Hurst, published the results or at least so much as they wanted to disclose of his research in a technical analysis classic, The Profit Magic of Stock Transaction Timing. Ironically, the best book ever written about stock market cycles and swing trading became available during the deepest and most extended Bear Market since the Great Depression. There was no market for a book by a stock market timer, and the book became a hidden treasure. JM Hurst was a very private man.
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While it is beautifully simple and elegant in its essence, it is not a simple theory to understand or to apply. Hurst claimed his success on the basis of the process presented in the Cycles Course, whereas many people read the Profit Magic book and go no further, with the consequence that they never discover the more effective process presented in the Cycles Course.
Hurst defined eight principles which like the axioms of a mathematical theory provide the definition of his cyclic theory. These cycles are all harmonically related to one another their wavelengths are related by small integer values and their troughs are synchronised where possible, as opposed to their peaks. The principles define exactly how cycles combine to produce a resultant price movement with an allowance for some randomness and fundamental interaction.
Just as it is impossible to conceive of the sum of two infinite numbers, it is impossible to define the result of combining an infinite number of cycles Credits: www.
A lot of people follow it, and it is, I have come to believe, the most important cycle for use in intermediate-term market forecasting, because it helps us plan for and quickly identify the most important declines and rallies that we will encounter within the course of a year.
Even if you are a short-term trader, it is essential that you be aware of the progress of the 9-Month Cycle so that you will be in tune with next higher trend. The illustration above shows the basic structure of the 9-Month Cycle. The most powerful rally during the 9-Month Cycle will normally occur during the first three months of the cycle as all three nesting cycles are combined in a united upward move.
Conversely, the period when the market is most vulnerable to a significant decline is during the last three months of the cycle when all three cycles are moving downward together into their final troughs. In addition to the cresting of the 9-Month Cycle, the next most significant event is the cresting and completion of the Phase 1 Week Cycle. This can materialize as a minor price correction or consolidation in a bull market, but in a bear market it will likely coincide with the cresting of the 9-Month Cycle.
Knowing this basic 9-Month Cycle structure, we can consider that we are at the least risk establishing new long positions during the first three months of the cycle, and the greatest risk of decline comes in the last three months of the cycle.
The three months in the middle is a time when caution should be exercised - it can present risk as the Phase 1 Week Cycle rolls over into a trough, and it also can present new opportunity as the Phase 2 Week Cycle begins to move up Credits: www.
JM HURST - CYCLE TRADING
In five years? If so, what is the risk involved? These are the kinds of questions to which this work is addressed. Such fantastic results are possible in the stock market. Individual issues fluctuate widely enough and often enough to permit this and more. An actual trading experiment will be described using these principles which produced an 8. The answer is complex, but the elements are simple: effort, knowledge and psychological barriers.
The profit magic of stock transaction timing