Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Vitas who wrote (28426)	9/20/1998 3:54:00 PM
From: William H Huebl	Read Replies (1) \| Respond to of 94695

VITA, NOT EVEN CLOSE! The RMIs (144,89) have been excellent tracking and forecasting indicators both now and 1990. The 144 is about to cross 50% after being strongly up for over 2 weeks. And the RMI patterns ARE NOT the same... this has been the worst sell-off in terms of indicators of any time period back to 1970 which is the earliest I have in my database. Bill

To: Vitas who wrote (28426)	9/22/1998 6:40:00 AM
From: Vitas	Read Replies (1) \| Respond to of 94695

The 4 year cycle - written by Dan Ascani in July: Cyclic Stock Market Decline Beginning Now: The 4-year Cycle One thing is for sure after yet another round of U.S. economic numbers this past week: it is confirmed that the U.S. economy is slowing. A slowing economy--especially one that could lead to a recession--in the past has led to anywhere from 20% to as much as 50% or more declines in stock averages, before the recession hits. After enjoying a few years of double-digit stock returns, the average investor would not likely enjoy declines in investment portfolios--even 401k or other retirement plan investments--of as much as 50%, even if stocks eventually come back in a few years. In fact, history has shown that investors who overstay their welcome without making some changes in portfolios eventually are forced out of the market with losses, and they don't typically come back for years--well after the next market bottom. So, what do investors do now? We have long observed--for many years, in fact--in our publications that it is very normal for the U.S. and global economy to slow down into recession every 4 years, and for the stock markets to fall into major lows in the process. During the Eighties and the "Roaring Nineties," as this decade can perhaps be labeled, the tendency has been for U.S. economic contractions to form a "soft landing" every other 4th year, and for a full-blown recession to hit every other 4th year. That means that every 8 years an economic slowdown severe enough to register as a recession--complete with the typical 20% to 50%+ stock market corrections--strikes. This 4-year cycle is well known to many analysts, investors, and professionals, yet it still seems to be met each time with denial by the average investor. Seems that the stock market profits of the years leading up to the 4-year cycle low are too much fun for investors to leave behind. This 4-year cycle can be spotted very easily on charts and by perusing economic numbers. Beginning in the 1970s, for example, investors familiar with the markets and the economy will likely recognize the years 1970, 1974, 1978, 1982, 1986, 1990, and 1994 as significant stock market lows. Most of those years were also accompanied by recession, sometimes severe. The exceptions, of course, were the years1986 and 1994 (there's that 8-year tendency again), when the slowdown was not severe and the economy made a so-called "soft landing." But the years 1974, 1982, and 1990--every 8th year and, correspondingly every other revolution of this regular 4-year cycle--were accompanied by severe market corrections and recession. This time around in 1998, the seeds of global recession--even depression in some parts of Asia and Japan--have been sown. It will be extremely difficult for the U.S. and European economies, as good as they have been in the years leading up to 1998, to avoid at least some damage from the effects of this global recession. But, then again, given the regular tendency for the economic cycle to manifest itself every 4th and 8th year, who could be surprised? Perhaps only those who feel the business cycle has been repealed, or that "this time it's different," as the common thinking goes when the economy is booming ahead of its cyclic downturn. Denial is commonplace, yet there is proof that the global economy is slowing, that some countries are already in recession by the official global definition (two quarters of negative growth in Gross Domestic Product (GDP). Our market commentary has noted many times the emerging evidence that the economy is slowing and that the stock market, which has already approached within a couple percentage points our long-term bull market target of Dow 9654, is staring a large-scale correction right in the eye. The 4-year cycle low is due at the end of 1998, and according to our work, by the first or second quarter of 1999 U.S. GDP growth will be negative and stocks will have staged their biggest correction since 1990--8 years ago, of course.