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Peter Eliades: Cycling the Markets

| Last Updated: December 21, 2010 | Posted in: Individual Gurus

Guru Accuracy Rating
This is below average. Current guru average is 47%

As suggested by a reader, we evaluate here the public stock market forecasts of Peter Eliades since late 2002. Evaluated predictions/recommendations come indirectly via MarketWatch columns, which have reported his commentary sporadically in recent years. Peter Eliades is editor of Stock Market Cycles. His “approach to the market is based on the theory that stock prices move as a result of a combination of cyclical forces. The theory contends that the major trends of stocks and stock averages are determined by fundamentals which affect a stock or a stock average smoothly. The trend is sideways, up or down at varying angles, and is subject to change when fundamentals change. These smooth fundamental trends are affected by cycles and the cycles are most important for market timing because they repeat with a good degree of regularity. At any one time there are theoretically scores of cycles acting simultaneously on the market, making analysis a more difficult process than a simple breakdown of mathematical formulas.” The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. We conclude that:

  • Peter Eliades cycle combinations tend to complexity.
  • There is a long gap in coverage between early 2004 and mid-2008, when Peter Eliades’ outlooks are apparently of no interest to the columnists. It appears interest may peak after bear markets and wane after bull markets persist.
  • Peter Eliades’ forecast sample is very small, as is therefore confidence in the measurement of his accuracy.

To augment the tabular summary below, we note that:

From Peter Brimelow in MarketWatch (12/23/10): “…Peter Eliades’ Stock Market Cycles (down 8.06%) [has] had two bad years after his great success in 2008.”

From Peter Brimelow in MarketWatch (9/30/10): “…through August…portfolios were up an average of 0.5% by Hulbert Financial Digest count compared to negative 3.9% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. …Over the last three years, it’s up 3.6% annualized versus negative 8.13% annualized for the total return Wilshire 5000. Over the past ten years, Stockmarket Cycles is up an annualized 3.53% against a 1.07% annualized loss for the Wilshire.”

From Peter Brimelow in MarketWatch (12/24/09): “Another of last year’s top 10 is in the bottom 10 for 2009: Peter Eliades’s Stock Market Cycles (down 12.5%). It also has a checkered — but by no means catastrophic — career, and a strong medium-term record.”

From Peter Brimelow in MarketWatch (5/18/09): “…recently, Stockmarket Cycles has been treading water, down 0.8% versus negative 1.16% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. …Over the past three years, the letter has achieved a 2.9% annualized gain, against negative 10.72% annualized for the total return Wilshire 5000. Over the past five years, it has achieved a 3% annualized gain, versus negative 2% annualized for the total return Wilshire.”

From Peter Brimelow in MarketWatch (12/17/08): “Peter Eliades of Stockmarket Cycles…: long, somewhat checkered history; esoteric method; currently on a multi-year roll.”

From Peter Brimelow in MarketWatch (8/4/08): “Over the past 12 months, Stockmarket Cycles is up 18.89% by Hulbert Financial Digest count, vs. negative 12.53% for the dividend-reinvested Dow Jones Wilshire 5000. Over the year to date, when many recent leaders have been hit hard, Stockmarket Cycles is up 14.3%. …Over the past three years, Stock Market Cycles is up 5.51% annualized, vs. only 5.02% for the total return DJW. …Over the past 10 years, the letter has achieved just a 2.8% annualized gain, vs. 3.59% annualized for the total return DJW. Over the entire time since the Hulbert Financial Digest began following it, in 1985, the letter has lagged the market significantly, 4.8% annualized vs. 11.6% annualized.”

From Peter Brimelow in MarketWatch (12/15/03): “Eliades has a record of occasional remarkable success — the “hot hand”…but…he seems to be able to keep his down years under control… In 2003, Eliades lost some 2.4 percent.”

From Peter Brimelow in MarketWatch (9/18/03): “…his record is an odd mixture of brilliance and bust that averaging his portfolios doesn’t really catch. Over 15 years, Eliades’ average portfolio appreciated at an annualized 5.6 percent vs. 11.6 percent for the market. But on a risk-adjusted basis, his pure market timing beat the market.”

From Peter Brimelow in MarketWatch (7/4/02): “Over [Feb. 28, 1998 to May 31, 2002], the Wilshire finished flat (the total value of all stocks in the country is essentially the same as it was more than four years ago), several mutual fund investment letters produced significant annualized gains: …Peter Eliades’ Stockmarket Cycles : +7.3 percent…”

See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.

    S&P 500 Index  
Date Comments re:  Peter Eliades at MarketWatch 21-Day Return 63-Day Return 126-Day Return 254-Day Return  
12/21/10 … he sees the potential for a 25% gain on the S&P 500 during the first half of 2011. 2.3% 3.1% 3.3% 0.0%
8/9/10 … the S&P 500 Index…is now readying itself for a journey to a potentially major top within the next two-four weeks.” -2.6% 8.3% 16.2% -0.6%
5/24/10 …Eliades is still in cash. 1.7% -0.2% 11.5% 23.0%
3/18/10 “The odds are beginning to favor a pullback of at least short term proportions. At the same time, there are some things happening internally in the market which suggest that any top of significance in the market is still likely months away.” 2.7% -4.4% -3.5% 11.4% +
11/18/09 …the Dow Transports’ new rally high helps to “tilt the intermediate trend market outlook to bullish.” -0.7% -0.1% -3.4% 7.9%
11/10/09 …currently is quite bearish is Peter Eliades…he believes that Monday’s action was a “final fake-out move to the upside.” 0.9% -2.3% 7.2% 9.7%
8/17/09 Depending on risk tolerance, Eliades is currently recommending cash, Rydex Inverse 2x S&P 500 ETF, or shorting the September S&P 500 e-mini contract. 9.1% 11.0% 11.8% 9.8%
7/8/09 “Using a classic measurement technique whereby the distance in points is measured from the top of the head of the formation down to the neckline and then carried over to the breakdown level to calculate an equivalent number of points, …we arrive at a target for the S&P cash around the 822 level.” 13.4% 18.3% 29.2% 22.6%
6/8/09  “We can still make a case for nominal 10+ year projections down to around the 4,000 level on the Dow Jones Industrial Average DJIA and the 400 level on the S&P 500 Index. In order to invalidate those projections, the Dow and S&P would have to rally over 15%-20% from current levels by the end of the year. We do not believe that is in the cards.” -6.3% 6.8% 17.1% 15.7%
6/1/09 …there is a good chance that the Coppock Guide’s recent buy signal will “not end up being a good one.” -2.5% 9.3% 17.8% 17.0%
5/18/09 “We believe this market is in danger, perhaps even great danger, once again. …this market could be headed to new lows for the year much sooner than most believe possible.” 0.1% 10.4% 19.5% 17.8%
5/4/09 …he’s 100% in cash… 2.7% 8.8% 17.5% 24.3%
2/1/09 Eliades is in cash… -13.6% 6.3% 19.6% 28.8% +
1/26/09 “Subject to the qualification…, we must admit to being bullish on the market, at least for the short-term.” -8.6% 3.5% 17.1% 29.6%
12/17/08 …Eliades is not cheerful at all; in fact, he’s itching to go short. -11.0% -13.3% 1.5% 23.2% +
10/8/08 Eliades says his work suggests, tentatively, a low of 8,000-8,600 on the Dow. -8.1% -7.9% -16.2% 9.3% +
9/25/08 His stock-index futures traders are modestly short… -27.5% -28.6% -31.1% -12.3% +
9/11/08 …his “preliminary projection” for the Dow Jones Industrial Average is a decline to at least 8,847, and to 918-976 on the S&P 500. -28.0% -28.9% -39.9% -15.7% +
8/4/08 “…we could well see a trading bottom established sometime over the next week or so, but this week’s action speaks loudly about the market’s long-term prospects and tells us they are not good.” Longer term, Eliades says his four year cycle work calls for an S&P 500 decline to “976.69 plus or minus 60 points…” Eliades’ mutual fund switching portfolios are 100% in cash. 2.1% -23.6% -33.9% -20.2% +
6/22/08 “This could well be signaling the end of a 33-plus year uptrend in the stock market and mark the beginning of, at best, a multi-year sideways consolidation or, at worst, a painful bear market.” -8.0% -37.6% -42.5% -20.4% +
3/16/04 Eliades thinks it is ominous that the stock market has been unable to rally from last week’s high TRIN readings. He interprets that to mean that there is “great instability in the market.” …Eliades believes that…the odds of a market crash are now much higher than average. “Readings such as we currently see on the Trading Index moving averages are usually signaling us that some kind of market bottom…within the next two-three weeks, if not sooner. The tricky part of that equation is that it tells us nothing about the price vulnerability between now and that bottom. It could turn out to be very significant.” 1.6% 1.9% 1.6% 7.1%
2/11/04 “…one would have to bet that the next big move in the market will not be to the upside… There is an amazing unanimity of opinion that this is a great time to have money in the market. That unanimity almost guarantees this will not be a good year for the stock market.” -3.2% -5.4% -7.1% 4.2% +
12/10/03 Eliades says his esoteric numerological “price projection technique” now makes him think the Dow will probably be unsuccessful in overcoming 10,000… “Stock-index futures traders should now be shorting S&P futures…” 6.4% 4.5% 7.3% 13.6%
9/18/03 …he’s in cash. 0.0% 3.4% 8.0% 7.1%
8/6/03 “…the probability that we have seen a top of some importance and perhaps even a top of very major importance increased substantially today.” 5.6% 9.5% 16.5% 11.6%
7/3/03 “The Bradley Indicator calls for a top on July 2nd followed by a consistent decline into September 14th.”…Right now, according to Eliades, the Bradley Indicator is hot. -0.3% 3.3% 12.8% 12.5%
6/13/03 Eliades…remains as convinced as ever that this is not the beginning of a new bull market. …”You can argue with us until you are blue in the face but there is no way you will convince us or anyone else with a knowledge of market sentiment and its history over the past 40 years that a market bottom of any significance has been seen.” 1.2% 2.8% 7.1% 14.5%
5/16/03 Eliades says that he will remain bearish until these lines are crossed, at which point “we will retreat to our cave and pore over our charts even more carefully to see what might have gone wrong.” 7.1% 4.9% 12.1% 15.3%
11/27/02 Eliades maintains two different mutual find timing models, one for Fidelity funds and the other for Rydex funds. Both currently are bearish. -6.3% -10.4% 2.6% 13.6% +

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