It’s
time once again for our annual Kress cycle echo forecast and review for 2013. For the benefit of those unfamiliar with a
Kress Cycle “echoes,” these stock market patterns are based on the 6-year,
10-year, 30-year and 60-year rhythms in the equity market and have been
invaluable in providing a rough guideline or “road map” for what to expect in
the coming months.
Let’s
start with a review of last year’s “echo” analysis. The Kress cycle echo for
2012 was based on the years 2006 (6-year rhythm), 2002 (10-year rhythm), 1982
(30-year rhythm) and 1952 (60-year rhythm). Based on an analysis of these four
rhythms, here’s what I concluded in the Dec. 28, 2011 report:
“The
first five months of 2012 will likely be characterized by greater than average
volatility....This will create a level of choppiness to coincide, if not
exacerbate, the market’s underlying predisposition to volatility owing to the
eurozone debt crisis…the May-June 2006 stock market slide could be repeated in
May-June 2012. Our short-term trading
discipline should allow us to navigate this volatility and there should be at
least two worthwhile trading opportunities between [January] and the scheduled
major weekly cycle around the start of June 2012. From there, the stock market should
experience what amounts to the final bull market leg of the current 120-year
cycle, which is scheduled to bottom in October 2014.
“Keeping
in mind that like snowflakes, no two markets are exactly alike, the Kress cycle
echo analysis for 2012 tells us to expect a final upswing for stocks in the
second half of the year with the first half of 2012 likely to be more favorably
to the bears, especially if events in Europe are allowed to get out of hand.”
All
in all, last year’s forecast wasn’t too far off the mark. The anticipated May-June slide did occur and
there was indeed a major cycle low around June 1, 2012. The anticipated rally in the second half of
the year materialized up until October, after which the market took another
“correction” into November. This is the
only major part of the 2012 forecast our Kress cycle echo analysis failed to
see. (Although there was an October
slide in the 60-year “echo” year of 1952, I chose to discount this factor in
last year’s forecast). In any event, the
year 2012 was an overall winning year for the U.S. stock market as measured by
the S&P 500 and as forecast by the 2012 echo analysis.
That
was the year that was. Now let’s turn
our attention to the year that is, namely 2013.
The old saw that “No two markets, like snowflakes, are never exactly
alike” should be kept in mind here as a disclaimer, but there is a cyclical basis
for a similar pattern occurring this time around. In the past we’ve talked
about the Kress cycle echoes which tell us that the stock market performance of
any given year tends to loosely resemble the performance of the previous 6, 10,
30 and 60 years previous on an aggregate basis, with a special emphasis on the
60-year-ago period….
[For
the complete 2013 Kress cycle forecast for the U.S. stock market, subscribe to
the Momentum Strategies Report at the link below.]
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