- Expansionary periods (low rates, money creation) - Followed by contraction/normalisation
Central banks now deliberately manipulate liquidity, interest rates, and asset prices to control economic cycles, using monetary policy as a precision tool rather than a blunt instrument.
Cycle Characteristics (based on historical cycles):
- A cycle has 4 seasons (Spring, Summer, Fall, Winter) - Each season with a cycle lasts 365 days - The Cycle Low happens towards the beginning of the Spring Season of each new cycle - This is followed by a run up throughout the Spring and Summer Season - The Cycle High happens towards the end of the Fall Season - The Winter season is characterised by price corrections until establishing a new floor in the Spring of the next cycle
Key Functionalities
1. Cycle Tracking - Divides market history into 4-year cycles (Spring, Summer, Fall, Winter) - Starts tracking cycles from 2011 (first cycle after the 2007 crisis cycle) - Identifies and marks cycle boundaries
2. Visualization - Colors background based on current cycle season - Draws lines connecting: - Cycle highs and lows - Inter-cycle price movements - Adds labels showing: - Percentage gains/losses between cycles - Number of days between significant points
3. Customization Options - Allows users to customize: - Colors for each season - Line and label colors - Label size - Background opacity
Detailed Mechanism
Cycle Identification - Uses a modulo calculation to determine the current season in the 4-year cycle - Preset boundary years include 2015, 2019, 2023, 2027 - Automatically tracks and marks cycle transitions
Price Analysis - Tracks highest and lowest prices within each cycle - Calculates percentage changes: - Intra-cycle (low to high) - Inter-cycle (previous high to current high/low)
Visualization Techniques - Background color changes based on current cycle season - Dashed and solid lines connect significant price points - Labels provide quantitative insights about price movements
Unique Aspects
1. Predictive Cycle Framework: Provides a structured way to view market movements beyond traditional technical analysis 2. Seasonal Color Coding: Intuitive visual representation of market cycle stages 3. Comprehensive Price Tracking: Captures both intra-cycle and inter-cycle price dynamics 4. Highly Customizable: Users can adjust visual parameters to suit their preferences
Potential Use Cases
- Technical analysis for long-term investors - Identifying market cycle patterns - Understanding historical price movement rhythms - Educational tool for market cycle theory
Limitations/Considerations
- Based on a predefined 4-year cycle model (Liquidity Cycles) - Historic Cycle Structures are not an indication for future performance - May not perfectly represent all market behavior - Requires visual interpretation
This script is particularly interesting for investors who believe in cyclical market theories and want a visual, data-driven representation of market stages.
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