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The study of Cycles
Cycles are everywhereCycles are a fact of Life, and while some have obvious origins like the seasons, others like the Sun spot cycles are not well understood. Many Cycles can be explained by the movements of the Moon or Earth relative to the Sun. Cycles in the activity of the Sun are now suspected of having an effect on both short and long term weather patterns such as ice ages and global warming. Studies on recent climate change like the little ice age of the 1650, shows that the change occurred quickly and may be tied to the decrease in Sun spots during the period. While it is not well understood what is causing these cycles, it seems that the regular movements of astral bodies may be a good place to investigate. It makes little difference if they are the cause or are affected by the same cause as other coincident phenomena.
The pervasiveness of VibrationsCycles are in effect an oscillation with a long enough period to be noticeable in a human time frame. Our ability to scan the spectrum of frequencies has been constantly increasing over the years. From the study of very low frequency elephant rumblings that can be heard across the globe, to the very high frequency Cosmic ray background radiation, the source of which is still debatable. The discovery and manipulation of this spectrum has been the source of the greatest gifts to mankind, from the humble beginnings of language and music, to the benefits of Radio, Laser, X-rays, Computers and Microwave communications and cooking.
The source of VibrationsThis excerpt from an article on Spectroscopy and its use in revealing the composition of the universe explains well the natural oscillations unique to each substance.
"During the first half of the 19th century, scientists such as John Herschel, Fox Talbot, and William Swan studied the spectra of different chemical elements in flames. Gradually, the idea that each element produces a set of characteristic emission lines has become established. Each element has several prominent, and many lesser, emission lines in a characteristic pattern. Sodium, for example, has two prominent yellow lines (the so-called D lines) at 589.0 and 589.6 nm - any sample that contains sodium (such as table salt) can be easily recognized using these pair of lines."
This concept is being taken even further with the string theory of the universe, where each particle is a quanta of energy vibrating at a unique set of frequencies and hence having different properties. This must be close to the truth, since we have known for some time that light can behave as a wave or particle, revealing the closely knit relationship between the two. It is also known that oscillations create Harmonic Resonance at certain multiples depending on the shape and form of the substance. The interactions involved become complex rather quickly, but the concept of an atomic spectra resonating into larger periods based on the shape and form of the chemical substance has a parallel with known phenomena. More on the subject can be found here.
How can they affect Man?How these minute oscillations can affect the behavior of Man is poorly understood, or even scoffed at, but the evidence in many series related to the actions of Men are readily detected. One such series is the well known Federal Reserve short term interest rates setting decisions. The following table and chart reveals a statistically significant clustering near 50 and 60 months.
 [size=-1]Charts courtesy of StockCharts.com
[size=-1]Charts courtesy of StockCharts.com
We are constantly bombarded with background cosmic radiation, radiation from our Sun, but also radiation from the planets, since every body in the universe emits radiation of its own and/or reflects radiation it receives. Since it has been shown that the brain detects and functions with extremely low signals, it is not impossible for us to subconsciously pick up the resulting Harmonic or Discordant radiations hitting the Earth at that time. This is actually a very sound basis to explain the cause and effect of Astrology, since angular positions of the planets in 30, 60, 120 degrees are considered Harmonic and 45, 90 are seen as discordant. The angles of 0 and 180 degrees are less certain but the consensus leans towards discordant. If you think this is ludicrous, then you should read the research from Nelson at RCA in the 50's into the disruptions caused to Atlantic radio communications by the 90 degree angles between planets. The full article can be found here.
 Since an harmonious piece of music can improve our mood, and an annoying sound can certainly raise anger, it is not that far fetched to believe we could be affected as radio transmissions are, when these discordant radiations hit the biosphere. We also detect great variations into what is considered harmonious music and annoying noise by any given individual. As such we would expect different reactions from individuals depending on their sensitiveness to the current radiation, based on their own rate of vibration or taste. This is exactly what ancient lore about Astrology describes, and the references in the Bible to watch the stars for guidance are plenty. Since the largest monuments ever built on Earth are from ancient times, and are full of advanced knowledge about Astronomy and Geometry, we should not brush away the Geometry of the Stars as insignificant.
Practical uses of CyclesEdward Dewey was a recent promoter of the study of Cycles and wrote "Case for Cycles", but other well known figures include Kondratieff, Benner and more. Generally, the longer term cycles are both easier to detect and more reliable than shorter cycles, since Harmonic Resonance guarantees an increasing amount of short term cycles as the time frame is shortened. Our understanding of the substance origin of Cycles, would suggest that elemental substance series like the price of Metals would be less complex to analyze than the various influences involved in the SPX for example. We generally find this to be the case with obvious 3-5-8 year cycles in Gold and 10-20-30 year cycles in Oil, but with regular long term cycles in the SPX harder to detect except for the 4 year cycle.
Detecting CyclesThe most common error in the study of cycles is concentrating on a major cycle and ignoring the effect of other cycles readily apparent. Because a particular cycle is dominant in this part of a larger cycle, does not mean it will be in a latter part of the same larger cycle. This is best seen in the following charts of the CRB index with ever increasing time frames. In the 25 year chart we can clearly see that the 8 year cycle highs which worked so well in 1980, 88 and 96 is no longer the dominant cycle since the larger 30 year cycle turned up likely in the mid 1990's. Similarly the 8 year cycle lows that worked so well in 1986, 1992 and 1998, is also not so dominant now that the larger cycle likely turned up. The larger 30 year cycle can be detected in the 13 + 17 years periods apparent in the 50 year chart, but also in the 200 year chart with highs in the PPI in 1920, 1950 and 1980. There are more cycles apparent in the 25 and 50 year chart with some highs and lows unaccounted for.
[size=-1]Charts courtesy of StockCharts.com
[size=-1]Charts courtesy of StockCharts.com
The 200 year chart also displays a much larger 100+ year cycle in the CRB which made a low in 1900. This change of 100+ year trend also marked a change of period from the previous ~50 year highs near 1810 and 1860 to the current 30 year cycle. We can also see confirmation for this 100+ year cycle in the 300 year chart, with a high in 1865, a low in 1932 and the next projected high of this wave as follows: 1932 - 1865 = 67 * 2 = 134 year cycle or 1932 + 67 = 1999. However we do not have sufficient data to be sure of the exact period of such a large cycle, nor any guarantee that it will be an exact turn. The 200 year chart shows that we are in the fourth advance since the 1900 low. This is a Wave 7 (not Elliott Wave) and probably the last one, since waves are progressively rarer as we move from Waves of 1 to 3, 5, 7 etc... divisions, as predicted by the laws of probabilities outlined by Blaise Pascal. Since the first two waves up from 1900 and 1932 both lasted 20 years, and the last one from 1970 lasted only 10 years, this one will likely be 10 years or less and could end near 1999 + 10 = 2009 or 2002 + 10 = 2012.
[size=-1]Charts courtesy of StockCharts.com
[size=-1]Charts courtesy of StockCharts.com
Geometry and Cycle behaviorThe behavior of Cycles is best evaluated and validated using Geometry to give a relative point of reference. When this is done properly, a number of behaviors can be observed and their predictive value studied. The following chart of the Yen demonstrates many of these, starting with the well known inversion phenomena that makes using cycles more difficult. Inversion usually occurs when a larger trend is reversing as can be seen in the Yen with the break of the 15+ year uptrend in 1996. Such inversion are usually a sign of a corrective wave within a larger wave. The next easily observable behavior is the higher highs or lower lows analysis so well known. In the 15+ year uptrend higher highs and lows were seen without exception confirming the upward trend. Since the break in 1996 we have not seen any lower lows, even though two such cycles have gone by already, and we have not made any new highs either. This is suggestive of a corrective wave and possibly the next cycle high in 1996 + 15 = 2009 will make a new high and start a new ~15 year uptrend. The final behavior that confirms the tight relationship between Geometry and Cycles is the Price target established by the intersection of the parallel channel with the 1991 cycle low producing a price target reached almost two years early.
[size=-1]Charts courtesy of StockCharts.com
[size=-1]Charts courtesy of StockCharts.com
Damped and Driven OscillationsThis dynamic element of Cycle and Geometry analysis is probably the most predictable and is a favorite of traditional T/A in the form of wedges and triangles. They are intuitively believed to be coiling actions that lead to forceful breakouts that most do not try to predict the direction of but just hop on for the ride. This is not far from the truth and more can be learned here. Expanding triangles denote a driven oscillation that is bound to fail in many contexts due to exceeding the limits of an element involved in the oscillation. The fact that it is driven usually means a change of trend is near as the conviction of both parties (one right - one wrong) increases with each wave. If the triangle is directional, the trend will continue in the direction of the triangle after the expected failure and pullback. If the expanding triangle is symmetrical then like most symmetrical triangles it is a continuation pattern, and usually precedes the last wave in the trend. Constricting triangles are the best known and show both parties in doubt as each wave shows less conviction. This usually means both parties will go with the break giving the powerful trending moves traders have come to rely upon. We can see both types of triangles in the chart of Palladium with a clear one year expanding triangle after a two year drop, followed by the failure and the resulting constricting triangle for almost one year. As expected we broke out, not unlike Silver did on a larger scale since Palladium spent 11 months building its constricting triangle while Silver spent 12 years. The base building of both charts are also similar with Palladium spending 7-8 months building a base and Silver doing it in 9 years. It could even be argued that the reverse SPX chart below is showing similar behavior with a 50% larger scale than Palladium and forecasting a sharp decline in the SPX until 2008.
[size=-1]Charts courtesy of StockCharts.com
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发表于 2008-5-22 14:56:22
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