Last year, I’ve posted a cycle theory on HSI : http://clcheung.wordpress.com/2012/09/23/hidden-cycles
While I have not adjusted the cycle length as far, here is an updated diagram:
To make it clearer to see, zoom in a bit :
It seems the cycle is still in effect. Good news is, if history repeats, HSI has passed the bottom and started a new cycle already. It is on a uptrend.
However, even a cycle really exists, the top and bottom of the cycle may be drifted from the predicted time frame by months. As one may expected there usually deep V at the market collapse bottoms, drifted by such a scale means that the cycle is not that useful.
But since the cycle length is about to be 368 days, a 92 day moving average can be used as a trend trading signal to capture the major wave:
But if the market goes higher, the current turnover seems not enough. Either the index goes sideways and MUPI turn strong, or new money flow into HK to support this cycle.
You can argue that the historical data is not enough or the recent movement seems not fitting well the cycle lines. I have doubts too. It seems the recent price movement indicates the cycle length is widen a bit.
Well, it is a believe it or not theory. Let’s see.