Technical analysis continues to fascinate me. In case you don't know, technical analysis is the practice of studying stock price data, generally through historical charts, to make a prediction about the future direction of stock prices. I'm sure the technical "analysts" will say that there's more to it than that, but that's my take.
Most of the respected members of the financial industry reject technical analysis as "reading the tea leaves". In other words, it is a false practice in which success is more a matter of luck than any sort of learned skill. The academic community, in particular, derides technical analysis as more of a pseudoscience than a legitimate discipline.
Nonetheless, I like to hear what the chart readers have to say. Much of technical analysis centers around the idea that markets are highly cyclical, and the charts give you insight as to when we have reached a top or bottom of any cycle. Knowing this, of course, means you simply plow your money in when a bottom has been identified, and the opposite at a top. There are two forms of cycles, the normal 3-5 year business cycle, and another longer cycle, commonly referred to a secular market cycle.
It is this last type of cycle that I want to discuss. I recently found a site that posted two charts that attempted to analyze the secular market cycle, and provide some insight as to where in the cycle we currently are. The charts are below.
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