From the December 01, 2008 issue of Futures Magazine • Subscribe!

Tech talk: Cycles turn up

The Cycle Project Oscillator (CPO) is a proprietary model that identifies multiple cycles in a market and has proven itself on numerous occasions.

The CPO uses complex algorithms to filter multiple cycles from historical data, combines them and gives a graphical representation of their productive behavior. The CPO methodology employs proprietary statistical techniques to obtain cyclical information from price data. Other proprietary frequency domain techniques are then employed to obtain the cycles embedded in the price. The CPO goes through an initial detrending filter that is determined by its specific time interval.

The CPO analysis clearly projected the bottom in the Dow Jones Industrial Average Index in the spring of 2003 in the March 2003 issue of Futures. In the July 2007 issue, the CPO indicated the multi-year bull move in the stock market might be ending. The CPO, as featured in July 2007, successfully predicted the current downtrend roughly 16 months before it occurred. In the April 2008 Market Strategy, the CPO called the May high and subsequent drop. Given its track record and the recent historic downturn in equities we wanted to see what the CPO had to say.

The CPO indicates that the stock market decline is ending and the Dow will start a move that should take it up to the 12000 area by mid summer of 2009. CPO does not, however, definitively show an end to the larger bear move as it is expected to dip lower again in 2010 and does not project a move to new highs over the next two years.

John Rawlins, trader, analyst, consultant and developer of the CPO can be reached at johnrawlins@msn.com.

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