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1988issue C101-4

Auditing the forty-month stock-price cycle

A 40.68-month stock-price cycle specified by 1951 can be locked as a template. Later turning points are then scored only after trend removal, and a weighted-average rerun is treated as a length check rather than a live price call.

  • Lock the 40.68-month length and phase first, then use later data only to test post-discovery-continuation of that same dominant-cycle.
  • Score later turning points after a trend-filter. A raw-price overlay can make a scheduled decline look sideways until prices are expressed as departures around trend.
  • Treat a weighted-moving-average rerun as a length and timing check. It can corroborate the 1951 period, but it drops months at both ends of the sample and is not a live price call.
  • An ideal-schedule is a timing ruler. The 40.68-month rhythm was only one concurrent cycle, so any forecast would have required the other components and the surrounding trend.
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Current trackDominant cycle detection119 readingsTrend filter137 readingsMoving average449 readings

Lock the published template

Editorial: this article teaches a post-discovery cycle audit. The published 40.68-month template is locked, later turning points are scored only after trend removal, and a weighted-average rerun is treated as a length check rather than a live price call.

A 40.68-month stock-price cycle had been specified by 1951, and later updates were used to judge whether the same rhythm still followed the extended average pattern after that definition. Editorial: that is a test of post-discovery-continuation. The length and phase stay fixed, and later data are scored against that template instead of being used to rewrite it.

A crest-to-crest interval of about 40 to 41 months in market averages had long been noted, and at times the rhythm was strong enough to be seen by inspection before trend removal or other filtering. Once that length and phase were fixed, the series was treated as a dominant-cycle, the leading periodic component under review.

Use the ideal-schedule as a ruler

Several repetitions in the 1950s and 1960s lined up poorly with the ideal 40.68-month schedule, while the most recent five up or down legs were described as visible even in the unadjusted series.

The ideal schedule placed a turning point in July 1987, and monthly average prices were reported to have crested the following August. The next ideal turning point on that schedule was a low at March 1989, presented as a timing benchmark for the cycle rather than a forecast of the market.

Score later turns only after a trend-filter

A raw-price overlay was called an inaccurate evaluation method because the cycle was defined on detrended and filtered data. The span from the February 1984 ideal crest to the November 1985 ideal trough looked more sideways than downward until those observations were expressed as departures around trend.

Editorial: later turning points are scored only after a trend-filter. The cycle is then read as departures around a local trend instead of in raw prices.

Treat a weighted average as a length check

Later work with weighted moving averages was said to corroborate the 1951 length and timing, at the cost of losing many months of data at each end of the series.

Editorial: a weighted-moving-average rerun can reconfirm a previously measured period. It is a length check, not a live price call, and it discards observations at both ends of the sample.

Read filtered-move lengths, not raw legs

In the detrended and filtered history compiled since 1789, a 20-month up or down move was the most common length. Those spans are filtered-move readings, measured in the isolated cycle series rather than in unadjusted market prices. 35 of 117 moves lasted exactly 20 months, 79 percent lasted 16 to 22 months, and observed lengths ranged from 9 to 29 months.

Average amplitude of the isolated cycle over that history was given as about 12 percent to 13 percent of trend, with a note that a sharp 1987 spike could pull that average away from a more typical reading.

Filtered 40.68-month cycle: length of up and down moves, 1789 onward

After trend and other cycles are stripped out, a 20-month leg is the usual half-cycle: 35 of 117 historical moves land exactly there, and most of the rest sit between 16 and 22 months. The bars are the Figure 2 histogram of those filtered-move lengths, not raw price swings, so a trader should treat them as a timing ruler rather than a forecast of how far cash prices will travel. Counts were read from the printed bars and locked to the article’s stated 35-at-20-months total.
After trend and other cycles are stripped out, a 20-month leg is the usual half-cycle: 35 of 117 historical moves land exactly there, and most of the rest sit between 16 and 22 months. The bars are the Figure 2 histogram of those filtered-move lengths, not raw price swings, so a trader should treat them as a timing ruler rather than a forecast of how far cash prices will travel. Counts were read from the printed bars and locked to the article’s stated 35-at-20-months total.U.S. stock prices (Foundation for the Study of Cycles filtered series) · move length in months · 1789-01-01T00:00:00.000Z to 1988-12-31T00:00:00.000Z

Lengths are measured in the detrended, filtered cycle series, not in actual stock prices. The source gives the 20-month bar exactly (35 of 117); neighbouring bars are approximate readings from the printed histogram. Average cycle amplitude is stated separately as about 12–13% of trend and is not plotted here.

Keep concurrent cycles in view

The 40.68-month rhythm was treated as only one of several concurrent cycles, and the 1987 decline was also linked to a 50-year cycle, so any forecast would have required combining those components with a view of the surrounding trend.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
5 of 31 in the Dominant cycle detection track
19891-5 pp.Next on Dominant cycle detectionWhen long-wave dominant cycles cannot be disprovedEditorial test: lock the measured series, the cycle-length, and the trough date before looking ahead.
All readings on this track · 31 readings
  1. 1982Cycle phase windows for chart signal filters
  2. 1987Constructing a cycle-scaled trend oscillator
  3. 1987Constructing a dominant-cycle grid from marked lows
  4. 1988Cycle lead from staggered exponential averages
  5. 1988Auditing the forty-month stock-price cycle
  6. 1989When long-wave dominant cycles cannot be disproved
  7. 1991Half-cycle average plot shift versus cycle attenuation
  8. 1991Half-cycle average contact as an amplitude-ratio test
  9. 1993Building a restoring-pull indicator from cycle frequency and volume
  10. 1995Regime filters for a dominant long wave
  11. 1995A cycle-tuned lead filter from bounded oscillators
  12. 1998Testable cycle rules instead of fear and greed
  13. 1999Nested Euro cycle timing as one checkable procedure
  14. 2002Constructing an instantaneous trendline from a dominant cycle
  15. 2002Half-cycle center of gravity oscillator from moving-average balance
  16. 2004Testing a locked forty-week cycle with a hold-or-sit-out rule
  17. 2005Nested timing bands for dominant-cycle confirmation
  18. 2005Dominant-cycle baselines versus policy-news narratives
  19. 2006Pairing a dominant-cycle horizon with trend and oscillators
  20. 2006A dominant-cycle split into a trend filter and residual Relative Strength Index
  21. 2007Construct a momentum difference from the dominant cycle
  22. 2007Naive dominant-cycle rules fail without crowd tests
  23. 2012Constructing a dominant-cycle forecast as a timing window
  24. 2012Open-parameter construction of dominant-cycle baselines
  25. 2013Using a second-term election to check a predeclared dominant-cycle forecast
  26. 2014Constructing a dominant-cycle forecast baseline
  27. 2014Quotient transform as an early-onset trend filter
  28. 2014Construct a trough-to-trough cycle map with the Detrended Price Oscillator
  29. 2015Dominant-cycle alignment before an earnings catalyst
  30. 2017Causal reverse exponential average for cycle and trend
  31. 2020Constructing a cycle-plus-trend oscillator from a one-wavelength chord
By fieldCycles and spectral analysis77 readingsBy year198866 readings
All 119 readings tagged Dominant cycle detection
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