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The Ultimate Book on Stock Market Timing: Cycles and Patterns in the Indexes

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Many traders and investors do not pay attention to cycles in stock prices. After reading this book, they will change their tune. Cycles should play a major role in your stock market arsenal and this book clearly lays out the case in excrutiating detail.

This book is Volume I of a 5-part series on " The Ultimate Book on Stock Market Timing" by Raymond Merriman:

Volume I. Cycles and Patterns in Indexes
Volume II. Geocosmic Correlations to Investment Cycles
Volume III. Geocosmic Correlations to Trading Cycles
Volume IV. Geocosmic Correlations to Short-Term Trading (not yet completed)
Volume V. Technical Tools and Trading Cycles (not yet completed)

This 227-page 16 chapter book provides solid evidence that cycles exist in stock prices. The book documents the cycles and patterns with 5 graphs and charts, 18 figures and diagrams, and 25 tables.

Merriman begins by explaining cycle characteristics -- definition of a cycle, troughs and crests, time band, and distortions. Then he covers the three basic categories of cycles (primary, long-term, and short-term) followed by their subcycles known as phases. Next, Merriman covers trends and teh criteria for identifying bull and bear markets.

Long-term cycles (80-year, 54-year Kondratieff) and their subcycles are then reviewed with examples. One chapter is devoted solely to the 18-year cycle in stock prices because that time interval occurs frequently. Multiples of the this cycle -- 36-year, 54-year, 72-year and 90-year -- are covered as they also appear over time in the past 200 years or so. Merriman provides a table of 18-year cycles from 1797 to 1990 showing the cycle highs and lows, accompanied by 12 charts illustrating the cycle high and low points.

Merriman then delves into the subcycles of the 18-year cycle with a detailed discussion of the eleven cycle periods from 1797 to 1990. He then moves into the well-known 4-year cycle pinpointing all of these cycles since 1896 with the month and year of the cycle troughs. This is further supported with a table indicating every 4-year cycle trough, crest, and trough; months up and down; low, high, and low of cycle; % up and % down. All the cycles in the table were grouped in terms of the larger 18-year cycle. The structure of the cycle is reviewed using 27 graphs of each 4-year cycle pinpointing the high and low poits. Additional information is provided on the two- and three- phase 4-year cycles and subcycles, and a table showing the 4-year cycle from 1895 and the proximity to the U.S. Presidential Election. Details on the 22.5 months cycle are also included.

There is a 33-page chapter on all the cycles evident in the Japan Nikkei Stock Index. Technical analysis is the title of a chapter that deals with investing vs. trading, and market timing vs. buy-and-hold. Included is a table showing the 4-year cycle crests in U.S. stock prices and the length ot time needed to get back to the crest.

In summary, Merriman provides a truly enlightening and useful guide to identifying and using cycles to time the market with increased precision. Students of the market will find that this book offers another important tool to conquering the market. Cycle review should be part of every trader's and investor's methodology, otherwise optimal results may not be obtained.

If you are interested in market cycles, then this book is a real 'must-have' for your collection. There are not many books that touch on the subject of cyclic analysis in a way that is understandable to the layman - but this is definitely one of them!
Here, Raymond goes into great detail in isolating the major and smaller cycles, those that have impacted price action to the largest degree going back many decades. Not only does he discuss lengths, he goes into depth on the patterns that the sub-cycles will play out within the larger (and usually more significant) waves - such as the 4, 18, and 72 year cycles.

More importantly, Raymond goes into great detail on a statistical analysis of the up and down waves - which will give the reader a good idea of how future market movements can be expected to play out on the various stock indexes.

I bought this book nearly a decade ago, and it is as timely today as the day that it was written! In fact, I have incorporated a lot of the statistical methods into my own analysis of the markets. A real gem!

Jim Curry - Market Turns Advisory