Four-Year Cycle Low Will Be Late Editor: Since making a bottom of 666.79 in March 2009 the S&P 500 index has risen 118%. Respected technical analyst Charles Nenner, who also uses market cycles to influence his buy/ sell decisions, believes that the S&P’s bull run will peak in February. One scenario we could see is a peak in the stock market in late January or early February, followed by a steep decline into a 4-year cycle low in the summer. Massive stimulus would then fuel a new up-leg in risk assets, sending stocks and precious metals to new highs. This would fit in with the Fibonacci Time Zone mentioned back in October.

Calculating from the Four-Year Cycle low in 2009, the next cycle low is due in two months, but unless there is a major crash, that projection will not be realized. In fact, we can’t even say that there has been a cycle crest yet, although, given the proximity of current prices to the tops in 2000 and 2007, it is likely that a long-term top will be put in soon.

Obviously, the Four-Year Cycle does not repeat at exact intervals — the last one lasted almost six years from trough to trough — and it appears that the current cycle is going to be extra long. A “normal” downside for the cycle is about 18 months, so an educated guess as to when the price low might hit is about mid-to-late-2014.

A 64 year monthly chart of the S&P 500 4-year cycle

A 64 year monthly chart of the S&P 500 4-year cycle

To summarize, the ten-year trading range of the S&P 500 Index suggests that a major price top should be arriving sometime in the first half of 2013, maybe within three months. After that the Four-Year Cycle low (price low) projection would be for the last half of 2014, unless the decline is exceptionally accelerated.

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