ChartWatchers

WHAT ABOUT THE FOUR-YEAR CYCLE

Chip Anderson

Chip Anderson

President, StockCharts.com

I've received a number of questions on the status of the four-year cycle. The stock market has shown a very consistent pattern of forming important bottoms every four years – usually during the fourth quarter. The last bottom took place in October 2002, which makes another one due this year. The only problem is that most of those four-year bottoms occurred after a weak year (like 1990 or 1998) or a year in which prices moved sideways (like 1994). That makes this year's action somewhat unusual. My original market outlook had been for a weaker market into October followed by a probable upturn. So far, the market has held up much better than I had anticipated over the summer months. Although the market still needs to weather the seasonally dangerous September/October months, the four-year cycle should act as a bullish prop under the market on any selloffs. The green arrows in Chart 7 show the last four cycle bottoms in 1990, 1994, 1998, and 2002. If the cycle repeats itself, another four-year bottom is due this year.

S&P500

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More