TRADERS PRESS° POST OFFICE BOX 6206 GREENVILLE, SC 29606CYCLIC ANALYSIS: The Dynamic New Approach To Technical Analysis Of Stocks and Commodities J. M. Hurst Ly Traders Press, Inc.® Greenville, SC 20606 Pg© Copyright J.M. Hurst 1974 All rights reserved. No part of this work maybe reproduced or transmitted in any form ot by any means, electronic or mechanical, including photocopying and recording, or by any information storage or retrieval system without the prior written permission of the copyright owner unless such copying is expressly permitted by federal copyright law. Published by Traders Press, Inc. The material contained herein is not to be taken as advice to buy or to sell specific securities. The information presented is based on sources we believe to be reliable and has been carefully checked for completeness and accuracy but cannot be guaranteed. 1975-2000 25th Anniversary Traders Press Inc, PO Box 6206 Greenville, SC 29606 800-927-8222 864-298-0222 FAX 864-298-0221 Tradersprs@aol.com http:(/www.TradersPress.comublishers Comments For many years had heard that the work of J.M. Hurst was of great value to tech- ical analysts egpecially those interested inthe cyclical analysis of stock price move- ments, Upon looking into what composed the body of his work, I learned that most of t tras uiavailable to tgaders and investors. Hurst's primary work, The Profit Magic of Stock Transaction Timing bad gone out of pring. had heard rumors that Hurst had algo authored a lengthy ading couse on eyeles bu i, 00, vas long out of print. Having been involved fu esmnea! analysis and tading for many years myself 1 fel that it would be a valuable ontbution t te field of technical analyas to assure tha the work of Hurst was “kept flive” for present and future generations of traders and analysts T decided to make a spe- Gial project of “resusctating® his research in is vious forms. Ty fiat step was fo negotiate with Prentice Hall forthe rights to reprint Proft Magic asa Traders Press publication. This done, I next set about to locate a copy of the Hum course 1 knew that Hurst himself would be the best source of information on It However, due tothe various rumors | had heard about Hurst, 1 assumed tht he was n0, qonger ling, No one had seen or heard fom him in many years and it was commonly umored that he had died. I conducted a search to find nt only the Hurst cours, but also to Getermine whether Hurst was sill living and if so, how to contact him. Months of dligent seuching finally tamed up copy ofthe course Tian, ples analy of cone bie reptte, owned a copy ofthe couse and was kind enough to let me use it in order to reproisce the course. A further search fore owner of the rights to the course proved Tbcessfl, and | purchased them ffom hin, A final search resulted in finding Hurst alive nd well, to my surprise and delight have since had avery pleasant association and fiend- tip wilh him: He has esked me to keep his location and eoatact information confidential, and I intend to respect that wish “After reprinting Profi Magic and the Hurst Cycles Course, and sending copies to Hurst, e advised me that in 1974 he bad authored @ book which gave an overview and ummiaty ef the main points of the course, He very graciously offered me the rights t2 eprint et material, and this resulted inthe book you are now reading. This completed the Project had in mind from the beginning, to make al of the Hurst research and work avail- ble again to the investment community. “The course itself is quite lengiby and will prove exceedingly valuable to those willing to devote tho nevessary me and effort stugying and mastering the principles of Wading it aches. A Tonge Tar Pres ciniomer, wipo manages i exes of $100 Inllieg, advised mc that te sole method he used in his ming and selection decisions was ihe Hurst apron as aught inhi cour. Any reader oF this book who is meresed in ie fl course (oh aval exclusively trough Traders Prem) encouraged wo cota ‘Tauders Press for fall descriptive information. ‘The price paid for tis book may be de- dicted from the price ofthe course. Tis my hope that my efforts to preserve the work of Hurst will prove helpful to investors who avail themselves of his genius by studying his work. Sincerely, Yosark fd Mokoon Edward D. Dobson, President ‘Traders Press, Inc. Greenville, SC October 12, 1999bout the «Author James M. Hurst was educated at Kansas Scate, Brown, and Washington Universities, majoring in physics and mathematics. World War II and the advent of radar stimulated interest and training in electronics and the theory of communica tions. Following the war, Mr. Hurst specialized for 25 years in electronics systems design for aerospace applications. An interesting project related to antisubmarine warfare pro- vided experience with and appreciation of the power of large digital computers as applied to the problem of extracting information from time-series data Numerical analysis methods were first applied by Mr. Hurst to negotiable equiry dara in the search for a solution to the classical cost-effectiveness problem. This effort led to the discovery of the spectral signature phenomenon in price data (cyclicality), and to a Theory of lrational Decision Processes. The Weve Theory of Price Action described in chis paper is the first practical application of The Decision Theory to be developed. In 1969, Mr. Hurst founded Decision Models, Inc. for the purpose of further develop- ing decision theory and wave concepts as applied to the equity markets. The CycliTec aids to cyclic analysis of equities resulted and were initially published in 1971. Mr. Hurst has authored several creatises on the Wave Theory of Price Action. The first ‘was the book The Profit Magic of Stock Transaction Timing, published by Prentice-Hall in 1970, The paper Cycles for Profts in Stocks and Commodises was presented to the Society for the Investigation of Recurring Events on 15 June 1971. The paper Predic- tive Implications of Periodicity in Stock and Commodity Prices followed (presented to the “Technical Security Analysts of San Francisco, 18 October 1972). The last, and by far most extensive treatment isin the form of the CyeliTee Services Training Coune, initially published in 1973 by CycliTec Services, San Francisco. This course has been reproduced and preserved by Traders Press, Inc., Greenville, SC and has been renamed the JM Hurst Cycles Trading and Training Course. It is exclu- sively available through Traders Press.ynopsts “The advent of accurate and continuous equity price histories made possible he study of equity price movement as 2 function of time, independent of all other variables. Early studies of such data produced the conclusion that equity prices vary in a random, hence unpredictable, way. ‘This conclusion bas been replaced in the last decade as evidence mounts that equity price variation is ordered and quasi-predictable. “The relationship becween past and fisture prices is found to be complex and nonlin- ear, Current simplified models represenc price movement as consisting of a linear combination of wave functions with specific and consistent interrelacionships. This viewpoint has led to the development of the Wave Theory of Price Action. From this Wave Theory, a body of practical applications methods called Cyclic Anaty- sishas been evolved which permits fully integrated and wholly technical approach to the problem of trading and investing successfully in the stock and commodiey mar- kets. ‘This approach features the following unique capabilities: prediction of price-reversal timing, prediction of the price at an anticipated reversal, estimation of the extent of the price move expected to follow a reversal, and evaluation of transaction before entry in terms of risk and profit potential. Cyclic Analysis methodology has been field ested since 1971, and computerized analysis aids are available.reface Until 1979 my career followed the established path of university scientists and teach- ers the world over—writing papers, teaching students, presenting my work at con- ferences and visiting other workers in my field of scientific research. Then I was invited to spend a year as visting scientist with the Food and Drug Administration in Washington, D. C., bringing my family with me. ‘Since I had an interest in the stock market, mainly from the scientific aspect of using, digital filters to market data, | naturally paid a visit ro the local library to see what ‘was available on the subject of investment. I was astonished to find almost a whole ‘wall of books devoted to this topic, ava time when there would have been probably none, or at best a couple of books cn this subject back home in our local library in England. Imagine my delight and pleasure when after about three months I came across J.M. Hurst's book The Profit Magic of Stock Transaction Timing (published by Prentice Hall), Unknown to me, Hurst had been putting into practice for years methods of analysis of marker data that I had only recently begun to look at. Hurst was a ‘mathematical analyst with an engineering background and he employed techniques familiar to me as a scientist where I frequently analyzed the noisy output of various instruments. He also, in his book, satisfied the slight reservations I had as a scientist about the predictability of the stock marker by providing a great deal of evidence in support of the author’ theories about cycles and channels in stock price movement. If I had any criticism of the book ac all, it was simply that the average investor, picking it up and quickly scanning through its pages, would pethaps feel thar it was too mathematically orientated, and replace iton the shelf, because it contained terms such as Fourier Analysis, modulated sidebands, etc. The investor would then be miss- ing an important contribution to the subject of technical analysis. However, a reader who took the trouble ro study the bool in depth would grasp thar Hurst's work was based on five main concepts. These were: 1 Maximum profits are obtained from shorter wades 2, Some 23% of price morion is based on cyclic movements innacure 3 These cycles are additive