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THE
MAGNIFICENT SEVEN Background:
The Old Bull Market Rumor (Never finished out of the money in a year ending in X5 – wait until 2005?): Charts 1 - 3 show the updated Magnificent Longwave (Weekly) Cycles riding thru the NYSE today and into the future. The filter sum of sixteen weekly cycles is shown on each of the attached charts. Chart 1 shows the updated predicted waveform for the NYSE Composite Index thru 2005. A second (but lower) top is being predicted for June/July 2005 (War with Iran?). This top will be chaotic and may or may not be higher than current top in Feb/March 2005. The “topping formation” ongoing in the NYSE is probably the formation of a “right shoulder of a ten-year formation” in the NYSE Composite Index. After the second top in July 2005 the trend definitely becomes downward in the NYSE Composite Index (for next two years to come 2006-2007). This chart also suggests some type of “political or financial” crisis or event occurring in March/April 2005 which may trigger a sharp sell-off. Chart 2 shows a possible bear rally attempt in the NYSE in July 2006 off a market bottom (doomed to failure) as the major longwave weekly cycles are headed down with the dollar (no real bull market but the hype should be good). There is a possible sharp but short term rally in late 2005 (off market low) into April 2006. There is currently predicted another sharp drop in the NYSE from April 2006 thru July 2006. The net result is either another secular bear wave down or possible sideways trading market (net for the year). Chart 3 shows a sideways trading market in early 2007 following a possible major bear rally in mid-late 2006 thru early 2007. However, after a major NYSE top forms in early 2007, the NYSE is predicted to suffer a dangerous decline again (4th wave down?) into 2008. This is currently predicted to be the most significant downside move (2007-2008) in the NYSE in period from 2002 thru 2009. This may coincide with a major rally in foodstuff commodity prices as corn and soybeans (possible China food shortages) become in short supply due to “famine cycle” (2007-2009) and gold becomes a financial asset again to the investing public (it be way too late in the day to get into gold after bottom in 2006 – should already be slowly investing in precious metals). Overall 2005 is going to be an exciting (roller coaster) year – and for you secular bears we have continuing natural disasters. More money than ever being printed and grizzly-type debts. Also, the prairie dogs are getting soaked from ongoing floods worldwide as they watch for the coming Financial Storm. The Last Stagecoach out of US (2013): Chart 4 shows the actual 800-week cycle in NYSE Weekly Composite Index from 1958 as it continues to grow in amplitude (this cycle is a growing instability in the NYSE whose amplitude directly correlates with huge credit expansion in US in last 25 years). It is predicted this cycle will bottom in 2009 (taking the market down thru 2008) and this will “mark an end to the current secular bear market – or so we will think”. If this cycle continues along its current trajectory, the 401 (k) and savings of the Baby Boomers will pour into the worldwide market from 2009-2013 (along with privatized Social Security account money – watch and see a huge double top form in 2012-2013) causing the greatest NYSE market rally of all time (it is going to be wild!). After this cycle turns, it will bring down the NYSE thru 2013-2018. It may wipe-out 50%+ of the NYSE gains in the following subsequent years from 2013-2018. Asian stocks and bonds may come into vogue after 2012 (following a Chinese Recession). These events will eventually lead to the US Dollar ceasing to be a worldwide currency and global resource “wars” will have drastically changed the financial landscape unless Mother Nature or “dominoes” derivatives trading decides to do it first. Large Weekly “ Cycle”: Chart 5 presents one of the largest current cycles in the NYSE Composite Index (the 150-week cycle) which appeared in 1979. The cycle amplitude has been growing since 1987. The cycle is now starting to accelerate downwards and will bottom in March 2006 and eventually lead another significant rally in the NYSE into a top in 2007. This cycle will start to take the NYSE down in 2007 thru 2008 (but not before we hype China’s growth and investment opportunities leading into 2008 Olympics) setting up a major rally in the NYSE in 2009 There is a significant situation developing in the NYSE in 2008 in which a majority of the major long-wave cycles will be heading downwards leading to a final NYSE market bottom in early 2009.
DISCLAIMER: The author is neither a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources as well as his own software. Of course, the author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments. CONTACT
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