How to grasp the trend according to the cycle?
The cycle is divided into large cycles and small cycles.
The large cycle is the monetary policy of the Federal Reserve, such as interest rate hikes and interest rate cuts, which represents whether the currency is loose or tight. The small cycle is to judge whether it is in the early, middle, or end of the interest rate hike? Is it entering a pause in interest rate hikes, or entering the end of the pause in interest rate hikes? Looking back at historical data, we can find that:
1. The early stage of interest rate hikes is a destructive blow to the entire risk market. Whether it is cryptocurrencies or US stocks, they are basically falling. At the end of the interest rate hike, the entire risk market has risen.
2. Entering the cycle of suspending interest rate hikes is generally beneficial to the risk market.
So from an operational point of view, sell when the interest rate hike begins, and when the interest rate hike reaches the bottom, everyone has begun to predict that the interest rate hike will enter a pause and start buying. In the cycle of interest rate cuts, if there is no economic recession in the early stage of interest rate cuts, you can still hold positions. If there is an economic recession, then selling is a better choice. In such a cycle, you may not be able to escape the top accurately, but you can definitely get 70% of the entire rising cycle, and the risk is very low.
There is another cycle, that is, the more it falls before the mid-term election, the more you should buy, because it may rise better after the mid-term election. From the historical data, 14 out of the last 15 times are like this, and there is at least a profit margin of 40%-50%.