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Created on: 10/19/2011 6:46:00 PM   Last Update: 10/20/2011 9:00:49 PM Posted by: RTT
WARNING: This entry is 3746 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.

1 POST Cycles produce one of the most powerful signals Part One
cycles-produce-one-of-the-most-powerful-signals-part-oneCycles are very powerful. When you find a price series that has a controlling dominant cycle, all one needs to do to profit from it is execute a timing method on the price series change in line with the cycle. However cycles do have an powerful signal that is a little harder to market time.

Part One: Describes the signal
Part Two: Where we expect the signal to occur next.

First we re post the chart below from our Jim Hurst method education page.

Click for popup. Clear your browser cache if image is not showing.
Inversions

The powerful signal I refer to is when the price action inverts to the cycle (Inversions). This means that the price action is so strong it is breaking the behavioral habits of its preceding history. Or more bluntly something has changed in the price series to give it such determination to break the cycle swing. In the chart above the inversion is seen as massive price strength for the bullish side. This was caused by QE1 for the record.

A cycle inversion occurs because of two reasons:
1) A new or existing very strong fundamental development in the price series that gives price action the impetus to be very strong.
2) Or, of course, the cycle period is losing its correlation to the price series. This must be considered, however when the cycle is very strong and inversions are infrequent then (1) is more likely.

Consider this blog we posting : Long term interest rate cycle Bernanke doesnt want to see . We expected bonds to get stronger (interest rates higher). The cycle was perfect and fundamentals. Everything apart from the bearish distribution pattern found on the SP500 that result in a 16% sell off (August 2011) and thus caused folks to buy US Treasuries in mass. Who would have thought that will all the money Federal Reserve printing and the talk of US paper being rubbish that the world would see 10yr bond under 2%. Seriously! The truth be known we though the rise in long term bond yields would cause the SP500 sell off, it just turned out Europe woes beat the higher interest rate fundamental story to the front page first. The fun with fundamental analysis.

The SP500 sell off was the new fundamental reason that broke the cycle in the bond market. The result was a cycle inversion which resulted in a very strong move in bond prices. Hence the reason why cycle inversions on long term cycles are very powerful signals. (NOTE: Cycle inversion on short term cycles is never so dramatic, for the simple fact they are short term)

This is what happened..
Click for popup. Clear your browser cache if image is not showing.
YNX Inversion


We use long term Hurst cycles on bonds, commodities, stocks, currencies and metals for the smartest intermarket analysis possible. Part two we will put a case forward for the next powerful long term cycle inversion signal.



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NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.

Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, Cycles, Wyckoff and Ney logic is the best way to ride the change, after all these methods have been used successfully for 70+ years. This post is a delayed and small sample of what is avaliable to members. Sign up to enjoy the full service.


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Investing Quote...

"Stock market technique is not an exact science. Stock (and commodities) prices are made by the minds of men (and women). Mechanical trading methods or mathematical formulas cannot compete with good human market judgment."..

Richard D Wyckoff


.."It's easier to fool people, than to convince them they have been fooled"..

Mark Twain


..“Bull markets are born on pessimism, grow on scepticism, mature on optimism and die of euphoria.”..

John Templeton


.."The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market."..

George Soros



..“Because of the extreme challenge, one must commit full attention to it.” Market speculation is “no different than trying to be a successful doctor or lawyer … you simply must devote yourself full-time to the study of your craft”...

Bernard Baruch




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We at readtheticker.com hold the view that a mix of stock chart technical analysis, Richard Wyckoff, William Gann and Jim Hurst methods plus market fundamentals allows the investor to formulate a very sound market opinion. These attributes are mutually inclusive and must be weighted equally before investing or trading in any Stock, ETF, Currency, Bond, Commodity, CFD or Mutual Fund



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