Analyzing the Dow Jones Industrial Average Cycles:
What to Expect by October 2026
Introduction
If the current 18-month cycle aligns with the Hurst nominal model, the next low will occur in October 2026. However, if this 18-month cycle follows its actual length of 15 months, we can anticipate the next low in the summer of 2026, likely in July or August.
Understanding the 18-Month Cycle for the D.J.I.A
Let’s examine the broader context. If September 2022 marks the last low of the 54-month cycle, we are currently in the final 18-month cycle of the upcoming 54-month cycle (4.5 years). In this scenario, October 2026 is the likely timeframe for the next low. Typically, the third 18-month cycle tends to be less bullish and may even be bearish compared to the previous two.
Alternatively, if we consider October 2023 as the last 54-month cycle low, we find ourselves in the second 18-month cycle of the next 54-month cycle. Generally, this second cycle is expected to be less bullish than the first, spanning from October 2023 to April 2025.
When can we determine the nature of the upcoming 18-month cycle? A black dashed uptrend line on the chart, originating from the 2020 low, serves as a key indicator. If the Dow Jones Industrial Average crosses below this line, it will confirm that we are in the third and final 18-month cycle of the next 54-month cycle, suggesting a bearish trend. Conversely, if it remains above this line, we will likely be in the second 18-month cycle of the same 54-month cycle.
During the formation of the April 7 low, part of the candle dipped below this cycle line. To trigger a valid signal, the midpoint must clearly cross the cycle line, rather than just part of the candle. On April 7, the midpoint was at the cycle line, thus no valid downside trading signal was generated. From a trading perspective, knowing which 18-month cycle we are in is not crucial, as opportunities exist in both bullish and bearish trends.
The Dow Jones Industrial Average 40-Week Cycle
According to Hurst’s rule of synchronicity, the April 7 low also represented the 40-week cycle, coinciding with other lower time frame cycle lows. The last two 40-week cycles averaged 38 weeks in length, while the Hurst nominal model suggests an average of 38.97 weeks. For more detailed information on cycle lengths, please visit my website, tradingmarketcycles.com.
Using the average length of 38 weeks, we can expect this 40-week cycle to form a low in the last week of December (as indicated by the blue vertical dashed line). The peak for this cycle should occur around mid-August. During this peak formation, the Dow Jones Industrial Average is anticipated to cross above its cycle line, providing an upside target.
The location of the 40-week cycle peak will offer critical insights into the long-term trend. A crossing above the cycle line will be vital in assessing remaining bullish momentum in the market. The last crossing occurred during the second week of March, with a crossing point of 42,665, which set a downside target at 40,257. During the decline in the last week of March, the Dow Jones Industrial Average met and exceeded this target, forming a low at 36,611 on April 7. Since the beginning of the year, there has been one positive trading signal, achieving a success rate of 100% for the 40-week cycle.
On each following chart, there is a table with the cycle lines and their potential target if the the Dow Jones Industrial Average cross their cycle lines.
Discussing the 20-Week Cycle
Similarly, the last 20-week cycle formed on April 7, with a low at 36,611. Last week, the Dow Jones Industrial Average crossed above its cycle line at 42,120, indicating an upside target of 47,629—representing a potential profit of 5,509 points or 13%. However, this crossing is not particularly strong despite two bullish candles, so we should approach the new target cautiously.
Since the start of the year, the 20-week cycle has also generated one positive trading signal, yielding a 100% success rate. The last crossing occurred during the week of March 10 at 42,500, targeting 39,927, which was a 2,573-point or 6% potential profit. Following the 36,611 low, the Dow Jones Industrial Average exceeded this target on April 7.
The next 20-week cycle low is expected in the second week of August, with the peak forming around this time. This might explain the lack of strength in the recent crossing above the cycle line, as the market is currently in a peak phase. During the formation of this 20-week cycle low, the Dow Jones Industrial Average should find support around 42,138 on his cycle line. If it crosses sharply below its cycle line during this low formation, we could anticipate further declines.
Analyzing the Dow Jones Industrial Average 80-Day Cycle
During the last 80-day cycle, the Dow Jones Industrial Average crossed below its cycle line at 42,800, establishing a downside target of 40,546—offering a potential profit of 2,254 points or 5.55%. Following the low at 36,611, the index rebounded and crossed above its cycle line at 42,000 on May 15, presenting an upside target of 47,389—5,389 points or 12.83% potential profit. This target is closely aligned with the 20-week cycle target.
The next 80-day cycle low is anticipated soon. Should the Dow Jones Industrial Average turn negative, we will need to monitor the cycle line and its corresponding downside targets.
With one positive and one negative trading signal since the start of the year, the 80-day cycle has a 50% success rate. The first signal occurred on January 28, when the Dow crossed above its cycle line at 43,996, setting a potential upside target of 46,148. The Dow Jones Industrial Average fell short of this target due to the major peak formation within the 18-month cycle.
The Dow Jones Industrial Average 40 day cycle
The last 40-day cycle occurred on May 23, marking the first low since the major April 7 low. On May 1, the Dow crossed above its cycle line at 40,500, providing an upside target of 44,389—3,889 points or 9.60% potential profit. This target is just below the all-time high of 45,073. The next 40-day low is expected on June 16, followed by another on July 20.
Since the beginning of the year, the 40-day cycle has generated two trading signals. The first was on January 17, with the Dow crossing above its cycle line at 43,024 and targeting 44,204—a potential profit of 1,180 points or 2.74%. The Dow met this target six days later before reaching a high of 45,064. The second signal was negative, with the Dow crossing below its cycle line on February 21 at 44,359, aiming for a rapid target of 43,664, as the market was forming its 18-month cycle low. The 40-day cycle has a 100% success rate.
The Dow Jones Industrial Average 20 day cycle
With 4 positive trading signals out of 5 since the beginning of the year, the 20-day cycle has demonstrated a 80% success rate. The 20-day cycle is expected to have formed last Friday or today, representing the final 20-day cycle within the 80-day cycle.
In balanced market conditions, trading should only occur below his cycle line, due to the strong bullish momentum in the Dow Jones Industrial Average since crossing above its cycle line on April 22, the index has maintained trading above its cycle throughout the entire 80-day cycle.
On April 22, the Dow Jones Industrial Average crossed above its cycle line at 38,949, providing an upside target of 41,237, which was reached on May 2. Last Friday, the Dow Jones Industrial Average found support on its cycle. If the 20-day cycle forms this week, there’s a high probability it will occur by crossing its cycle line. The chart includes a table showing the cycle lines for the coming days and their potential targets if the Dow Jones Industrial Average crosses below them.
The trading opportunities are based on the interaction between price and the 20-day cycle FLD (Future Line of Demarcation). Within each 80-day cycle, which actually averages 68 days according to Hurst’s Nominal Model,
If Friday’s low marks the 20-day cycle low, we can expect the next one to form on July 4 or 5. At that time, the Dow Jones Industrial Average should find support on its cycle line. If it happens this week, we simply need to add the average 20-day length from the Hurst cycle nominal model, which is 17 days.
If the current 20-day cycle forms during mid-week, it will be a long cycle, typically indicating emerging bearish sentiment in the market. Indeed, in bullish trends, cycles tend to run shorter, while in bearish trends, they run longer than the Hurst nominal model suggests.
The 20-day cycle is crucial for trading, providing four trading opportunities, We use it to trade the 80-day cycle (approximately 2 months), during which the market generates 4 trading signals – two on the upside and two on the downside.
For more details on using the 20-day cycle for market trading, I recommend studying my roadmap from previous articles. It’s also possible to use another cycle for shorter trades; for example, to trade the 40-day cycle ( 1 month), you should use a 10-day cycle line, or what Hurst calls FLD. The rule is to use the cycle line of two timeframes lower than the cycle you’re interested in trading.
In conclusion,
In conclusion, the coming months are poised to be crucial for the markets, with several key cycles to monitor. In the short term, we need to pay attention to the developments of the 20-week cycle, which is expected to reach its low in the second week of August. This could create trading opportunities, especially if the Dow Jones Industrial Average manages to maintain support around 42,138.
Additionally, the 40-week cycle is projected to peak around mid-August, allowing us to assess the bullish strength of the market. If the index crosses above its cycle line, it could signal growing investor confidence and pave the way for new highs.
However, if bearish signs emerge, such as a drop below critical cycle lines, this could indicate a more negative long-term trend, with potential lows on the horizon.
In summary, it’s essential to remain vigilant and regularly analyze cycle signals to adjust our trading strategies according to market conditions. The months ahead could present both opportunities and challenges, and a well-informed approach will be crucial for navigating this period of uncertainty.
Really interesting analysis, thank you.
You are very welcome, if you have question please do not hesitate.