Market Forecast 2023 Recap

Foundation for the Study of Cycles

Market Forecast 2023 Recap

The FSC hosted another successful event, Market Forecast 2023, featuring key insights from six leading market experts across three days. Once again, we broke records for attendance and new members, marking a growing interest in the study of cycles.

The event kicked off with keynote speaker and trading veteran Larry Williams presenting 2023: The Year We Find Out if Cycles Really Work or Not. He credited the early cycle pioneers and posed key questions on theory, validity, and practical application. Noteworthy was his citation of Gertrude Shirk: “Of the thousands of rhythmic cycles in hundreds of subjects the Foundation for the Study of Cycles has studied, one we have reported repeatedly since 1951 is the 40.68-month cycle in stock prices.”

A primary cycle rhythm approximation was also highlighted by other experts such as Edward Dewey and Edgar Lawrence Smith. Williams shared his cycle studies revealing that a similar 40/42-month cycle has influenced stock prices for almost 150 years!

Further analysis is demonstrated on fundamental analysis as a method for better understanding and prediction of the uncertain macro environment in 2023 and beyond. Williams predicts a make-or-break price reaction in 2023, favoring an upside surprise. He acknowledges cycles are useful as part of a process with conditions and rules.

FSC Chairman, Dr. Richard Smith’s presentation Cycles, Correlation, and Volatility offered a review of global cross-assets using the FSC’s flagship cycles technology. Smith encouraged preparation for the “sea change ahead” as cited by Howard Marks of Oaktree Capital.

He demonstrated a strategic framework using cycles analysis with a correlation matrix to help identify critical relationships, while avoiding portfolio concentration risk. The importance of risk management was emphasized by using Finiac’s smart analytic tool that calculates probability distributions of market tail-risk, enabling a more astute risk-reward assessment.

The grand finale was a review of long cycles powered by FSC’s cycles technology and Global Financial Data. Below is a chart on 10-year U.S. interest rates over the last +200 years confirming a new structural rise ahead.

On day two Jake Bernstein shared his latest market insights using his science-of-trading approach (Setup, Trigger, and Follow-Through or STF model). Additional overlays included price and indicator cycles, divergence, seasonals, sentiment positioning, and patterns. Bernstein’s headline chart was Copper fuelled by a strong COT positioning build-up, likely from China (chart below). Looking at the equity market, he expects a short-term upside surprise and warns of focusing too much on the negative headlines, which often serve as a contrarian indicator.

Ron William shared his latest Roadmap Cycle as part of a “crisis-opportunity” in 2023, marked by compounding headwinds across macro, fundamental, and technical factors. However, in the short term, his global ranking model signals a tactical risk sentiment rally, with pro-growth market forces in China after its reopening from a three-year pandemic lockdown.

He highlighted key behavioural challenges and how cycles provide a real edge during VUCA times. Thematic analysis included new year seasonality Will lightning strike twice blog post and media interview, which is aligned with his composite cycle model prediction for risk into H2 2023-2024 (Figure 1). Time confluence was also shared with the cycle analysis of Samuel Benner & WD Gann (Figure 2).

On day three Lars von Thienen braved the million-dollar question: Will Crypto Recover Or Will Winter Last Forever? His presentation featured BTC long-term cycle analysis, and he discussed the importance of the 200-day nominal cycle and specific cycles patterns.

He reviewed the 2021-2022 cycles projection forecast: The count of #5 in action (predicted in advance in FSC 2021 summit), including a pattern that predicted the end of an 80% drop (chart below). Real-time analysis was also featured at the end with live BTC cycle projections.

Finally, Bill Sarubbi shared his latest market insights in his presentation, Overall Indices, Sector Groups, and Stocks. His analysis signaled the S&P500 is likely to rally over the short-term. However, expectations remain for the bear market to resume in 2023, likely in March/April. Timing is based on his dynamic composite cycle model driven by the 1-4-10-year pattern (chart below).

Macro headwinds remain, notably an inverted yield curve which continues to predict recession and lower markets. A decline in the real estate cycle is also likely to cut consumer spending. In the meantime, commodities, such as gold and oil, are likely to move higher.