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Chapter 5. Political, Seasonal, and Time... > The 18-Month Market Cycle with a Rat...

The 18-Month Market Cycle with a Rate of Change Confirming Indicator

Synergy Between Rates of Change and Cyclical Patterns

Chart 5.5 further demonstrates the regularity and power of significant market cycles—in this case, the powerful 18-month market cycle that produced very regular and powerful market fluctuations for the full nine-year period between March 1995 and March 2004. The idealized cycle lines shown on the chart are evenly spaced. Virtually no adjustment appears required to allow for the usual variances in the actual lengths of time between cycles, particularly cycles of this length.

Chart 5.5. The Standard & Poor’s 500 Index and the 18-Month Cycle (March 1995–March 2004)

Longer-term market cycles often break up into 18-month cycles, which are reflected on this chart. A and B waves are quite distinct, rising during the bull market periods and falling during bear market periods, clearly expressed in price movement as well as in the patterns of a 50-day rate of change indicator.



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