CYCLEPEDIAThe trading encyclopedia
IT
James Marsden Hurst 1924—2005

Chapter 8.2 — Trading by Logic

Cyclic market state (Hurst)

Every trade's first move: cyclic analysis of the Averages. The 1 November 1968 case: three cycles on the Dow, one operating verdict, and the half-span check with a 1001±14 target.

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Who this entry is for — "Buy, or sell short?" is every operation's first question, and the answer is not sought on the stock: it is sought on the Averages. Here is the book's complete worked example, dated 1 November 1968 — with all the numbers.

Source: J. M. Hurst, The Profit Magic of Stock Transaction Timing, Prentice-Hall, 1970 — Chapter 8, Determining the "State of the Market" (pp. 124–127, Fig. VIII-1).

Prerequisites

Hurst nominal cycles and Chapter 2's Dow measurements: here they are used as clocks.

The three clocks on 1 November 1968

In plain words — For each Dow cycle: when it made its last low, its recent average duration, hence where it stands on the dial — remembering that the top comes at half duration. Three hands, one verdict.

Cycle Last low Position Verdict
4.5 years (recent average 52 months) — 24 months Nearly halfway: push "slightly up to sideways"; low expected ~Q1 1971
18 months (71±4 weeks) 817.61 — week ending 22 Mar 1968 32 weeks Top expected at ~35–36 weeks: 3–4 weeks of upside left
26 weeks (21.4±3.5) 863.33 — point "J", week ending 9 Aug 1968 12 weeks Already topped 1–2 weeks ago: rowing against
HURST 1970 · CH. 8 The state of the market: three clocks 1 November 1968 — the Dow analysis that opens the anatomy of a trade CYCLEPEDIA DIAGRAM — EMICICLO 4.5-year cycle (“bull-bear”) 24 months of ~52: nearly halfway — top approaching, low due ~Q1 1971 18-month cycle TOP (½ DURATION) 32 weeks of 71±4: top 3–4 weeks away 26-week cycle 12 weeks of 21.4±3.5: already topped 1–2 weeks ago Verdict: one last ~month-long push, then “considerable downside activity” — short longs, ready to flip short. HALF-SPAN CHECK conjunction 932 → target 1001±14 DJIA ON 1 NOV 1968 948,4 Before picking the stock, you pick the side of the market.
The three clocks of 1 November 1968: each cycle's hand against its top (half duration).
Tap the three hands

The composite verdict, in substance verbatim: the residual push of the 4.5-year plus the 18-month will temporarily overweigh the 26-week — but only for 3–4 weeks; then the 18-month and 26-week will both be downside with the 4.5-year flattening. Hence: one last push, then "considerable downside activity" → "trade long for about a month — then switch to the short side as action signals develop" — cautiously, short trades, modest expected yields, "since we are in the vicinity of a market top-out".

The computational check

In plain words — Delicate moment (cycles in conflict) → a second opinion from the half-span. The 10-week average confirms the August low and delivers the target: Dow at 1001±14.

On the expanded plot around the 9 August low (Fig. VIII-1), the 10-week average — a close approximation of the 21.4-week cycle's half-span — confirms the low and gives the conjunction in the week ending 27 September 1968 at 932. From there, Chapter 6's ruler: the rise 863→932 (69 points) is half the total (138±14) → target 1001±14 (987–1015). At the 1 November close (948.4), at least 39 points remain to the top: the month-long window is confirmed, "and we can feel free to continue as planned".

Warning — This is the marriage of Chapter 5's doctrine (the Averages treated as a stock, the side compass) and Chapter 6's ruler (the half-span). And the historical validation sits in the experiment entry: the predicted sequence — dip to 930–950, rise to 960–1000, steep drop toward 890–930 — played out in full.

Summary card

Step Action
1 Clock each index cycle (last low + average duration → position)
2 Each cycle tops at half duration
3 Composite verdict: who pushes, who brakes, for how long
4 Half-span check with conjunction and target
5 Side decision: long/short, and with what caution
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