Ecclesiastes 1:9
What has been is what will be, and what has been done will be done again; there is nothing new under the sun.
This posting is not intended to be religious but is to examine the effect of time, our perception of time, and how we can use time as analysts and traders. Albert Einstein demonstrated in his work that gravity can bend light. He also postulated that the more gravity is present, time slows down. We laymen generally view time as linear, as in a straight line. Some cultures view time as curvy-linear, or circular, thus the quote above. Seasonally, we see it as we experience the repetition of spring, summer, fall, and winter. It is exceedingly regular and one of the surest cycles in nature. In relation to trading, it has been said that "time is more important than price". Time is an integral part of technical analysis. Moving averages are an example of blending price with time. With some rather sophisticated software, one can divine various time/price cycles of differing lengths and amplitudes in tradeable markets. The longer the data set the more reliable the observations tend to be. If we were to look at the data for the S&P 500 ETF (SPY) over the last 888 trading days (not a lot of data) we see two cycles that appear to have reasonable regularity, a 32-trading day cycle, and a 170-trading day cycle. In combining the two, we note that there appears to be a cycle top forming this week for SPY. Nothing is perfect, but time cycles can be one of the tools in a trader's set of analytics that can give an edge in the markets. Let price action confirm one's analysis, and always use stop-loss orders to protect capital.
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