FIGURE 8.10
Part 2
FIGURE 8.10
Five-month cycles in S&P 500 index.
(
Source:
FutureSource.
Reprinted with permission.)
This market had many good clues for a potential bottom to occur. How-
ever, keep in mind that picking bottoms can be hazardous to your wealth.
This information might have at least kept you from selling short in the hole.
When looking for a cycle occurrence—in other words, a repetitive
pattern—go back to historical price moves. This research may prove to be
enlightening for your trading. Here is an example taken from an article that
was e-mailed to clients and posted on my web site on Tuesday, July 23,
2002, the day before the Dow made a bottom at 7450 and the S&P 500 index
low was 771.30.
The seven worst months for the S&P 500 since the inception of stock
index futures in 1982 were, in calendar order:
1. October 1987, 152 points
2. October 1997, 148 points
3. August 1998, 175 points