I do recommend readers check out the full article at NASA's webpage, at the link above. For purposes of this particular post, I want to zero in on their chart showing sunspot activity since the year 2000. (At some point for longer-term studies of the market's long-wave cycles over the centuries, we might want to refer back to that lower-term chart showing the Maunder Minimum.)
New Solar Cycle Prediction - May 29, 2009
An international panel of experts led by NOAA and sponsored by NASA has released a new prediction for the next solar cycle. Solar Cycle 24 will peak, they say, in May 2013 with a below-average number of sunspots. ""If our prediction is correct, Solar Cycle 24 will have a peak sunspot number of 90, the lowest of any cycle since 1928 when Solar Cycle 16 peaked at 78," says panel chairman Doug Biesecker of the NOAA Space Weather Prediction Center."
[Below is a view of NASA's page at http://science.nasa.gov/headlines/y2009/29may_noaaprediction.htm (with the above quote encircled)](Upper right: A solar flare observed in Dec. 2006 by NOAA's GOES-13 satellite. (Click on any image to see it larger))
More from the NASA article:
"Even a below-average cycle is capable of producing severe space weather," points out Biesecker. "The great geomagnetic storm of 1859, for instance, occurred during a solar cycle of about the same size we’re predicting for 2013."
....Above: This plot of sunspot numbers shows the measured peak of the last solar cycle in blue and the predicted peak of the next solar cycle in red. Credit: NOAA/Space Weather Prediction Center.
The latest forecast revises an earlier prediction issued in 2007. At that time, a sharply divided panel believed solar minimum would come in March 2008 followed by either a strong solar maximum in 2011 or a weak solar maximum in 2012. Competing models gave different answers, and researchers were eager for the sun to reveal which was correct.
"It turns out that none of our models were totally correct," says Dean Pesnell of the Goddard Space Flight Center, NASA's lead representative on the panel. "The sun is behaving in an unexpected and very interesting way."
Researchers have known about the solar cycle since the mid-1800s. Graphs of sunspot numbers resemble a roller coaster, going up and down with an approximately 11-year period. At first glance, it looks like a regular pattern, but predicting the peaks and valleys has proven troublesome. Cycles vary in length from about 9 to 14 years. Some peaks are high, others low. The valleys are usually brief, lasting only a couple of years, but sometimes they stretch out much longer. In the 17th century the sun plunged into a 70-year period of spotlessness known as the Maunder Minimum that still baffles scientists.Above: Yearly-averaged sunspot numbers from 1610 to 2008. Researchers believe upcoming Solar Cycle 24 will be similar to the cycle that peaked in 1928, marked by a red arrow. Credit: NASA/MSFC
Right now, the solar cycle is in a valley--the deepest of the past century. In 2008 and 2009, the sun set Space Age records for low sunspot counts, weak solar wind, and low solar irradiance. The sun has gone more than two years without a significant solar flare.
"In our professional careers, we've never seen anything quite like it," says Pesnell. "Solar minimum has lasted far beyond the date we predicted in 2007."
In recent months, however, the sun has begun to show timorous signs of life. Small sunspots and "proto-sunspots" are popping up with increasing frequency. Enormous currents of plasma on the sun’s surface ("zonal flows") are gaining strength and slowly drifting toward the sun’s equator. Radio astronomers have detected a tiny but significant uptick in solar radio emissions. All these things are precursors of an awakening Solar Cycle 24 and form the basis for the panel's new, almost unanimous forecast.
According to the forecast, the sun should remain generally calm for at least another year. From a research point of view, that's good news because solar minimum has proven to be more interesting than anyone imagined. ...
Meanwhile, the sun pays little heed to human committees. There could be more surprises, panelists acknowledge, and more revisions to the forecast.
"Go ahead and mark your calendar for May 2013," says Pesnell. "But use a pencil."
Here's where it gets really interesting. After you see the sunspot cycle pattern in NASA's chart above, compare that with a chart of the Dow Jones Industrial Average. But not the one you're used to seeing that bottoms in 2002 and rises into 2007. I'm thinking of the inflation-adjusted version that screens out the effects of the greatly devalued dollar (which has 'conveniently' masked the great drop in asset values the U.S. has experienced over the past decade). Below is the Dow/gold ratio chart circulated publicly from time to time by "Chart of the Day," most recently several weeks ago which I posted along with their commentary at If the Dow-Gold ratio bounced up higher, will it be from the Dow rising or gold falling (or both)? Checking gold in 3 time frames (5/9/09) - this is the chart most commonly considered to show the inflation-adjusted Dow Jones Industrial Average. Below is just that portion of the post, with their chart and commentary:It would be fascinating to really track out the correlations (time doesn't permit me to do so). I understand that some others may have done that but I don't know that there's a public version to post or quote. Still, any student of the markets who knows major high and low points of the past few hundred years cannot help but find the NASA information intriguing. And even a casual review of "Chart of the Day"'s Dow/gold chart shows a startling similarity to the sunspot cycle since the year 2000.Chart of the Day
"Today's chart [5/9/09] presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.2 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces it took back in 1999. When priced in gold, the Dow is down 79% from its 1999 peak and the scale of the current two-month rally has not distinguished it from the many bear market rallies that have occurred over the past decade.""Webmasters, journalists, and bloggers may post an occasional free Chart of the Day on their website as long as the chart is unedited and full credit is given with a live link to Chart of the Day at http://www.chartoftheday.com."
Another area to consider would be the correlations to the ancient calendar systems that incorporated solar, lunar and planetary cycles with agricultural, commodity and market cycles. One example being of course the traditional Chinese calendar with its 10 "heavenly stems," 12 "terrestrial branches," and the pairing of these which yield confluences of 60-day patterns and 60-year cycles. Something I've referenced previously in this cycles review series of posts, and also at my Tao of Trading site.
Many equities analysts are projecting that the equities markets move into bear-market lows in the time frame around 2011-2015, and I don't reject those ideas out-of-hand. But my own work is showing that there remains a possibility that the equities markets can make a significant low, either later this year (perhaps September or later in the fall) or about mid-year in 2010. To be followed by a much more substantial rally, even with a theoretical new high (but don't get excited - can be a bear-market rally but much better than the one we've seen so far). Therefore, it's only natural that I find it personally interesting to see NASA's projected sunspot cycle dropping into a low perhaps this year, with a good bounce into 2013.
Below are my hypothesis or working analysis big-picture charts of the Dow Jones Industrial Average and the S&P 500 indices. If you look at this post, Long-term channel (5/22/09) that I posted at my UBTNB3 blogspot (link to that always at right), you'll also see a long-term price channel chart as located at Insights from Jeremy Siegel: 3 Reasons Why The Dow Will Hit 10,000 in 2009 (InvestmentU.com, 5/18/09). To accomplish the price targets I've mentioned in my long-term charts below, price would fall somewhat lower under Jeremy Siegel's long-term channel trendline that it already did. But when you look at his chart, you see that price already did poke under it during the lows of the 1970's/1980's - which can set up an outside and lower but still parallel trendline providing support for a poke lower presently. For that matter, breaking under but retaining a channel trendline would be consistent with such Elliott Wave views as a large expanded flat that can set the stage for a fifth-wave diagonal; or, that corrects the movement up from 1932 or so. (Depending on which it is, Jeremy Siegel may end up being right that the Dow will hit higher levels that people don't expect - even higher levels than Dow 10,000 but not in 2009. Although it's also possible for a sharp rally to test up to that level, probably along with SPX 950/960, before new lows later this year or into mid-2010, so we'll stay alert.) But also note that the potential projections I've noted on the charts below, can remain within the long-term price channel as it's marked on a different version of the big-picture chart, which I posted at Big-pic alternatives-equities (5/16/09) at my Unbiased Trading - No Bull, No Bear, No Bias (tm) (UBTNB3) site.
For those particularly interested in tracking the gold market, and if you haven't been reading my posts tracking it (use the "Gold" label in the labels list at right), I've been continuing to track the bull vs. bear cases for gold in terms of chart and technical analysis. Recently, gold moved up quite well in dollar-denominated terms, but that's partly because of the dollar's drop, This rally is much more muted in other currencies (although it made a new all-time high in other currencies, when gold made the $1007.70 intermediate swing high that hasn't yet been bettered). Frankly the odds would normally favor gold cycling downward right now, but it has not violated chart support so I'm remaining open to the possibility it may actually rally higher. In any event, moving to $1008 (not to mention $1034) will be most significant from a chart basis. In both the dollar and in other currencies, gold's recent rally has not yet confirmed the idea of a large third wave higher. So even though I do have a price objective at $1192, don't get gold fever before it breaks above those key levels, because if it fails to do that and loses support then I've got lower price projections including to $550.I've included the Solar Cycle in my "Cycles review" here because it's looking apparent to me that the Solar Cycle being tracked by NASA may have correlation to financial market activity, even though I'm not prepared to discuss reasons why. I know that there are others who track natural phenomena to financial markets - not just Raymond Merriman from the financial astrology point of view, but also those who show correlations with geomagnetic storms, and Chris Carolan with his "Solunar" model that correlates with solar and lunar cycles, and even Mike Korell's work at ChartsEdge with the daily maps based on VLF signals. I also know that Mike has done mathematical work examining those down to fractal measurements that may relate to "phi", and there are others working with such mathematical methods including Martin Armstrong and those involved with Gann analysis (such as Andy Askey at his PTV Investing blog). You can locate some background information on these using the labels list here, and of course by visiting the pertinent websites included in my list of "other sites of interest" at the right side of the page here.
Well this has been a time-consuming post on a pretty, sunny morning, so I offer this set of information for your consideration. And now I'm off to enjoy the sun in a more direct way! Hope you're enjoying your weekend; and I'll return later in the day with the forecast charts provided by ChartsEdge, as well as Andre Gratian's Turning Points weekend newsletter update.
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