In Technical
Analysis Explained, Martin Pring notes that since there are three
major financial markets (stocks, bonds and commodities) and each has two
turning points in a given cycle, there are six turning points in each cycle. He
calls these turning points the six stages and uses them as a reference point
for identifying the current phase of the business cycle and by extension the
next likely turning point.
Stage 1: Slowing growth rates or early recession. Interest rates
start to fall and bonds rally.
Stage 2: Business cycle trough. Stocks begin to rally.
Stage 3: Late recession and early recovery. Commodities begin to
rally.
Stage 4: Early recovery. Interest rates trough and bonds peak.
Stage 5: Cycle peak. Stocks peak.
Stage 6: Slowing growth, commodities peak.
