Hitting bottom, are we there yet?

The short answer is “No”, not by a long shot. As I have said earlier, I think the market will only bottom in 2021 and in this article I will explain why I believe that.

To look at important turning points in the market, it often helps to use fibonacci time ratios. In the chart below I use a very long term price chart. By taking the lows of 1789 and 1932, it is immediately clear that they are 143 year apart, which is a 144(-1) fibonacci number. Projecting this from 1932 forward, using the golden ratio (1.618:1.00) we arrive in 2020. In addition, from the low of 1843 to the low of 1932 is 89 years, also a fibonacci number! Projecting this forward using a 1:1 ratio gives us 2021.

Chart 1: Long Term DOW Jones

Another chart is the so called Benner cycle, named after its discoverer/inventor. Benner found that markets make tops and bottoms at somewhat regular intervals using a 8,9,10 year cycle and a 16,18,20 year cycle. I extended this chart into the future only to notice an important low in 2021 and another important turning point in 2018.

Chart 2: Benner cycles

By just using the DOW chart (chart 1) , it is by itself not clear if 2021 will be a top or a bottom, it can be either. Fibonacci ratios only indicate turning points. But by also taking into account the Benner cycles it becomes clear that 2021 will probably be a low.

Conclusion: There is more evidence than described here, but given 2 different methods both arriving at 2020-2021 cannot be coincidence…

The next article(s) will describe more in detail what the AEX might look like going forward to the 2020′s.