Paul Mylchreest on Natural Law, China ,Dollar and Equities

Paul Mylchreest writes …..We suspect that every strategist and active fund manager has bet against this mega equity bull market at some point during the last eight years. Buy and hold/buy the dip have triumphed. In contrast, directional changes in many so-called “fundamentals”, e.g. credit spreads, inflation/deflation, Fed policy and earnings, have often had limited predictive power.We could have delved even deeper into fundamental analysis, but questioned whether that would add much value for active portfolio managers. Many are questioning the value of
sellside research, and often their own convictions, in very tough industry conditions.There’s a case for the buyside and sellside to find different analytical approaches at this point.With that mindset, we analysed repeating patterns of peak-to-peak and trough-to-trough cycles in the Dow Jones index. The interference of many individual cycles creates a complex waveform in aggregate.
The analysis (for what it’s worth) suggested two things. Firstly, US equity prices have surprisingly behaved almost perfectly in terms of the trend since 2009, although we suspect that central bank policies significantly exaggerated price movements to the upside. Secondly, the next cyclical peak for US equities could occur in the final week of November 2017 (+/- one month)


Ritesh Jain