Cycle Summation

For GT Blog November 03, 2009

Hello fellow bloggers

The current corrective period that began with the cyclic peak of the TSX Financial Index on September 30, 2009 is frustrating the bulls and giving the bears more hope for the big down so they can finally get long and participate in the current bull market

Some cycle work of the late, great Ian S. Notley as set out in his May 1995 publication Cycles And Methodology may provide some clarity during noisy and confusing periods such as now – so let us look firstly at the longer term monthly cycle

The longer term cycle is monitored on the charts by investors using monthly observations with one cyclic bottom juncture approximately every 4 to 4 ½ +/- years. The bull phase generally persists for 28 + /- months duration and the bear phases are generally of 15 +/- months duration. The origin of the last juncture was a bear trough in most of the major stock indices on April 30, 2009 thus aging the current bull at only 6 months.

The shorter intermediate term cycle is monitored on the charts by traders using weekly observations. The intermediate trend cycles are measured trough to trough and are 20 +/- weeks apart. There are about three intermediate trend junctures per calendar year (one bottom and two tops or two tops and one bottom). The bull skew is 12+/- weeks and the bear skew is 8+/- weeks. The origin of the last juncture was the October 2 peak in most of the major stock indices – aging the current bear skew at 4 weeks.

The very short term cycle is monitored on the charts by speculators for trading OR by traders and investors seeking to time the entry and exit of the weekly and monthly top and bottom junctures. The very short term trend cycles as measured from trough to trough are about 39+/- days apart with the bear skew spanning about 14 +/- days. The origin of the last juncture was the October 23 peak in most of the major stock indices – aging the current bear skew at 8 days

Now with our three cyclic positions mapped out we can plot a course for the broader equity markets over the next several weeks

Over the next 4 to 6 trading days the very short term daily cycle will trough and exert upward pressure on the current bear skew of the intermediate weekly cycle. By mid November the intermediate cycle will trough and set up a condition we call summed cyclicality which is the sum of the movements of all three market rhythms – in this case upward for at least 12 weeks taking us to the peak of the next intermediate cycle sometime in mid to late January 2010

So get long and enjoy

For GT Blog October 28, 2009

Don Vialoux has removed me from his mailing list in reaction to my CSTA rant last week. I will miss Don's analysis because I have an interest in the TSX listed Tim Hortons Inc. (THI) which would hopefully pass three of Don’s tests – seasonality – fundamentals and the technicals. I am weak on the seasonal and fundamental issues so I will give it a try – some feedback would help

Seasonality

Seasonal affective disorder (SAD) takes its toll on millions of North Americans each year, a condition that leads to depression, anxiety, and chronic fatigue as the winter months ensue. It's one reason why people migrate to sunnier quarters during winter season – or in the alternative remain in Canada and eat more donuts.

Fundamentals

A simple observation of the Hortons’ drive through any morning clearly shows that Canadians love their morning coffee and donuts. When the Hortons’ medium coffee cup is examined for volume it is clearly less than the McDonald's medium cup – at about the same price – this tells me Hortons’ make more money per serving – (personally I like the McDonald’s coffee)

The Technicals

The chart below displays a huge symmetrical triangle which tends to precede a major move – up or down. The lower study is a relative analysis test which is showing recent improvement in THI vs the TSX Composite. Hortons is also a “safe” place to hide when investors seek to leave the riskier assets – watch for the break to the upside

For GT Blog October 25, 2009

I am still done with the CSTA in spite of Don Vialoux’s opinion that my comments were “over the top and not in (my) best interests.”

The reality is the CSTA is the only professional organisation that allows industry professional members to use the resources of their organisation (the CSTA) for the purpose of soliciting, urging, requesting, enticing or otherwise promoting their services to individual investors.

I know because I attended many public CSTA promotions at various financial forums and witnessed CSTA members pimping their services to private investors who were initially curious about the benefits of membership. A classic bait and switch technique.

The foxes ambushing the chickens

Log on to www.advocis.ca - The Financial Advisors Association of Canada - a platform of knowledge, advocacy, community and protection enhancing the professionalism of financial advisors and planners in the best interest of the consumer. Only industry professionals can be members - scan the list of directors – no contact info – with the exception of name@advocis.ca

Scan the list of CSTA directors – the contact info is directed to their personal business enterprise. Some of the directors email reply names are almost egregious – not suitable for a professional organisation - some examples "Wi$eMoney.ca" and “analyzingmarkets.com” – only one director has non predatory contact information - Deborah Shaman, Ottawa Regional Director - ottawa@csta.org

The foxes ambushing the chickens

One would wonder why an industry pro who may - or may not have any accreditation or reputation of being a technical analyst would worm their way onto the list of CSTA directors. There can be only two answers – firstly it is an easy way to add some impressive stuff to their resumes – something like “Billy Bob is past President (or) former director of the Canadian Society of Technical Analysts (CSTA)”.

Secondly why would a director want to post all of their professional contact information on a busy web site?

The foxes ambushing the chickens

This predatory behaviour only adds to the public perception that technical analysis is “voodoo science” or “lunatic fringe” activity. The fact that holding a CMT does little to impress the regulators or the financial services industry as to accreditation is a serious problem for the profession. That is why some CMT’s will also acquire a CFA or CIM to ensure employment opportunity

Now before all you CMTs out there complain - go to Advocis / find an advisor http://www.advocis.ca/content/find-ad-form.aspx and look at the search - Financial designation options CFA, CFP, CH.F.C, CIM, CLU, CMP, R.F.P, REBC, RHU and TEP – no CMT found here

There is more – look at IIROC the list CE Accredited Courses for Cycle 4 (2009-2011) Professional Development - IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada - the link:
http://cecap.ca/cy4//en/index.php?pageNum_pd_c3_members=0&totalRows_pd_c3_members=66&mod=providers_pdc3&cyc=04&cat_type=PD

No mention of the CSTA here but one can get 4 credits by watching a presentation by Thomson Reuters Markets Academy

Don I know you were – and I quote - “sad about Bill’s comments for a number of reasons: The comments were not specific. More information about his concerns are needed by the CSTA board before it can respond.”

So there you go – specifically yours – Bill Carrigan