More information on the Chinese Five-Element (Yin-Yang) calendar method when used for market cycles analysis

Manfred Zimmel wrote a very interesting article at his amanita website about the Chinese calendar used for market cycles analysis. We already know this calendar incorporates the Five Elements which in turn are based upon yin-yang, as explicated in the book, I Ching: The Book of Changes and the Unchanging Truth (written by my beloved teacher's teacher, Master Ni, Hua-Ching). Manfred Zimmel's article written and posted in February, 2009 at his site, at http://www.amanita.at/Interessantes/Artikel/detail.php?id=1584, discusses this as well as western astrological views about market cycles. Below, I'll just quote the portions discussing specifically the Five-Element calendar:

Chinese zodiac cycle (length: 12 years): amplitude 22%

The Chinese years [within the calendar system] are also distributed very unevenly (pictures from http://www.chinaseite.de/china-kultur/chinesische-astrologie/chinesisches-horoskop/chinesische-tierkreiszeichen.html):

Is that in accordance with theory? Yes quite well:

#1 rabbit (element: wood): The rabbit is breeding fastest of all 12 animals, it is a universal fertility symbol.

#2 pig (element: water): The pig has a very positive meaning, too, in Europe a New Year gift that should bring good luck is a small pig (made of chocolate or plastic, for instance). Another symbol representing luck is the fly agaric, which is called „amanita muscaria" In Latin and the origin of the name "Amanita Market Forecasting".

#3 dragon (element: wood): In China the dragon is a symbol for luck similar to the pig in the West. Dragon years are considered to be beneficial for marriages and births in China.

It's no coincidence that the 3 weakest signs are the 3 fire signs: sheep, horse, and snake. Fire is destructive in Chinese tradition. Good times are stabilizing a situation while bad times are catalysts of change, change & transformation are another meaning of the element fire. At the very bottom of the hierarchy is the snake: of the 12 animals, the snake is the least liked and most feared, as well as bear markets and bad times. On the other hand, 2 of the 3 best signs (rabbit and dragon) belong to the element wood which stands for dynamic rise and growth.

It's interesting that each of the 4 elements represents a season: water = winter, wood = spring, fire = summer, metal = fall. Of the 4 seasons, summer (= fire) is the worst performing in the stock markets. Summer ends around 9/23 and late September also marks the average (statistical) bottom of the Dow Jones. Because the symbolic meaning and the empirical findings align well, the thousands of years old Chinese system is supported.

Sign ............. element ............. average profit (%) ........... next occurrence

1, RABBIT ... wood ................ 21.7 .................................... 2011

2, PIG ............. water .............. 13.5 .................................... 2019

3, DRAGON ... water .............. 12.0 .................................. 2012

4, ROOSTER .. metal .............. 10.5 ................................. 2017

5, DOG ............ metal ............. 8.5 .................................... 2018

6, RAT ............. water ............. 5.5 ................................... 2020

7, OX ................ water ............. 5.0 ................................... 2009

8, MONKEY .... metal ............. 3.9 ................................... 2016

9, TIGER ......... wood .............. 2.3 ................................... 2010

10, SHEEP ....... fire ................ 1.5 ................................... 2015

11, HORSE ....... fire ................. 0.0 .................................. 2014

12, SNAKE ....... fire ................. -0.4 ................................ 2013

Deriving a simple model
With an amplitude (difference between the best and worst year) of 22-23% the 12-year Chinese cycle and the 7-year planetary cycle are somewhat weaker than the 10-year decade cycle (amplitude 35%) but much stronger than the 4-year election cycle (amplitude only 6%). ....

For more about this model that Zimmel derives, check out his full article, because this zodiac information is only one of a few inputs he uses. And I am not saying that I subscribe to or endorse all his analyses or conclusions. My main point here and now, is to help people to understand that the Five Elements system that is so ancient still remains a remarkable one for understanding ourselves and, to some extent, pointing the way for our futures.