Time ▾ Value ▴ Analysis: The 41-Month Kitchin Cycle Topping Sample in US Shares

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The weekly S&P 500 exhibits that the nominal 180-week cycle, at the moment at 177 weeks, is in an early topping stage. This long-awaited time cycle has been monitored because the finish of 2023 and has been cited as a key driver for the upturn lasting into this window. Now that we’ve arrived at this level, we have to pay shut consideration to the shorter-term cycles and technical indicators.

Weekly S&P 500 with nominal 180 weeks / 41-Month Cycle topping | October 23, 2024


Earlier than transferring to the day by day cycle evaluation, it’s price noting that the cyclic-tuned RSI indicator has reached the higher band, indicating a “bull exhaustion” mode. This situation can flip inside days right into a “bulls drained” and/or “bulls exit” state, signaling that we’re primed for a longer-term reversal. The identical weekly cycles scenario will be noticed on the NASDAQ.

NASDAQ weekly cycles | October 23, 2024


Let’s now study the day by day cycles, beginning with the S&P 500 mannequin.

 » The day by day composite mannequin suggests a topping sample both now or probably by the tip of the yr. «

 S&P 500 day by day dominant cycles mannequin | October 23, 2024


The primary cycles are the 192-day and the harmonic 89-day buying and selling cycles. The day by day composite mannequin suggests a topping sample both now or probably by the tip of the yr. The cRSI indicator exhibits we’re nearing the higher band, which may additionally sign a ultimate year-end rally earlier than each day by day cycles align with the downward-trending weekly cycle famous earlier. An analogous perspective will be noticed within the Nasdaq day by day information.

Nasdaq Composite day by day dominant cycles mannequin | October 23, 2024


The shorter-term day by day cycles with lengths of 80 and 200 buying and selling days on the Nasdaq mannequin are rolling over now and can doubtless proceed into the tip of 2024. These cycles are additionally coming into alignment with the following long-term downward swing, which is in sync with the long-term cycles proven earlier.

It is price noting that we’re seeing a divergence forming, because the market skilled a transparent topping sample in June of this yr: At the moment, the composite mannequin peaked whereas the cRSI was breaking down beneath the higher band, issuing a promote sign. The value by no means went again to realize the next excessive, and the cRSI is indicating an excellent greater divergence between the worth motion and the sign line. The technical indicators proven beneath have been adjusted to the cycles detected and talked about above. The highlighted pink or inexperienced shaded areas point out that the upper timeframe – right here the weekly S&P 500 – can be considered. 

S&P 500 – cRSI cyclic indicator | October 23, 2024

The multi-timeframe cyclic technical indicator is exhibiting a transparent divergence between worth and the sign. Whereas the weekly chart confirms one other overbought scenario on the time the divergence sign emerges, this offers technical affirmation of a doable prime in place. An analogous technical situation will be noticed on the NASDAQ.

 

Nasdaq Composite | October 23, 2024