Deemer on Technical Analysis: Expert Insights on Timing the Market and Profiting in the Long Run

CHAPTER 9MARKET-BASED CYCLES

Cycles are a very important part of a market analyst’s toolbox. A cycle is simply a relatively regularly occurring move in a data series, and it’s always measured from low to low for reasons I’ll discuss shortly. Every expansion cycle—whatever the cycle’s length—ultimately creates excesses, whether in the economy or in the stock market, that need to be corrected. And that process, that contraction, ultimately leads to the next expansion.

There are two cycles a technically savvy long-term investor needs to be aware of: the four-year cycle, where the stock market makes an important low every four years or so, and the Kondratieff wave, which is a very important but much less clearly defined cycle where the stock market—as ...