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NYSE
COMPOSITE INDEX PREDICTED THRU JULY & AUGUST 2004 Background: This is an update to the previous May 2004 NYSE Composite Index prediction published on www.financialsense.com. It will be updated on a regular future basis to see if we can predict the future in the NYSE’s broad waveform. Of course, we all know the markets cannot really be predicted so this is probably just a bad science experiment!? Since the smallest cycle considered is about 7 days, this prediction is of no value in “day trading” and may well be off by several weeks as to intermediate tops and bottoms. That having been said…………. There continues to be gradual but significant shifts in the long term cycles of the NYSE Composite Index. The regular 800-day cycle has shifted to about 853 days and the old 1410-day cycle has moved beyond 1600+ days. It appears from some preliminary neural net research, this may be attributed (i.e., correlates highly) to the growth of M3 money supply as well as increasing consumer debt. These neural net researches will be published in a future editorial. Research Results: Chart 1 shows the actual data versus the prediction from the May 18th dataset thru June 2004 (ok, just a lucky guess). The waveform is being dominated by the smaller cycles as some of the larger cycles are making bottoms (lack of volatility). Our prior comment about a coming rally in the NYSE Composite Index seems to be occurring. The NYSE has started to move up from mid-May right on schedule. This may yet prove to be a solid rally leading into early March 2005 (followed by short but sharp drop in mid-March 2005 and another final top in May 2005). This chart can be printed so a person can spill coffee on it, but beware that watching these charts can slowly become addictive. Chart 2 gives a prediction of the NYSE Composite Index for July 2004 and August 2004 (ok, let’s try again). It is predicting a continuing rally in the NYSE Composite Index followed by a possible 2-week downtrend in the next two months. However, the overall trend in the NYSE Composite Index is upwards for the next two months. Hey more good news for an incumbent political party. You may be on a M3 roll, Mr G! Chart 3 presents the trend in the NYSE Composite Index for Sept and Oct 2004. It suggests a coming downtrend for these two months. This part of some wild prediction that may change in the next two months and will be updated. It is expected a second (intermediate) top will be forming in early October 2004 followed by a downside move with a mini-double bottom in Nov/Dec 2004 and another move up to a final double top in March/May 2005. Chart 4 shows the current 850-day cycle in the NYSE Composite Index and this cycle is also present in many of the Dow components. The cycle will be making a top in November 2004 and as a consequence, the smaller cycles will become more dominant in early 2005 (leading to the top of the NYSE) for 2005. This top is currently predicted to occur in late April 2005 but subject to change without notice. Chart 5 shows the current 1600-day cycle in the NYSE Composite Index and this cycle may also present in many of the Dow components. The cycle plays a major role in the rough timing of broad NYSE bottoms. That is, after this cycle bottoms (again in late 2007/early 2008), the NYSE can subsequently suffer sudden and large sell-offs. Currently, this cycle is accelerating upwards and will be forming a top in early 2006. However, the real NYSE sell-offs happen after this cycle bottoms (with as much as 200+ day phase lag from the bottom). Chart 6 compares the 1600-day cycle in the NYSE Composite Index versus the 1600-day cycle. It appears that the bottoms in the NYSE \Composite Index occur as this cycle bottoms or after it bottoms. It is not nice to be long in the NYSE as this cycle approaches a bottom. Summary: 1. The predicted overall top in the NYSE continues to be in late April or early May 2005. The NYSE Composite Index remains in an overall uptrend for the next two months with possible downtrend after an intermediate top in October 2005. Our summer rally continues slowly upward but there maybe a sharp upward move coming in mid-July 2004. We will show the shorter time intervals on the graphs so they are easier to read – sometimes these charts are right at least 5% of the time, 2. The 800-day cycle in the NYSE Composite Index has shifted to about 850-days and almost all other long-term cycles are continuing to shift to longer periods. This phenomenon appears to correlate with growth in M3 money supply based on neural net simulations as well as increasing consumer debt (subject of a future editorial). The 800-day+ cycle can be found in all Dow components (phase groupings) – see comments about General Electric’s prediction and also carries major implications as to timing of “movers and shakers in the market”. 3. Major sell-offs in the NYSE Composite Index appear to follow the overall broad pattern of the longer-term cycles in the NYSE – particularly the combination of the 600-day, 850-day and 1600-day cycles. We have used a total of twelve cycles in the prediction (the smallest was 7 days). The 1600-day cycle is currently accelerating upwards. 4. The media hype often coincides with coming major market tops (great news at tops and bad news at bottoms – cheerleading may peak in early March 2005 just prior to the first sharp move downwards in NYSE). International events will “wash-out” of a market – usually within a matter of weeks. However, the fun continues for a little while longer and winter is still way-off. Why worry, yet? 5. “My, What big eyes you have Mr G!” :said Red Riding Hood! “Why, the better to see your moves in the markets, my dear”: said Mr G.
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