I’m not the first analyst using time cycles to predict movements in the financial markets. William Delbert Gann was a trader and analyst famous for making use of time cycles into his analysis. In this article I want to have a look at the “Shemitah” Cycle also known as the “7-year cycle”.
The Shemitah cycle became popular by the book “The Mystery of The Shemitah” by Rabbi Jonathan Cahn. The year of “Shmita” or “Shemitah” (meaning: letting go) also called the sabbatical year occurs every seventh September.
The story behind the Shemitah is that the 7th year is the year of resting and releasing. Not planting nor harvesting any crops so the soil can recover from 6 years of growing and harvesting. They year also strands for debt forgiveness to break debt cycles.
So what makes this Shemitah cycle so interesting? Well, if we compare the Shemitah years with the financial markets we can see a very interesting correlation. Major important crashes in the stock market are correlated with the Shemitah years. Let’s have a look a couple of examples of stock markets crashes which fell all in Shemitah years,
- 1916 – 1917: Stock market drop 40% and many European countries are suffering an economic collapse.
- 1930-1931: The Great Depression, the worst financial crisis in human history.
- 1937 – 1938: Global Recession
- 1979 – 1980: Global Recession
- 1993 – 1994: Bond Markets Crash
Now let’s have a look at the more recent stock market crashes we have seen. In the year 2000-2001 we have seen the DOTCOM bubble pop. Where the stock market was experiencing a major crash. This happened to be a Shemitah year.
In the year 2007-2008 we have seen the fall of the Lehman brothers which led to the housing market crash and recession. This happened to be as well a Shemitah year.
The last time we have seen a Shemitah year was in the year 2014-2015. If we have a look at the stock market in that year, we can’t see any crash like we have seen in past Shemitah years, but we are seeing something interesting. In the year 2014-2015 the stock market is moving sideways and slows down within the established uptrend. So, although we are not seeing any crash, we do see weakness in the financial markets.
The next Shemitah year will start in September of 2021. Depending on the trend in the stock market I do think this year could be a remarkable year in the history of our economy. If we continue the upwards trend entering 2021, approaching September we should pay attention. Because it aligns as well with the fact that September is known to be the worst month for stocks. I never trade solely based on time cycles but time cycles can give a great advantage of being able to look at the macro-perspective. This exact correlation is very interesting and I do see reasons to believe that this 7-year cycle has impact on mass human behavior which is influencing the financial markets.
I’ve created an indicator which can help traders and investors analyzing the Shemitah year on various charts in Trading View. The indicator is included in the cryptocurrency trading course. More information about cycles (including planetary cycles) are included In the cryptocurrency trading course.