Solar Minima And The Financial Markets

If the mass human excitability that Tchijevsky identified leading into and around solar peaks translates into maximum risk-taking, speculation and buying in the financial markets, then might the mass human apathy associated with solar minima translate into conservatism, safety and maximum risk-asset selling?

The last solar minimum of December 2008 is shown below. Note that despite the official dating, solar minima are in reality drawn-out rounded affairs lasting a couple of years. The March 2009 bottom occurred in this period.

Could that be the nominal bottom of the stocks secular bear? I have advocated that it should be, using history as our guide, but interestingly, I have found that the nominal bottoms of the last 3 secular stocks bears all occurred not only in the middle of the secular bears, but all within 2 years of the official solar minima.

Here is 1932:

Source: Sergey Tarassov

Taking this further, I have established that within 2 years of each solar minimum over the last 100 years we have experienced panics and crashes if not outright secular nominal bottoms, as shown:

First, the stock market panic of 1901 (solar minimum Feb 1902). Then the financial crisis of 1914 (solar minimum August 1913) which involved closing key global stock and commodity markets for several months. Had they not been closed, it is expected the crashes would have been worse than 1929.

We had a crash in 1921 in stocks and commodities (solar minimum August 1923), a commodities crash in 1952 (April 1954 solar minimum), the sterling crisis in 1964 (October 1964 solar minimum), Black Monday 1987 (solar minimum July 1989) and the Asian financial crisis in 1997 (solar minimum May 1996). All saw massive falls in risk assets.

We reached the nominal secular stocks bear bottoms in 1932, 1942 and 1975, corresponding to the solar minima of September 1933, February 1944 and June 1976 respectively.

Forecasting ahead, I therefore expect that the next cyclical stock market low will be higher than March 2009 and that late 2008 / early 2009 bottom will turn out to be the nominal secular bottom, falling close to the solar minimum. Also forecasting ahead, I expect another crash or panic sometime in the window 2018-2022, around the next solar minimum. Drawing solar cycle predictions together, I expect a secular commodities peak in 2013, a cyclical stocks and commodities bear 2013-2014, a new secular stocks bull to erupt 2014/5 and make a 3.5 year up cycle on to the verge of the solar minimum, at which point a crash or panic should occur as apathy and conservatism overwhelms risk appetite.

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8 thoughts on “Solar Minima And The Financial Markets

  1. There is an extraordinarily bullish case that agrees with your scenario that 2009 as the bottom. One is that the bear market from 2000 to 2009 looks like an exquisite Elliott ABC 4. Which would mean we could be in 1 of a 5 impulse wave up. The other is Gann’s Master Time Factor, the 60 year cycle. 60 years ago the US was near historically low interest rates with historically high debt levels. We were in the Korean War. Europe and Japan were in shambles. People were fearful of falling back into a depression. Sound familiar? But somehow the stock market just kept going up as it “knew” we were embarking on 15 years of strong growth, mild inflation, and gradually increasing interest rates. That is very interesting historically rhyming poetry to me. The factor that does not agree with you is that commodities topped in 1951 corresponding with 2011 and fell 30% and stayed flat for 15 years thereafter. The previous is so hard to believe it gives strong contrarian credence. Of course, even if we are in a 1 up, it leaves room for a double bottom 2 of the 2009 lows.
    Ref the sunspot cycle and S&P cycle above. I think the drop from the 2000 high in sunspots from above 400 to around 25 corresponds to the 2011 drop from above 200 to around 25. Even though the sunspots rallied back to a double top, the 2000 bear market continued. So I guess I’m thinking that 2 down beginning is imminent.

  2. John,

    This forecast is very compelling, as usual.

    If 2009 was indeed the secular stocks nominal low, then I think inflation will have to be VERY high in order to bring real (inflation-adjusted) stock prices low enough to cause the sort of despair normally associated with secular bull conclusions. Of course, very high inflation does fit well with your other analyses.

    If the Dow/Gold ratio is to reach 1:1 (as it has in the past), then gold will have to reach at least $6600/ounce… My personal estimation is $8800.

    Also, the geomagnetism peak following the Feb/March 2013 solar peak will mark a recession (a “no-fail” relationship as you show on your Ultra Long Term Models page), and that is likely to be around 2014/2015 – so there will almost certainly be a chance-in-a-lifetime opportunity to buy stocks during the forthcoming recession and hold them for the longer-term…

    Regards,
    Mark

    1. Just thinking – maybe the despair will not be provided by rapidly falling stock prices, but rather the sheer length of time (14/15 years) they will have been going nowhere. And if other asset prices like commodities have been going ballistic by then, I can imagine similar headlines to 1982 telling investors to forget stocks…

  3. http://www.solen.info/solar/polarfields/polar.html

    HI John

    The relationship between solar minima and stock market crashes has been bugging me since I saw the above chart.

    I googled it and your article came up high on the list.

    There is an inconsistency with the chart and your article:

    “Black Monday 1987 (solar minimum July 1989) ”

    According to the chart, the SSN solar minimum was Oct 1986, not July 1989. I point this out because, on the chart, the crashes all appear to have occurred approximately one year after the solar minimum, with the exception of May 1976.

    I appreciate the sample size on the chart is small, but I wonder where you sourced the data for the solar minima? Could it be that the correlations are “tighter” than your initial appraisal suggest?

    I’m no mathematician, but I believe it possible that there is a harmonic that links the larger grand minima (Dalton etc.), planetary tidal forces and Schwabe cycle durations (that impacts on your commodities/ shares cycle) that is yet to be identified. Unfortunately, I don’t have the brain power to compute it.

    Food for thought!

    Regards

    TDL

    1. Thanks TDL. Wikipedia was my source, I believe, and having checked I just made an error there – 1986 it was, not 1989. The others appear correct.

      If you can produce something visual to cover the harmonic you have in mind, I would be interested to see it.

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