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doc

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Reply with quote  #1 
Hello all,

Hurst update: I have posted sparsely since July as the sudden shortening of the 20wk cycle by 2.5wks caught me off guard. In retrospect, should have been expecting it due to 1) The 80wk low was running 2-3wks late and 2) The sudden gush of liquidity as per all money flow measures.
Also, the Sept 2nd, 10wk low off the July 8th 20wk low seemed a bit early too and John (Silent One) was the first to recognized it for what it was. With those two basic markers for important lows, the phasing has been fairly consistent since and much easier to follow for me. I was able to correctly predict the 40wk low way ahead of time as falling around Nov 2 and it did. I still had to hedge back in Oct with my alternate phasing of a late July 20wk low, but the move out of the Nov 2 low in my mind makes it clear that it was the 40wk low. It is also very consistent with the other 5wk lows as you will see below.

Here is a summary then of the phasing as I have it and true to Airedale's phasing through last year. I am much more confident now (usually are warning sign to be open to other possibilities, lol).

March 6, 2009 as the first 80wk low off the August 2007 4.5yr low.
July 8th as the first 20wk low off the March 80wk low.
August 5th (20TDs) as the first 5wk low off the July 20wk low.
Sept 2nd (20TDs) as the 10wk low off the July 20wk low.
Oct 2nd (22TDs) as the third 5wk low off the July 20wk low.
Nov 2nd (21TDs) as the 40wk low off the March 80wk low.

Cycles have continued to shorten since the March lows, consistent with ample liquidity, coincident with the meteoritic rise of the NYAD line, the Bond CEFs, and fall of the TED spread, etc.

The last 2.5wk cycle may have been 9 TDs.
The average of the last three 2.5wk cycles then is 10 TDs (10,11,9).
The average of the last three 5wk cycles has been 21 TDs (20,22,21).
The average of the last two 10wk cycles has been 41.5 TDs (40,43).
The average of the last two 20wk cycles has been 85 TDs (88,83).

We are now 19TDs (holidays included) off the Nov 2nd 40wk low.
We are also 10 TDs off a potential 2.5wk low Nov 13th.
That means that based on a very short 9TD 2.5wk low Friday 13th, it is possible that Friday morning was the 5wk low and off we go.
It is also possible that the 5wk low comes in on Mon-Wed on TDs 20-22 of the 5wk cycle, as per the lengths of recent 5wk cycles. The uncertainty then is just a matter of IF you believe the cycles are still shortening further near term, or if they've stablized at the summer and early fall lengths.

Update on the direction of the various cycle lengths:
9 yr (bottomed 03/2003) Down
4.5 yr (bottomed 8/07)  Down
80 wk (bottomed 03/09)  Down
40wk (bottomed 11/02/09) Up
20wk                     Up
10wk                   Topping
5wk                   Bottoming
2.5wk                 Bottoming


For the IT future, it is bullish that we are well above the 40wk low and came out strongly from the 40wk lows. It is near term bearish that on Friday we traded below the recent 2.5wk and 6-7 day lows. It is also somewhat bearish that the 1130-1140 target on the SPX by the 5 wk FLD has been undershot. Using an offset of 10 to account for the recent lengths of the 2.5wk cycles, I had a target of 1131 +/- 10 so 1113.6 undershot the lower boundary by only 7 points. Part of the reason may have been the huge gains on the front end made the FLD crossing so high that the target became "unattainable" due to the need to unwind the near term overbought conditions. Either way, so far it seems we are consolidating at the highs in the range of 1085-1110.
For the time being, I think that it would be reasonable to continue to invest from the bullish side as the path of least resistance and use the developing 5wk low as the first line in the sand for caution and the 1029 SPX low at the 40wk low as the final line in the sand for this rally off the March lows. If this market drops a decent amount early next week, say down to the 1075 area as suggested by the 5wk fld crossing (borderline as of Friday), then the drawdown to 1029 is not so much and if we do breakdown after the low is in place, it might be better to avoid risking that drawdown and to stand aside and wait for the next 10wk low. Also bearish is the current bearish divergence between the cumulative breadth and volume lines and price action. Also the McClellan NY Breadth Summation appears poised on a shelf to fall off of. Finally, as we continue into the end of the year, the larger cycles will continue to exert increasingly negative influence over the shorter cycles. Despite this however, this rally could continue up further quite a bit despite the negative effects of the larger cycles above, if we have been in a pseudotrends down in 2007-8 and now up since March 2009 and I believe that to drop so far so soon off the Aug 2007 4.5year low, that is a reasonable conclusion to draw. This credit crunch and stimulus recovery are classic pseudotrends by JM Hurst's description.

Here is a chart to illustrate where I think we are. This is in keeping with the phasing as previously established by Airedale with my best efforts to continue it as I think he might have.

Happy Thanksgiving holidays.

Doc

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hiker

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Reply with quote  #2 
thank you very much for the update, Doc.

I am attaching simple daily and monthly charts of the NYSE Composite Index for later reference ... and notice the $7,083 major price horizontal defines the boundary for now having a trading bias for more upside potential ($7,083 must become firm support going forward)

it now seems plausible we could be in for range-bound trading lasting several months?



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doc

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Reply with quote  #3 
Thanks Hiker. Support at or around these levels will be required to move substantially higher in the near term. Certainly no lower that the Nov 2 lows.

Doc
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doc

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Reply with quote  #4 
Today I had a chance to extend my analysis to include the 40wk and 80wk FLDs.

Using an offset of 17 or 18wks (represents the lengths of the last two 20wk cycles, I get an upside target for SPX cash of 1134 +/- 47 points. If I take an average of the last 3 40wk cycles, then the offset needs to be 19 or so and this gives a very unclear upside target due to multiple crosses.

Now if we include an 80wk FLD,

Using the length of the last 40wk cycle only, we get 35wks to use as an offset and the target is 1142 +/- 48 pts. I think that this is an unrealistically short FLD offset to use.
Using a 36wk offset, the target is 1194 +/- 53 pts.
Using a 37wk offset, the target is 1184 +/- 52 pts.
Using a 38wk offset, the target is 1174 +/- 51 pts
Using a 39wk offset, the target is 1214 +/- 55 pts.
Note that the average length of the last 4 80wk cycles has been 77.8wks. Therefore, using an FLD of 38-39 would be most appropriate from a historical perspective, while the 35-37wk offsets are shortened to account for recent actual shortening observed, similar to the first 80wk cycle off the March 2003 lows which ran only 73wks.

The bottom line is that based on longer cycles,
The 40wk FLDs target the 1134 area and
the 80wk FLDs target the 1174-1214 area.

Doc
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bkenjura

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Reply with quote  #5 
Thanks for posting the analysis.  I am currently going through the course.

Do you see the 5 week cycle here a potential mid channel pause of the 20 week cycle?
I am looking to sell my SDS (from sp500 1096) at this 5 week low.  Where do you see the top for this 40/80 week cycle.  First 20 week or second?  The trend seems to be pretty flat for now. 

bryan



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bkenjura

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Reply with quote  #6 

My mistake.  The more I think about it.  It seems the 2.5 week wave is responsible for the pause here.  So I guess that would make the mid channel pause of the 10 week.  Still learning.

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fib_1618

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Reply with quote  #7 
Really nice job Doc...thank you very much for taking the time in posting your work!

Fib


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bobalou

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Reply with quote  #8 
nice job...I all so see nov 3 as my, 4 mo. low..and must hold... but, can fill the gap.I all so think, the charts are moving faster..the ? comes w/ the us $ trade,,does it get a bounce?  the pig boys should hold the market up to cash in on the IRA $$...I looked back to dec of 03, and may be your work could play out the same way ??  if,, I read your timing  right. hope it's a help..

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doc

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Reply with quote  #9 

We certainly have to see where we close today and in the coming days, but, the Hurst 40wk low came in Nov 2 and the 5wk on sched last Friday for the largecaps and Mon for the small and midcaps. The risk to the downside is known if you place your stops at the 5wk lows. The upside potential is unlimited....Now let's see if volume comes in with a fresh inflow of new money from the sidelines.

Upside target on SPX cash = 1127 off the 6-7day FLD. Don't know if we can get there, but the target off the 2.5wk FLD is 1122 which is more realistic, esp if the close on Thurs was the 6-7d low.

Doc

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doc

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Reply with quote  #10 
Well the 5wk low actually was on the Dubai friday I made the post. Since then, the upside targets of 1122 or 1127 off the shorter cycles has been met. The upside target of 1134 area off the 40wk fld has also been met. There remains the upside target of 1174-1214 area off the 80wk flds. Here is the latest update:

Hurst cycles seem to be shorting more and more.

The 80wk low in March came in at 81wks and was longer than the previous 3 averaged.
From there the July 20wk low came in at 18wks (avg 9wks for 10wk cycle)
Then the November 40wk low came in at 16 wks (avg 8wks for the 10wk cycle).
Now the latest 10wk low seems to have come in at 7 wks 12/18/09 and the last 2.5wk cycles leading into that may have only been 8 and 7 TDs, extremely short. Shortening cycles is a bullish thing, so this 'bears' watching.

Now here is the status of the cycles picking up where Airedale left off:

4.5 yr cycle  DOWN
80wk           DOWN
40wk           UP
20wk           TOPPING TO DOWN
10wk           UP

The shorter cycles are a bit confusing now, likely due to year end aberrations and Airedale always advised caution using cyclical techniques during the 4wks straddling yearend.

When shorter cycles are confusing, best to stick with the longer ones. We are now 9wks into this 20wk cycle. You know the lengths of the last two were 18 and 16wks long and this one could be shorter yet in the 14-16wk range. We are still early off the 10wk low, only 9TDs, so there is plenty of time left for upside movement before the next 20wk low comes in. The shortest 10wk low has be 34TD lately.

When do we worry that we may have peaked from a Hurst perspective? Well a print of 7000 and lower for NYA or at and below 1080 for SPX would do it. Until that happens, playing this from the long side should continue to be the path of least resistance.

Doc
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bobalou

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Reply with quote  #11 
thx,, do you have any thing about the 2/4/10 time frame ?
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