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NYSE DAILY COMPOSITE INDEX PREDICTED THRU 2005

By: Dr Stephen A Rinehart

Background: These results presented for the NYSE Composite Index are some recent researches from a computer code developed over 20+ years ago which could find the major cycles in the long term NYSE stock market. I have successfully used the software to trade the NYSE Composite Index. In particular, the software was useful to define the possible overall broad market moves in the NYSE over several months (using Daily Closing Price data since 1980) for timing your 401(K) moves.

Summary of Results: The results (see attached graphs) show a possible rally for two to three months in July/August/Sept 2004 followed by a down market starting sometime in Fall 2004 (October is usually a bad month in the NYSE) with a topping formation in through early April 2005. These results are similar with earlier predictions from the NYSE Weekly Closing prices but the weekly closing prices predicted a top in Jan/Feb 2005. The NYSE  will form a broad top from Jan 2005 thru early to mid- April 2005 (but volatile) followed by a sharply descending market at some point thru July/August of 2005 (third wave down of a secular Bear Market!?) with a final double bottom possibly not occurring until March thru May 2006!  The largest cycle currently in the NYSE daily closing prices is the 800 day cycle with amplitude of over 600 points. It peaked in Feb 2004 and will take the NYSE sharply down at some point in mid-2005.

Possible Strategy: Get out of 401(K), mutual funds before October 2004, unless you just like playing with fire and taking risks (there is a predicted market rally going into early 2005 after a drop Dec 2004 but this is risky and will be chaotic). This prediction shows broad (multiple) tops will be forming in the NYSE Composite Index in early 2005 with a sharp drop possible after April 2005 (timing still relative). We still are predicting a sharp move up in the NYSE Index in July/August 2004 (summer rally?). This is going to become a very dangerous global financial market after March 2005. There is a strong possibility of a solid bear market rally again after March 2006!