Tech Innovation Cycles & the Current Mega-Cap Melt-Up

By Ron William, CFTe, MSTA

The Perils of

According to the expanded cycle framework that I use, originally based on the “Roadmap signature” model of veteran strategist and mentor Robin Griffiths (Figure 1 ABC), the U.S. economy remains in a late-stage pending recession, but is now shifting into 2024 as part of a multi-year transition.

The Kondratieff wave which, drives trends of interest rates, predicted the bottom in 2020 and structural rise in 2022, marking a winter season amplified by a great debt burden (Figure 2).

The same k-wave is part of a ‘creative destruction’ force that predicts long periods of innovation. It confirms that we are now in a sixth innovation ‘echo’ wave - since the Industrial Revolution, that is likely to last 20-25 years, largely driven by technological developments in AI and robotics (Figure 3).

Primarily for this reason, the latest AI boom proved stronger than expected, with YTD performance quadrupling for some leading stocks (Figure 4), NVIDIA hitting the $trillion valuation and market internals historically more divergent even than Y2K and 2008 GFC. The warning about “The Perils of ‘Painting the Tape’” remains!

Watch S&P500 equal-weighted, as it nears YTD peak levels, into historic +2STD threshold (Figure 5). Only above here would signal broader market rotation and stronger risk appetite.

Alternatively, failure implies pending mean-reversion risk, further weighed by negative seasonality, typically led by a peak into August and fall-crash pattern into September-October (Figure 6). More seasonality analysis to follow in future FSC blogs.

Thank you to all FSC members for all your kind feedback and insightful questions on our FSC blog series. I welcome more interaction on ron.william@cycles.org.

Ron William, CFTe Bio

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Ron William, CFTe, is a market strategist and educator/mentor with more than 20 years of experience working for leading macro research and institutional firms, producing tactical research and trading strategies. He specializes in global, multi-asset, top-down framework, grounded in behavioural technical analysis, driven by cycles based on the "Roadmap" signature model of veteran market technician Robin Griffiths, published in his book “Mapping the Markets.”

Ron also applies a "market & mind" approach at IntensiChi, using the latest techniques in behavioral-risk models and neuroscience sourced from expert groups. He further supplements with mentoring/coaching, trained by the International Coaching Federation (ICF), and teaches a regulatory approved masterclass in Applied Behavioral Science, with investment, private banks and CFA Societies.

Ron's primary work, as part of his current institutional market advisory firm (RWA), acquired global industry recognition as winner of “Best FX Research” in 2020. Financial media programs and industry publications regularly feature his market insights, including “Is the big cycle about to turn?”, predicting the 2020 crash and alerting the “Minsky paradigm” of 2020 H2-2022.

Driven by high-integrity education, Ron serves as part of the education committee of the International Federation of Technical Analysts (IFTA), Development Director at the Foundation of the Study of Cycles (FSC), Head of SAMT’s Geneva Chapter, and an honorary member of ESTA. He is also a visiting lecturer at universities, active guest speaker for the CFA, CAIA and CISI, and senior teacher at colleges offering an accredited diploma in trading and investing.