Sunspot (solar) 11-year cycle warns future may not be bright for stocks and financial markets

The 11-year cycle of sunspot (solar) activity suggests that the bull market may give out sooner than expected. When we looked at this 2 years ago, in my post CHARTLINES (tm): Cycles review, Part XII: Solar (Sunspot) cycle back in 2009, the correlations over the past 100+ years were eye-opening! Because if you go to that post and look at the charts, you'll see that this cycle has risen into maximum as the stock markets made highs, and went into the minimums (lows between cycles) as the stock markets made lows, over the decades. Here's a quick look at one of NASA's charts included with that post:

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

Currently we're in Cycle 24, which began in 2009 (yes!), and was projected to rise into 2012-2013 (same as the current bull market, according to various good analysts). Well - until now! The scientific community is abuzz about the revised predictions now issued, that a surprising change points to Cycle 24 giving out early. And the "worst" is, that we will probably go into an extended "minimum" for many years. That would suggest the stock markets also may meander in bear market slumps for a similarly long period.

You can read about the change in scientists' predictions in this article posted yesterday, Major AAS Solar Announcement: Sun's Fading Spots Signal Big Drop in Solar Activity at a site called "Watt's Up with That!", and as reported today at Yahoo! News, Scientists predict rare 'hibernation' of sunspots. And here's a quote of some of the most pertinent statements:

Scientists predict rare 'hibernation' of sunspots

by Kerry Sheridan – Wed Jun 15, 3:36 am ET

WASHINGTON (AFP) – US scientists say the familiar sunspot cycle seems to be entering a hibernation period unseen since the 17th century, a pattern that could have a slight cooling effect on global temperatures.

For years, scientists have been predicting the Sun would by around 2012 move into solar maximum, a period of intense flares and sunspot activity, but lately a curious calm has suggested quite the opposite.

Solar activity tends to rise and fall every 11 years or so. The solar maximum and solar minimum each mark about half the interval of the magnetic pole reversal on the Sun, which happens every 22 years.

Experts are now probing whether this period of inactivity could be a second Maunder Minimum, a 70-year period when hardly any sunspots were observed between 1645-1715 known as the "Little Ice Age."

"If we are right, this could be the last solar maximum we'll see for a few decades. That would affect everything from space exploration to Earth's climate," said Hill. …”

And it's fair for cycles analysts to conclude that the bull market highs that have gone along with Cycle 24's maximum are also something that won't be seen again for years ... and perhaps even decades ... I'd prefer not to be overly bearish. But I think there are valid projections that could go along with bear markets into and even past the year 2014.

There's another article that should interest anyone who studies cycles in stock markets, especially the long cycles (like the so-called Kondratieff cycles that range about 50-60 years). It's A Look at the Coming 6-Year Cycle Peak | Clif Droke | Safehaven.com, published there about a week ago. Here's a quote of what he discusses in the article:

Kress goes on to explain the importance of the 12-year primary directional cycle and its relationship to the 30-year cycle. He writes, "When adding 12 years at the time of the peak of the previous three 30-year cycles, the market's level in the twelfth year was higher than at the price of the peak of the 30-year cycle." He points out that by adding 12 years to the September/October 1999 peak of the previous 30-year cycle brings us to this year's September/October time frame. He also observes that the market's early May high of 1,365 in the S&P is over 10% below the 30-year cycle peak back in late 1999/early 2000.

So, Clif Droke (and Kress, who's quoted by Droke) look at cycles much longer than merely 6 years in that article. The article discusses why the market may be heading downward after this year.

Those who enjoy looking at charts should click the links above, since there are some really interesting ones in those posts and articles. I also find it very interesting that the ancient Chinese used a 12-year solar cycle, and scientists today study sunspot cycles that average almost the same time period. But the most important point I want to emphasize in this point is that the next sun cycle, Cycle 25, is beginning to be predicted as a bust and the potential long-term "minimum" could be very sobering.

Let's say for example that a supercycle wave I completed in either 2000 or 2007. We cannot then say with confidence that the ensuing supercycle wave II completed in 2009. It could extend with consolidation and bearish movement over a much longer period of time. Doesn't mean the $SPX has to go far below 667, but it can mean that it'll meander for a long time before attempting another run above whatever highs are traced this year.