With the cyclical analysis principles illustrated in Investing for Profit With Torque Analysis of Market, there are now two methods of arriving at the answer, each of which supplements the other, which is reasonable because stock prices consist of not one but two parts: earnings (intrinsic) value and cyclical (market) worth.
By fundamental analysis, we can determine the earnings-value portion-or the relatively stable intrinsic value in a stock’s price, expressed as a normal price earnings ratio-and, from a projection of probable future earnings, the trend which future values are likely to follow.
By cyclical analysis, we can determine the cyclical-worth portion-or the highly variable high and low market prices likely to be paid as a premium for, or as a discount from, those fundamental values at future points in time. As a bonus, because of the proclivity of cycles to trough at about equal time intervals, cyclical analysis can also indicate when the alternating high and low market price levels are likely to be reached.
Cyclical analysis is concerned with measurement and assessment of the rhythmic fluctuations of market price above and below intrinsic values. lt is based, first, on the determination of the TORQUE FACTOR-or the value of the force which cycles exert to push prices above fundamental values in an upward swing and pull prices below fundamental values in a downward swing of the cyclical rhythm-and, second, on the projection of cyclical rhythms into the future.
When we combine the two methods, we are able to assess future probabilities for price movement from ( 1) the trendular direction of intrinsic values, as indicated by fundamental or economic analysis, and ( 2) the cyclical direction of present and future price rhythms, as indicated by TORQUE ANALYSIS of the price cycles.
This book, then, has twin purposes:
- ( 1) To show you that cycles are real forces in the stock market and exert real and observable force in the movement of stock prices
- ( 2) To show you how to make your own appraisal of the probable timing and extent of future price swings
With this knowledge your profit performance should improve-if you can accept the idea that, with cycles, a trough is a prelude to an ensuing peak and not an indication of even lower prices, and that a peak is not an indication of even higher prices but of lower prices to come.
- THE PRICE CYCLES IN THE MARKET
- THE FORCES AND FRAMEWORK OF THE CYCLICAL STRUCTURE
- HOW VOLUME POWERS THE CYCLE MECHANISM
- TORQUE ANALYSIS OF STOCK MARKET CYCLES
- THE ART OF FORECASTING WITH MARKET CYCLES
- HOW TO PROFIT FROM STOCK MARKET CYCLES