The Secrets Of Cycles And What They Can Reveal
What Can Market Cycles Tell Us? by Tim W. Wood, CPA
Everything in nature moves in cycles — the solar system, the
migration of geese, sleep patterns. Of more immediate interest
to traders are cycles in the agricultural and financial markets. Cycle analysis is the one approach that can provide relatively
accurate time and price projections.
"Usually, the effect of cycles is of only passing
interest to market analysts and traders, unless
the cycles in question are related to market
prices and can be used to identify tops and
bottoms of price movement movement and give indications of future price activity.” —
The Power Of Oscillator/Cycle Combinations, by Walter
Bressert. That is the challenge the cycle analyst faces.
Bressert continues, “Cycle analysis of the futures markets assumes that at any given time, current fundamental information is relative only to the current price structure, and that fundamental events will occur to move prices in the direction of the cycle.” Such an event might be a government report that greatly changes the supply or demand picture; money supply figures; utterances of Federal Reserve officials;
foreign purchases; crop failures or freezes in any part of the world; war or the threat of war; or unexpected political action such as embargoes, tariffs, or price controls. These and many other unforeseen factors can
alter prospects for the future.