Cycles Create Patterns or What Caused the Great Depression

As a trader or investors it's extremely important to understand cycles and the importance they play in creating tradable patterns. Whether you belief in cycle theory or not, they do exist in nature and the markets.

Cycles create patterns that, as prudent technical traders, we should be very aware of.

Part of understanding cycles is that NOTHING goes in a straight line forever, and while we as traders will recognize our greatest profits by staying in a trend for as long as it last, we must also understand that the seemingly never ending trend will at some point REVERSE and go the other way for a little while or a long while.

Later this week I'll post more on this topic including some simple specific signals to assist you in defining direction.

For further reading, check you public or university library for books on cycles and cycle theory. Like all subjects surrounding the markets, we do not have to believe everything that's been written about the subjects, but as students of the markets it's important for us to at least understand the basic theories.

Edward R. Dewey is one of the best known authors on the subject of cycles.

The following book is a rare first printing of the 1949 edition and is for sale from our collection:
Cycles: The Science of Prediction (with a 1950 Postscript on Deflation)
Dewey first became interested in cycles while Chief Economic Analyst of the Department of Commerce in 1930 or 1931 because President Hoover wanted to know the cause of the Great Depression. Dewey reports that economists gave him no consistent answers on the cause of the depression and he lost faith in economic methods. He received and took advice to study how business behaviour occurred rather than why. This book attempts to establish the ground for a completely new approach to the economic problems of our era. From a technical standpoint, one only needs to look at a 50 year SPX monthly chart to see how these cycles work themselves out. From a practiclal standpoint, cycle theory and technical analysis go hand in hand to create powerful patterns like the double top that we witnessed on the SPX monthly chart last year (2008). For those who ignore cycles, the ignorance is likely to be at the peril of their trading and investment accounts. This book is a great overview of Dewey's theories and even for those of you who chose to ignore his premise, this is a great primer on his findings. The additional 1950 postscript "Further Deflation and it's Promise" is a wonderful essay extremely relevant to our current economic crisis . 307 pages (52 in postscript plus 255 of main title).

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$89.95