Refining the Commonality Principle


#1

Hurst in Profit Magic, Chapter 2,Timing is the Key, , page 32 , defines what is " Commonality"

Commonality is the second element of the Cyclic Model.

a) Summed Cyclicality is a common factor among all stocks.
b) Cyclicality exists in the price motion of all stocks.
c) The highs and lows of cyclic fluctuations are time synchronized.
d) The relative magnitudes of cyclic components are similar in all issues

These four statements are part of the principle of commonality.

These statements can be precised and refined.

A study of statement c) The highs and lows of cyclic fluctuations are time synchronized. shows that among components of the major indexes ( DAX 30, DOW JONES, CAC 40 = 100 components)

  • around 70 % made a major Low in march 2003 and march 2009
  • around 15 % made a major Low in october / november 2002 and october / november 2008

d) A study of statement d) The relative magnitudes of cyclic components are similar in all issues implies we can classify financial instrument according to their specific “vibration”, according to the “Fractal of Price” within which cyclic price motion fluctuates.


#2

Long Term Commonality ?


#3