With the market perhaps in the midst of a meaningful correction (or not!), we thought it would be a good time to check on what the cycles have to say about the rest of the year.
Although the mood of the market is fairly dour at the present time, there is some good news to discuss. You see, our cycle composite work suggests that (a) we’ve likely seen the worst of the selling and (b) it will be mostly uphill from here until New Year’s eve.
For anyone new to cycle work, the cycle composite is a combination of the one-year seasonal, the four-year Presidential, and the 10-year decennial cycles – all going back to 1928.
By combining these three cycles, a cycle composite is produced. And while expecting the market to follow the cycles exactly is just plain silly, it is surprising how often the market tends to follow the general direction of the composite – especially when viewed from a longer-term perspective.
To review, we don’t make predictions about the stock market. However, the cycle composite can be a valuable guide regarding what may come next in the market. Remember, history never repeats exactly, but it does often rhyme…
David Moenning is Mr. Moenning is President of Heritage Capital Research, a privately owned, investment research firm. Heritage focuses on active risk management and an “own the best and ignore the rest” equity selection strategy.
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Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.