THE 7-YEAR SABBATICAL CYCLE (PART 2)

Part (B) : the 7-year sabbatical cycle

 (please refer to previous post, part 1. This is a continuation)

The wealth code of 7 (The sabbatical number 7)

It is noted in the Jewish Bible that they rest on the 7^th year after 6 years of good harvest. In modern times, still Jewish are wealthy so is it due to this recognition of the 7-year cycle?

The speaker talked about crisis every 7 years. This is his table of events.

1959	Singapore independent
1966	China cultural revolution
1973	Oil crisis
1980	Gold peak
1987	Black Monday
1994	Bond crisis
2001	9:11 tragedy
2008	Global financial crisis
2015	Stock market collapse, currency decline, terrorism

Let us research and do another table:-

Sources: https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets

7-year cycle	events	Date triggered	Agree?
1959			Nothing?
1966	US credit crunch, deflation, slump	Jan 1966	Yes
1973	oil crisis, prices soared causing stock market crash	Nov 1973	yes
1980	Latin debt crisis, started with Mexico and Iran revolution	Jan 1980	Yes
1987	black Monday, largest one day stock market decline	19-Oct-1987	Yes
1994	US bond massacre	Jan 1994	Yes
2001	Sept'11 attack, global stock market decline	Sep 2011	Yes
2008	USA subprime loans crisis	Dec 2007	Yes
2015	China stock market crash	12-Jun-2015	Yes

Questions:-

There was not any major event that can be considered a crisis in 1959. How?

But what about major events in between those crisis years so called every 7-years?

The speaker also mentioned that there will be mid-term crisis in between those sabbatical years.

This is his explanation:

1984	Pan Electric issue
1991	Gulf War
1997	Asian financial crisis
2004	Tsunami
2011	European crisis

Now let us research more and see what else happened.

1958	Eisenhower recession in U.S	Aug 1957	How?
1960	1960-1961 recession	Apr 1960	How?
1962	Flash crash in a day	28 May 1962	Mid-term ok
1970	Recession (deficits of Vietnam war)	Dec 1969	Mid-term ok
1990	Gulf war	Jul 1990	Mid-term ok
1997	Asian financial crisis	Jul 1997	Mid-term ok
2000	Dot-com, US market decline	Mar 2000	How?
2010	USA one day flash crash, DOW hit 1000 points low	6 May 2010	How?

Further information,

http://time.com/3957499/american-economic-crises-history/

The 6 major crises that hit USA in the last century as follow:-

1.    Stock market crash, Oct 29, 1929

2.    Oil crisis, OPEC embargo, Oct 16, 1973

3.    USA recession, from July 1981 unemployment hit >10%

4.    Black Monday, Oct 19, 1987 DOW dropped >500 points

5.    Dot-com bubble crash Jan 5, 2001

6.    Great recession, from Sep 15, 2008

Events in the past 50 years seem to point to us that this so-called 7-year cycle with mid-term crisis in between maybe a possibility but not exactly true. There are other happenings that affect the stock markets which either triggered too early or later than the so-called mid-term timing.

Base on chart of DOW index last 100 years, we see that there were bearish sentiments during those sabbatical year sometimes only.

1959 = not much effect

1966 = bearish (until Jun 1970 bottom. How?)

1973 = bearish (bottom out in Nov 1974)

1980 = bearish (until Jun 1982 bottom?)

1987 = bearish

1994 = not much effect, market still bullish (blue ring)

2001 = bearish (until Sep 2002?)

2008 = bearish (until Feb 2009)

2015 = bearish started from Feb 2015. Still no sign of bottom yet.

From here we see that this so-called 7-year cycle should be regarded with caution only and not a sure lead to bear market. However, in 2015, the commodities were very bearish compared to the equity.

As we see this chart, the downtrend line is still far away from the index.

In the short term, there should be a rebound towards the downtrend line.

Maybe 2016 will be continuance of this downtrend if US government faces another round of debt ceiling issue. There is also a problem of high national debt.

I think the sabbatical 7-year cycle has hit 2015 and the current bearish market will continue in 2016 until a bottom is found. Hence, the speaker also mentioned that he has been shorting the main index ever since middle of last year.