Investment Chart Kondratiev Wave

Investment Chart Kondratiev Wave

Monday, 15 November 2010

update four year cycle

I think we are in phase EF since the end of August. That is the recovery since the first equity correction DE since the (great) recession has ended.
The fase EF lasted on avarage 18 weeks. End of August until January should be normal. It can last somewhat longer, especially because the current four year cycle went too fast. In that pace is GH finished far before the president elections and ended at he end of 2011. (average of FG 26 weeks, GH 23 weeks), so very harmful for the chances of Obama to be reelected.
FG can last very long as was the case in the previous four year cycle.
The stroty of the high net demand for equities is so strong that it is difficult to believe EF will be finished in December 2010.
Another indication that EF can last longer: For quite some time the S&P500 follows the path of six years ago (see chart). When you extrapolates the comparisosn with 2004/5 the top F will arrive in March 2011. That can be the case but then EF will have lasted long. In 2004 you had a pause of about two months in EF with some stabilisation/ decline of the markets. Such a pause can occur now again.

The Coppock indicator is together with the S&P500 divided by its four year average in the upper chart. The Coppock gives some indiaction where you are on the four year cycle. The Coppock goes up just after A and becomes then less negative. Just after D the Coppock reaches his summit. After that it declines but remains positive and a horizontal trend starts just after F. When the Coppock becomes negative, that is an indication you are in Jl. So we are after D, but probably before F.

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