”.

If US markets are continuing to fall breaking the Nov 2008 low, regardless the Stimulus economic program, American sentiment will be worsen, so our economy will be continuing to regress to depression. As noted above, if the financial power house is planning to take down the US economy to depression, many Americans have no choice, but to go through the severe depression. Many including small business are waiting for our economy to improve so that they can avoid financial disaster as it is vicious cycle which is impacting many in chain reaction in a worsening spiral economic and financial disaster for many while a few % of wealthy Americans and many who are positioned themselves against the current economic downturn to become more wealthy as a byproduct from worsening economy – giving more power to the wealth which is the last stage of benefiting from the economic ruin.

Nevertheless, if our economy is maneuvered to go through less severe scenario which described above, we will see a VLT consolidation period as markets are consolidating in a range with the stimulus package until we find better ways to reignite our economy. This is the long term consolidation model which I noted recently even though this scenario is less profitable for the big money powers who are benefiting from our economic downturn. In this case, our economy will see a bounce with the stimulus package – will be able to see on SPX long term consolidation in a range below SPX 1100 +/- instead of a sharp correction to SPX 450 +/- which is the 1995 breakout, and then SPX 350 +/- which is the 1990 breakout.

With the recent pessimistic market condition, anything is possible as we could see a chain reaction deepening the current economic crisis the severe depression; however, I hope that we will see financial market bounce to help many who are going through financial catastrophe and if we see further deterioration of markets, market sentiment will be worsen and so does the Americans’ and many around the world.