The Mother of all Market Calls
Mar 19th, 2008 | By Dominic Frisby | Category: Stock Market InvestingI was planning to make this next item the main feature of today’s piece, but it got upstaged by yesterday’s rate cut. Some of you will remember the brutal sell-off in the stock markets on February 27th last year, at the time the worst day in the markets since the terrorist attacks of September 11th. Others will also remember that the sell-off had been predicted some eight years previously in 1999 by one Martin Armstrong, who we wrote about a year or so ago. See: The strange case of the jailed market genius (http://www.moneyweek.com/file
It was just one of many of the now-imprisoned financial analyst’s spectacular stock market predictions; among them the 1987 stock market crash, the 1989 high in the Nikkei, the July 20th high in US equities (nailed to the day) and the current boom in gold and oil.
His predictions are based on a model he developed in the 1970s. There is an intense turning point in financial markets every 51.6 years, he believes, with investor confidence churning on a smaller 8.6-year cycle. This 8.6-year cycle was related to pi – 8.6 years is equal to 3,141 days.
However, critics will point out rightly that the stock markets did not peak on Feb 26th, 2007, they merely corrected. The peak came in July. That’s fair enough – but now look at this chart of the Dow Jones Financials.
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Amazing, isn’t it? That peak was predicted in 1999!
Here we see a copy of his economic cycle:
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You should note that an intermediate turn date (in other words, a short-term rally in a longer-term downtrend) is scheduled for 2008.225 – or March 22nd, 2008, this Saturday.
Now a Saturday bang in the middle of Easter would be an odd day for the stock market to rally, so perhaps Armstrong was wrong. Perhaps that bear market rally in the financials began yesterday – or perhaps we’ll see a turning point in a different market altogether. We’ll soon find out – I’ll keep an eye out and get back to you with my thoughts next week.
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Dominic Frisby is MoneyWeek’s commentator on commodities, and is an active private investor in junior mining and energy companies. He is the presenter and producer of Commodity Watch Radio - an internet radio show run in association with Minesite, where Dominic discusses the commodities and financial markets with leading lights of the sector.