|  JUL 1989

Phase shifts in the 40.68-month cycle by Gary Zin, Ph.D.

Phase shifts in the 40.68-month cycle by Gary Zin, Ph.D. Phase shifts plague every cycle technician. Phase shifts, or apparent phase shifts, are often present when a high or low of a cycle is expected but doesn't occur. Sometimes, if neither a cycle high nor low occurs on its projected date, a cycle will shift 180 degrees to its subsequent anniversary date. Many times, these phase shifts occur near major trend changes in the market. By assuming that a change in market direction is probable near the date of a predicted high or low, other trend-following indicators can be used to decide whether a high or low is really likely to occur. Bullish and bearish cycles Figure 1 shows a semi-logarithmic plot of monthly data for the S&P 500 from January 3, 1928 to March 31, 1989. Gertrude Shirk, past research director of the Foundation for the Study of Cycles, has monitored a regular 40.68-month cycle in the stock market and projected that an ideal low period for this cycle would occur near March 1989. (See ""In search of the cause of cycles,"" S&C, March 1987 and ""The 40.68-month stock price cycle,"" S&C, Ocotber 1988) The cycle labeled ""Bullish"" in Figure 1 tracks this ideal 40-68-month cycle.

by Gary Zin, Ph.D.