Solar Minima And The Financial Markets

If the mass human excitability that Tchijevsky identified leading into and around solar peaks translates into maximum risk-taking, speculation and buying in the financial markets, then might the mass human apathy associated with solar minima translate into conservatism, safety and maximum risk-asset selling?

The last solar minimum of December 2008 is shown below. Note that despite the official dating, solar minima are in reality drawn-out rounded affairs lasting a couple of years. The March 2009 bottom occurred in this period.



Could that be the nominal bottom of the stocks secular bear? I have advocated that it should be, using history as our guide, but interestingly, I have found that the nominal bottoms of the last 3 secular stocks bears all occurred not only in the middle of the secular bears, but all within 2 years of the official solar minima.

Here is 1932:


Source: Sergey Tarassov

Taking this further, I have established that within 2 years of each solar minimum over the last 100 years we have experienced panics and crashes if not outright secular nominal bottoms, as shown:


Cliquez sur l'image pour l'agrandir.

First, the stock market panic of 1901 (solar minimum Feb 1902). Then the financial crisis of 1914 (solar minimum August 1913) which involved closing key global stock and commodity markets for several months. Had they not been closed, it is expected the crashes would have been worse than 1929.

We had a crash in 1921 in stocks and commodities (solar minimum August 1923), a commodities crash in 1952 (April 1954 solar minimum), the sterling crisis in 1964 (October 1964 solar minimum), Black Monday 1987 (solar minimum July 1989) and the Asian financial crisis in 1997 (solar minimum May 1996). All saw massive falls in risk assets.

We reached the nominal secular stocks bear bottoms in 1932, 1942 and 1975, corresponding to the solar minima of September 1933, February 1944 and June 1976 respectively.

Forecasting ahead, I therefore expect that the next cyclical stock market low will be higher than March 2009 and that late 2008 / early 2009 bottom will turn out to be the nominal secular bottom, falling close to the solar minimum. Also forecasting ahead, I expect another crash or panic sometime in the window 2018-2022, around the next solar minimum. Drawing solar cycle predictions together, I expect a secular commodities peak in 2013, a cyclical stocks and commodities bear 2013-2014, a new secular stocks bull to erupt 2014/5 and make a 3.5 year up cycle on to the verge of the solar minimum, at which point a crash or panic should occur as apathy and conservatism overwhelms risk appetite.

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