Predicting The Shape Of A Cycle Bottom
by Michael R. Burk
I define a cycle as what happens between peaks in my New Low Indicator. Since the beginning of 1978
there have been 24 complete cycles averaging a little over 120 trading days, or 24 weeks.
Cycle bottoms play out in two distinctive patterns, which I call V and W. Each bottom traces out the
pattern of its letter description. A V bottom is one where the price index declines to a bottom and then
heads up again (Figure 1). In the W bottom the price index reaches a low, retraces a portion of the decline
and then falls back to retest the previous bottom; it can make several retests, at which point it creates a
multiple W pattern (Figure 2).