Founder's Trading Journal
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This is our new cycles report which will be updated on the 7th and 21st of each month, absent significant events or changes. Today, we will concentrate on the S&P 500 index, but eventually I  will expand the report into some other asset classes including oil, gold, treasuries, and the U.S. Dollar. For now, the S&P 500 cycles will apply to most financial market indexes and sector funds, including the NASDAQ 100, by proxy.

Short-term, we have the nominal 40-day cycle trough due Monday, give or take a day. So today we are in the zone for a short-term peak before a few days of profit-taking.

Longer-term, and of greatest concern to the short-term picture, the nominal 18-month cycle could peak any time, as we are past the mid-point. This is typically the most challenging cycle we deal with on our trading horizon – leading to the deepest corrections as all other cycles less than the nominal 18-month will bottom simultaneously. The last cycle bottom was March 2020 China-Virus low and had been averaging about 16 calendar months trough to trough over the past five or six cycles.

While the market had readopted its bullish stance, this is likely to be the last rally leg before the 18-month cycle peaks. If the market will fall apart and crash, as many have predicted, it is most likely to occur on this cycle peak. While I would reasonably expect a 10% to 15% correction, I am not expecting a “crash” at this time. Of course, my crystal ball is not any better than anyone else’s.

A.F. Thornton

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