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| 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.
