Grand supercycle
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In Elliott wave theory the term grand supercycle is used to describe the longest Elliott wave that was proposed by Ralph Nelson Elliott. Elliott speculated that a grand supercycle advance had started around the time that the United States declared independence from mother-England on July 4, 1776.
In technical analysis, a Kondratiev wave grand supercycle is a cycle of 50 to 60 years.
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[edit] Possible Elliott Wave Position of Global Stock Markets in the 2000s
Some Elliott Wave analysts believe that a Grand Super Cycle bear market in US and European stocks started in 2000. Others view the 2000-2002 bear market in US stocks and 2000-2003 bear market in European stocks as being of lesser degree, such as Primary, Cycle or Supercycle.[citation needed]
The picture in Asia is occluded by the divergence of the Japanese market from other Asian indices; the Nikkei 225 is still far below its late 1980s high, whilst other indices are presently (2006) at all-time highs.
If a Grand Supercycle bear market started in the USA and Europe in 2000, the Elliott Wave forecast would be for several hundred years of turmoil. If there are an infinite number of fractal degrees in the Elliott Wave fractal, then the wave position at above Grand Supercycle degree is unknown, meaning that the forecasted bear market in stocks could be at least one degree larger than that of 1929 to 1932.[citation needed]
As of October 2006, the situation has been clarified: the Dow Jones Industrial Average made a new all-time closing high, which confirms that 2000-2002 was NOT the beginning of a Grand Supercycle bear market, but a complex correction of the bull market that began in 1982. Those who believe in the Grand Supercycle expect their bear market to begin once five waves up are complete from the October 2002 lows. Those who do not believe in the Grand Supercycle say that a new bull market is underway and that a Grand Supercycle bear market will never occur, instead forecasting a never-ending series of Supercycles.[citation needed]
[edit] Kondratiev Cycle position of the Global Economy in the 2000s
Conventional Kondratiev analysis would suggest that the 2000s should represent a Kondratiev winter. The fact that it is thus far (2006) not occurring suggests either monetary inflation and pumping of global liquidity on a massive scale in an attempt to deny the business cycle, or that a cycle of a larger magnitude than the Kondratiev cycle is operative and that the Kondratiev winter has effectively been overwhelmed by this larger-degree up-thrust.
There is no credit-led expansion in recorded history that has failed to end in a dramatic credit crunch and economic catastrophe. See Financial Reckoning Day by Bill Bonner and Addison Wiggin, and The Great Reckoning by James Dale Davidson and William Rees-Mogg.
Kondratiev's own work showed a Winter beginning 1914-20. That would normally have ended around 1945, but most theorists would agree that it lasted until 1949, with a new Spring commencing in that year. Given the shortest time period for the K-Wave of 40 years that would mean a new Spring Phase beginning in 1989, and an Autumn Phase beginning in 1999, with the Winter beginning in 2009. With the longest time period for the wave of 60 years, then the new Spring Phase should begin in 2009, but that would mean the Winter Phase should have begun in 1994, and now be almost over. Given any time period between the shortest 40 year and longest 60 year span of the cycle it is impossible to arrive at a Winter Phase beginning in 2000 or thereabouts.
In fact, a Spring Phase beginning in 1949 and last around 25 years until the mid 70's does appear to conform with the post war boom period, and the collapse of that boom into the slump of the 1970s, and protracted recessions of the 1980s and early 90's. Trying to connect this to periods of Stock Market performance is a corruption of Kondratiev's work which was to do with cycles in the real economy not in the fictional economy of Stock Markets.
[edit] Controversy about the Elliott Wave Grand Supercycle
Many controversies surround the idea of the Grand Supercycle:
- Stock transactions did not occur during the first years of the United States and price data is thus not available. The notion of the Grand Supercycle was thus implied by R. N. Elliott by concatenating gold prices, British stock market prices, and later U.S. stock market prices, as the U.S. economy surpassed the U.K. It is not truly clear that this methodology is scientifically robust.
- The hypothesised Grand Supercycle is conjectured to span more time than a human life, which some say means it cannot exist. Followers of Saeculum Theory take this view and align instead around a belief that defined sequences of generations relearn approximately the same lessons as their forebears. Similar ideas can be found in the Bible. The Saeculum might map to the Kondratiev cycle.
- If a social cycle of such large degree does indeed exist, then present-day scientific and economic understanding is at a loss to explain how it would propagate or what causes it, or even the smaller-degree waves that the theory suggests.
- If financial and social trends exhibit a constrained, patterned architecture then there would be wide-reaching ramifications in terms of the modern-day Western belief in Free Will, thought inspired by the Age of Enlightenment and its belief in the supremacy of Reason, predestination and the nature of the relationship between the individual and society.
- The idea of a Grand Supercycle bear market implies that mankind will never learn from its past mistakes, or become self-aware in a macro-economic sense. The historical study presented in David Hackett Fischer's The Great Wave (Oxford University Press, 1999), however, presents a meticulously-argued case that the periodic crises in human history are becoming steadily less volatile, which suggests that some kind of species-wide learning is occurring. This could be consistent with Rupert Sheldrake's controversial theory of "morphic resonance."
- If the Grand Supercycle does actually exist, then it is still not clear that a bear market in US stocks is in progress (April 2006), but not just for reasons of ambiguity in wave-count. More simply, many stock indices, such as the Russell 2000, are making fresh all-time highs. Typically a bear market is lead by small-cap and mid-cap stocks, but these are presently the leaders on the upside. A bear market cannot be in force until all stock indices are declining and have made failure highs.
[edit] References
- The Great Wave: Price Revolutions and the Rhythm of History (2000) ISBN 0-19-505377-X
[edit] See also
- Elliott wave theory
- Market trends
- Kondratiev wave
- Economic cycles
- Business cycle
- David Hackett Fischer
