WINNING INVESTMENTS with EXCHANGE-TRADED FUNDS SYSTEMS TIPS First visit? Notes may help >> Notes | Previous Tips          Home | Contact                  Subscribe The Big Picture & the Exact Day How to Pick the Date the Market Will Turn by Looking at Outposts of Change Chart below first posted August 17, 2008 (see Note) Updated as of today, February 5, 2010 See Comments Note. See complete details here first, then continue below. When this chart was first printed, the Dow had already fallen to 11660 (August 2008), readying for the final crash dive to 6500 (March 2009) seven months later. Was that the final bottom? If the cycle work is correct, the trough event still lies ahead, within the range identified two years ago that still stands. See the left and right pennants at the base of the last set of outposts. The right pennant off the last post extends to September 26, 2012. In the meantime, a short-term turning point manifests next week on Monday, February 15, in the next chart below. Is it valid? How do we know? Note that the middle post is higher than the other two. This indicates a peak turning the trend from up to down. Why? Because of corroboration by earlier episodes in the same cycle. A cycle, by definition, is a phenomenon that repeats. The following two charts show the previous corroborating episodes over the last 85 years. As I discuss them here, it may help to open another browser and scroll through them there with the text here. This middle chart contains the 1974 bear-market bottom. Note that the middle post marked the absolute low for that two-year bear market. The 12/13/1974 turning point after the nearest preceding down trend had been in place at least five months or longer. In other words, there had to be in place a long-enough trend important enough to merit an important reversal. The date of that turning point corresponds exactly with the current cyclic date trend-turning point of the first chart, 2/15/2010. A single correspondence hardly makes a proof, but it's a good beginning. The next previous cyclic trend-turning point occurred on 9/13/1939 (bottom chart). That is the exact cycle date that corresponds with each of the other two. All those dates belong to the entire family of dates from time immemorial to the infinite future that occur with exact precision during the course of the great 36-year cycle that we have studied before. The correspondence with price behavior here evinces the trend reversal pattern. The peak or trough of the price trend arrives after a five-month or longer previous trend has been in place. But two correspondences are, of course, not proof. You cannot even assign mathematical probability to them. What one does then, is to turn to other unrelated cycles (actually all cycles are inter-related--perpetually) that may be reaching culmination in the specific target-date area that we scrutinizing, February 15, 2010. There are at least six that have impact on this date. That improves the odds. I don't propose to go into them here. It would make this quick tips sheet at least six times as long and them some. This is not the platform for a detailed, comprehensive, total study of all that relates to next Monday's proposed peak price day. For someone who decries forecasters and forecasting, I surely must seem hypocritical, if not heretical. I plead innocence to both charges. It is not hypocritical to condemn something while at the same time probing it to see if it can be proven. Not is it heretical to hold the possibility of something which the authorities condemn or at the best ignore. Both authority and the public are slow learners. Fifteen hundred years after Ptolemy, Copernicus was both commended and condemned for holding (1543) the earth revolved around the sun and not the other way around. Worse, Galileo was tried and found guilty by the Roman Inquisition, vehemently suspected of heresy for the same beliefs which Galileo held, rightly, to be factual--sentenced to prison, and commuted to house arrest for the rest of his life (1635). It took another 200 years for their works to be removed from the Church's Index of Prohibited Books. Now, cycles theory has ancient and honorable precedents and adamantly factual proofs in modern times, at least with respect to astronomy and planetary behavior. Perhaps something is transferable here to stock-market-behavior theory. I condemn the current state of the art of forecasting social, political, and financial matters. I am open to proof of its possibility or certainty. Caveats. Too few observations for statistical probity (an oxymoron?). But that's always the problem with long cycles. And once you get a handle on, say, the 36-year cycle, and it misbehaves, you conclude that suggests evidence of a bigger, longer cycle(s), not yet accounted for, coming in and trumping the runts, twisting their carefully calculated expectancies even to the point of upside-downess. Monday will be the peak, or not. It may be a point of acceleration or simply march sideways beyond patience. We shall see. Written 2/3-2/8/2010 Posted 2/8/2010 11:30 p.m. ET Back | Subscribe © 2010 The 2000 Corporation. All Rights Reserved.