Don't laugh, this analyst says he has a buy-cycle built for you
Smirks and giggles. For Peter Elaides, they go with the territory. The Dow Jones popped above 1,300 last week. And plenty of sages on the Street say this rally has some oomph left in it. So why guffaw when a guy predicts 1,750 on the Dow by year-end?Skip to next paragraph
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Well, it's his method. When folks discover how Mr. Elaides makes such forecasts, most lump him in with crackpots who chart the market by tracing the bumps on a toad's back or counting bubbles in grape Nehi.
Elaides relies on cycle theory -- an arcane branch of technical analysis. He peddles the idea that the stock market follows rhythmic, recurring patterns. So? Most technicians look for patterns. Except most technicians don't know when the next ``head-and-shoulder pattern'' (or whatever) will form. Eliades claims his patterns will repeat on a regular schedule.
He also sells perpetual-motion machines, right?
No, he does not. But based on interpretations of 40 to 50 ``fairly consistent, interacting cycles,'' he has had some success pinpointing tops and bottoms in the stock market.
And there are fewer snickers these days, as well as more followers paying $220 a year to get his StockMarket Cycles bimonthly newsletter. Started in Los Angeles in 1975, it has attained a subscribership of some 2,000 -- a respectable figure in this business -- with ``a lot of brokers, some institutions,'' and, he says, a growing number of index options and futures traders.
``If I told you I never made a mistake, I'd be lying,'' Eliades grants. For instance, he missed the January rally and the bottom preceding last week's buying spree that pushed the Dow to a record 1,309.70.
But his record in timing the market remains better than most.
Three months before the Jan. 24, 1983, Dow Jones low of 1,013, Mr. Eliades cited that exact date as a near-term bottom. And last November, with the Dow lingering around 1,170, his cycle charts showed the index would hit 1,300 by mid-March. On March 1, it climbed to 1,299.36.
``I've never seen a cycle theorist who came up with as many on-the-money calls,'' says Robert James. ``In the last three years he has probably hit more turns than anyone else in the market.'' Mr. James is editor of Timer Digest, a Fort Lauderdale, Fla., newsletter that tracks the performance of around 45 market timing newsletters.
The success of such innovations as mutual fund switching and stock index options has given fresh relevance to market timing. But longevity is a rare trait among timers. Mr. James says his top performers' list of 1982 carries few of the same timers today.
In addition to Eliades, James now lists Robert Nurock (The Astute Investor), Gerald Appel (Systems & Forecasts), Gerald Gordon (The Gordon Market Timer), and the top timer of 1984, Robert Prechter (The Elliott Wave Theorist), as the best market timers. Following their advice, James says, investors could have made 25 to 35 percent on their money last year.
Another breed of cyclical timer doing well of late, says James, is Larry Berg (Astro Letter), who bases his stock market predictions on geomagnetic disturbances -- sunspot activity.