Looking at long-term indicators can reflect patterns not discernable in short-term analysis. The great cyclical bull and bear markets over the last 19 years can be seen in the chart of the S&P500 below. The top panel of the chart illustrates the zero-lag 10-day moving average (green line), while the middle panel (magenta line) shows the 300-day zero-lag velocity [VEL], with the lower panel (red line) reflecting the 500-day Jurik RSX [RSI].
When Focusing on the 300-day velocity, we can see that after the 2000 tech-bubble burst the velocity stayed negative for 2 years [2001-2002], and then finally crossed above zero at the beginning of Q3 in 2003. The current pattern of 300-day velocity suggests that perhaps another 4-8 months will be needed before it crosses above zero. At that point, we will be clearly at the beginning of the next cyclical bull market.
On the bottom panel of the chart, one can note that the 500-day RSX [RSI] indicator bottomed out during Q1 of 2003, which was a great buying opportunity. The 500-day RSX for today's close (May 22) suggests another post-bubble-burst buying opportunity.
