Showing posts with label J.M. Hurst. Show all posts
Showing posts with label J.M. Hurst. Show all posts

Tuesday, December 12, 2023

The Cyclic Theory Of Stock Transaction Timing │ J.M. Hurst

In the 1970’s an American engineer called J.M. Hurst published a theory about why financial markets move in the way they do. The theory was the result of many years of research on powerful mainframe computers, and it became known as Hurst’s Cyclic Theory. Hurst claimed a 90% success rate trading on the basis of his theory, and yet the theory has remained largely undiscovered and often misunderstood.
 

Hurst published two seminal works: a book called The Profit Magic of Stock Transaction Timing, followed a few years later by a workshop-style course which was called the Cyclitec Cycles Course (now available as J.M. Hurst’s Cycles Course). There are a number of very enthusiastic advocates, prominent traders and writers who proclaim Hurst as the “father of cyclic analysis” and confirm the efficacy of the theory (including the late Brian Millard who wrote several books about Hurst’s theory), but why is it that the theory isn’t better known and more widely used by technical analysts? There are, in my opinion, two reasons:

Firstly, Hurst’s Cyclic Theory is not “easy”. While it is beautifully simple and elegant in its essence, it is not a simple theory to understand or to apply. The Cycles Course is over 1,500 pages long, and most people take several months to work through it. 
Secondly, although the theory presented in both the Profit Magic book and the Cycles Course is the same, there is a vitally important distinction between the analysis processes presented in the two. Hurst claimed his success on the basis of the process presented in the Cycles Course, whereas many people read the Profit Magic book and go no further, with the consequence that they never discover the more effective process presented in the Cycles Course
 
Hurst defined eight principles which like the axioms of a mathematical theory provide the definition of his cyclic theory. The eight Principles of Hurst’s Cyclic Theory are:
  1. The Principle of Commonality – All equity (or forex or commodity) price movements have many elements in common (in other words similar classes of tradable instruments have price movements with much in common). 
  2. The Principle of Cyclicality – Price movements consist of a combination of specific waves and therefore exhibit cyclic characteristics.
  3. The Principle of Summation – Price waves which combine to produce the price movement do so by a process of simple addition.
  4. The Principle of Harmonicity – The wavelengths of neighbouring waves in the collection of cycles contributing to price movement are related by a small integer value.
  5. The Principle of Synchronicity – Waves in price movement are phased so as to cause simultaneous troughs wherever possible
  6. The Principle of Proportionality – Waves in price movement have an amplitude that is proportional to their wavelength.
  7. The Principle of Nominality – A specific, nominal collection of harmonically related waves is common to all price movements.
  8. The Principle of Variation – The previous four principles represent strong tendencies, from which variation is to be expected.
In essence these principles define a theory which describes the movement of a financial market as the combination of an infinite number of 'cycles'. These cycles are all harmonically related to one another (their wavelengths are related by small integer values) and their troughs are synchronized where possible, as opposed to their peaks. The principles define exactly how cycles combine to produce a resultant price movement (with an allowance for some randomness and fundamental interaction).

Name of Cycle (nominal) Av. Wavelength (Days) Av. Wavelength Harmonic Ratio
       
972 year * 353,548.8 968.22 years 3 x 1
324 year * 117,849.6 322.74 years 2 x 1
162 year * 58,924.8 161.37 years 3 x 1
54 year * 19,641.6 53.79 years 3 x 1
18 year 6,547.2 17.93 years 2 x 1
9 year 3,273.6 8.96 years 2 x 1
54 month 1,636.8 53.77 months 2 x 1
18 month 545.6 17.93 months 3 x 1
40 week 272.8 38.97 weeks 2 x 1
20 week 136.4 19.48 weeks 2 x 1
80 day 68.2 68.2 days 2 x 1
40 day 34.1 34.1 days 2 x 1
20 day 17 17 days 2 x 1
10 day 8.5 8.5 days 2 x 1
5 day 4.3 4.3 days 2 x 1
2 day 2.2 2.2 days 2 x 1
1 day 1.11 26.67 hours 2 x 1
5 hour 0.22 5.3 hours 5 x 1
160 minute 0.11 160 minutes 2 x 1
1 hour 0.037 53.3 minutes 3 x 1
30 minute 0.018 26.67 minutes 2 x 1
15 minute 0.009 13.3 minutes 2 x 1
7 minute 0.0045 6.6 minutes 2 x 1
3 minute 0.0023 3.3 minutes 2 x 1
       
* Ahmed Farghaly, 2015 (eg.linkedin.com/in/ahmed-farghaly-a5825637)  
 
These eight simple rules distinguish Hurst’s theory from any other cyclic theory. For instance most cyclic theories consider cycles in isolation from each other, and cycles are often seem to 'disappear'. By contrast cycles never disappear according to Hurst’s theory, but they may be less apparent because of the way in which cycles combine. It is the fact that Hurst’s theory stipulates that there are an infinite number of cycles that makes it particularly different, and also begins to explain why it is impossible to forecast price movement with 100% accuracy. Just as it is impossible to conceive of the sum of two infinite numbers, it is impossible to define the result of combining an infinite number of cycles.
 
Reference:
 

Sunday, October 16, 2022

Panic & Stock Market Crash into End of October ? | Lars von Thienen

Lars von Thienen (Oct 16, 2022) - The coming weeks from October 17 to October 30 will be fascinating. One of the critical time cycles that will come into play next week are the so-called "Dark Days" cycles of past crashes.
 

[...] The chart shows us 4 cyclic patterns now in place surrounding market panics:
  1. The “Dark Days” fall on 21.-22. October next week. Compared to 1929 and even if the markets have already gone down, this has given the index another -30% correction with extremely heavy selling.
  2. The leading movement is synchronized with the Jewish High Holidays: From a leading top in the market (point 1), there is a correction to Rosh Hashanah (2). Rosh Hashanah marks the beginning of the Jewish calendar. From there, a very small rally begins, ending on Yom Kippur (3). Yom Kippur is the emotional climax of the Jewish faith’s high holy days. This cyclical pattern is not well known - but has been seen in all major crashes in the past. See also the alignment in the chart in 1929.
  3. The next cyclical pattern which is seen at financial panics is the so called “Puetz crash window”. According to that pattern, all US crashed had the same important 6-weeks-window signature around a solar eclipse. According to that pattern a panic begins near a full moon that occurs within 6-weeks of a solar eclipse. This year, the solar eclipse occurs on 25. October.
[...] The cyclic configuration we recognize here is unique and does not occur frequently in this bundling.
 

Saturday, October 21, 2017

Russell 2000 Index vs 4 Lunar Month Cycle


Next week the solunar bias for stocks remains positive. However, in the Russell 2000 Index the net outcome could be almost neutral, since the continuation of the 4 Lunar Month Cycle would suggest the following choppy market action: Oct 23 (Mon) dip-down, close near opening; Oct 24 (Tue) from morning high above Monday close, down for the rest of the day - possibly to low of the week; Oct 25 (Wed) up; Oct 26 (Thu) from morning high of the week, sideways-to-down to low above Tuesday; Oct 27 (Fri) sideways. Heavy Cosmic Clusters will be modulating the geomagnetic field during this current weekend, and preparing for a mixed mood setup next week (Oct 21 = MER par NEP, MER 150 URA, NEP 045 EAR, SAT 120 EAR - all heliocentric; Oct 22 = SUN into SCO, MAR into LIB, and MER cp JUP, MER cp SAT, VEN 000 MAR, VEN 180 NEP - heliocentric). On Oct 26 (Thu), Jupiter will conjunct the Sun, and from a heliocentric perspective the Earth will be opposing Jupiter, and Venus trining Pluto. US-stock indices are in the latter stage of the first and very bullish 10 Week Cycle within the 40 Week Cycle that started with the Solar Eclipse from the August 21 major low. This cycle may peak as late as Oct 30 (Mon), and is expected to bottom in early November. Afterwards the main indices should rise to new highs.

Friday, March 24, 2017

Sunday, October 9, 2016

SPX vs 93 Trading Day Cycle + US Election

93 Trading Days135 Calendar Days19.3 Weeks4.5 Months0.37 Years.
Regardless of the election outcome, in November and December the S&P 500 advances 72.2% of the time.
(
Source: Jeff Hirsch - see also HERE)
Stan Harley: November 8 (Tue) = Cycle Low in Stocks + Crude Oil (HERE)

Thursday, June 9, 2016

CHF Long Against EUR + USD | EUR/USD to Double | Cyclic Vibrations

Ahmed Ferghaly's latest cyclic analysis of currencies searches for possibilities to long against the USD in the upcoming
environment. EUR and USD are likely to perform a continued, maybe drastic devaluation towards the CHF into 2019.
Then the recovery rally of the EUR is expected to last into late 2023
(HERE + HERE)
In this 18 Year Cycle the EUR should double to the USD (HERE).

Saturday, April 14, 2012

The Kondratieff Cycle And Subdivisions

The economic long wave is a boom and bust cycle driving the global economy, first discovered by Russian economist Nikolai Kondratieff in the 1920s. Kondratieff was researching debt, interest rate, production and prices when he discovered the economic long wave. The Long Wave Dynamics approach calculates the ideal Kondratieff long wave cycle as 56 years in length, but it can run long and short in Fibonacci ratios to the ideal length in time.



The current long wave is of the long variety and began in 1949. Current analysis suggests that the current K-wave will end in 2013, running eight years and a Fibonacci ratio of 14.5% longer than the ideal 56 years. 



The late renowned Harvard economist Joseph A. Schumpeter, author of the book Business Cycles; A Theoretical, Historical, and Statistical Analysis of the Capitalist Processbelieved that the economic long wave is the single most important tool for economic prognostication.


The current long wave is now in the Kondratieff Winter season. Most investors wish they had access to this long wave season chart in 2007. Every long wave has four seasons, just like a year. The approximate length of a long wave season is 14 years, but they can run short and long. Each season typically contains four Kitchin cycles with an ideal length of 42 months. However, long wave seasons can have fewer or more Kitchin cycles than the normal four.





www.escholarship.org
 

















































The Kitchin Cycles: Harvard’s Joseph Schumpeter concluded that every long wave was made up of 18 smaller business cycles or Kitchin cycles. In more recent years, with more sophisticated charting technology and market analysis, the research conclusions of market analyst P.Q. Wall, that the long wave is make up of only 16 market cycles, has been validated. This is an essential distinction in cycle research.

Schumpeter’s model of how all the cycles worked together to produce long waves included Kitchin cycles (the regular business cycle of 3-5 years) and Juglar cycles (7-11 years), with three Kitchins in each Juglar. Schumpeter also wrote of the Kuznets cycles (15-25 years), but didn’t put them in the charts below. The chart depicts the flow of the Kitchin and Juglar cycles integrated in 56-year long wave cycles. Note that Schumpeter’s model presented 18 business cycles in a regular long wave. See: schumpeter_business_cycles.pdf
Market cycles differ from business cycles in that they are identified on an index chart, and not necessarily in the economic data as a business cycle. However, they often correlate to the regular business or trade cycle. Every long wave appears to be made up of 16 market “Kitchin” cycles.

Chart 15.2 Kitchin Cycles Since 1982
The chart above demonstrates our count of the 15 Kitchin cycles that have come and gone in the current long wave since 1949 using stochastics. We are currently in cycle number 16, with its expected conclusion in the year 2013.

The 16 Kitchin cycles that make up a long wave are ideally 42 months in length, but they are rarely ideal and fluctuate in length both short and long, often in Fibonacci ratios of their ideal length in time. In each Kitchin Cycle there are ideally 36 dips or 36 Hurst "5 week" lows.






The Kitchin Third: The ideal Kitchin cycle is 42 months or 1277.5 days in length, the ideal Kitchin Third is 14 months or 425.83 days. A Kitchin cycle is made up of 9 Wall Cycles, therefore each Kitchin Third is made up of three Wall Cycles. PQ Wall had a general rule of third last and weakest. This goes for the final Kitchin Third in a Kitchin Cycle, but also goes for Wall Cycle #3, #6, and #9, or the final Wall Cycle in each Kitchin Third. The Kitchin Cycle often unfolds in the three Kitchin Third sections, but the Kitchin Third is not typically as distinct as the other cycles.

Kitchin 3rds
The chart displays the full Kitchin cycle #14 in this long wave, which began on September 1, 1998 and ended on October 10, 2002. This Kitchin cycle, like most in the current long wave, ran long. Therefore, the Wall cycles and Kitchin 3rds also ran longer than ideal. The nine Wall cycles and three Kitchin 3rds are all clear in this Kitchin cycle
Schumpeter’s model of how all the cycles worked together to produce long waves included Kitchin cycles (the regular business cycle of 3-5 years) and Juglar cycles (7-11 years), with three Kitchins in each Juglar. Schumpeter also wrote of the Kuznets cycles (15-25 years), but didn’t put them in the charts below. The chart depicts the flow of the Kitchin and Juglar cycles integrated in 56-year long wave cycles. Note that Schumpeter’s model presented 18 business cycles in a regular long wave.

The Wall Cycle (aka 20-Week Cycle):  The Wall cycle is the ideal trader’s cycle. Accurate technical analysis of the Wall cycle is essential for stock market traders. If you divide the ideal 56 year long wave by 144 you have the ideal Wall cycle. The mathematical relationship of these cycles indicates the Wall cycle is a miniature long wave. The approximate 20 week cycle (141.9 days) fluctuates short and long by Fibonacci ratios to the ideal length.
Wall Cycle
The chart presents the Wall cycle that ran from July 8, 2009 to February 5th 2010. The Wall cycles are currently expected to be running long due to government stimulus and aggressive monetary policy. If the ideal Wall cycle is 141.9 days, then an exact 50% extension of that is 212.85 days. July 8, 2009 plus 212.85 days is February 5th, 2010.

The Quarter Wall Cycle (aka Trader’s Cycle)

Quarter Wall Cycle
This chart is an example of the four Quarter Wall cycles in a Wall cycle in the DJIA and 8,5,5 stochastics. This is the Wall cycle that ran from October 10, 2002 until March 12, 2003. Tracking the Quarter Wall cycle is of critical importance for traders.
As the name implies, the Quarter Wall cycle reflects that the Wall cycle tends to unfold in four sections, or Quarter Wall cycles. The Quarter Wall cycle is a mini version of the long wave season. The ideal Quarter Wall cycle fluctuates in Fibonacci ratios in time relative to its ideal length of 35.475 days.The Quarter Wall is the critical cycle for traders.  Just like the other cycles, the Quarter Wall will run short and long relative to the ”ideal” in Fibonacci ratios in time. The forecasting power of the Quarter Wall forecasting tool is often startling.


"There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures."

 William Shakespeare

"By the Law of Periodical Repetition, everything which has happened once must happen again, and again, and again - and not capriciously, but at regular periods, and each thing in its own period, not another’s, and each obeying its own law … The same Nature which delights in periodical repetition in the sky is the Nature which orders the affairs of the earth. Let us not underrate the value of that hint."

Mark Twain