Econocasts

Sunday, September 16, 2018

2018.09.14 NASDAQ Cycle Model Chart

NASDAQ Cycle Model Chart

















As I mentioned in the past, I think the effect of the Federal Reserve Bank monetary expansion on the business cycle has rendered predictions based on cycle theory to be somewhat problematic, and that may not be a strong enough statement.  For commodity indices, the effect may be somewhat muted since they are based on lag times between resource extraction capex and output, and of course the mismatch that eventually occurs between supply and demand.  Those mismatches betwen supply and demand result in a stronger cyclical signal that can be picked up by the analyses. Nevertheless, the market cycle models may still provide some information which links economic activity with price, but I would be wary of using any of the cyclical market models for short or medium term investment purposes. I learned how to use pattern recognition algorithms to get a better handle on short and medium term movements.  I put examples of those efforts here on the blog, but I do not have the time or inclination to present real time updates.

Sunday, September 9, 2018

2018.09.07 XOI.X Cycle Model Chart

2018.09.07 XOI.X Cycle Model Chart

















The model stubbornly suggests higher prices for the index going forward into the Fall and Winter. The level of divergence between actual and predicted values for the index exceed those observed on 2008.10.10, which were resolved in the next few weeks according to the prediction.  That said, there is also the possibility that the model is failing.  Remember that all models are wrong, but some are useful.  Previous runs of this model are shown below and here.


2018.07.12 XOI.X Cycle Model Chart


















The medium term model output shown here also suggests higher prices for USO.