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Financial Calendar » Articles » Cyclical Trading Techniques » Quotes/Charts » Financial Astrology » Education Resources »
JM Hurst Applied Rocket Science to Cyclical Trading Techniques

When one thinks about the inspirational work in the arena of cyclical trading techniques, the names of Elliott and Gann are forever associated with applying simple wave theory to discern predictable trading insights within our commercial markets. The name of J.M. Hurst, however, is rarely remembered, yet his contributions may prove to be more valuable over time since he came along later in the process. Elliott and Gann arose from the Great Depression era, but Hurst burst upon the scene in 1970 and took cyclical trading to an entirely new level.

Hurst, an aerospace engineer, was well acquainted with turbulence and vibrational characteristics of rocket airfoils, a highly technical field where wavelike properties abound. On a whim, he and his financial backers, a group of wealthy investors, invested over 30,000 hours of computer time to unwind the vagaries of movements in the stock market. He soon published his landmark book, “The Profit Magic of Stock Transaction Timing”, followed by a “1,500+” page training course, that revealed the results of his more modern technical analysis research. Claiming success rates in excess of 90%, his secrets have been the topic of study for interested traders that have focused on stocks and bonds, as well as commodity, futures, and currency trading.

The ultimate irony is that this “aficionado” of timing detection published his groundbreaking work at the time of a major bear market, not the best of times to garner support for new stock trading ideas. Hurst, a bit of a “techno-geek” at heart, was repulsed by the tepid reception of his theories by the investment community and shyly withdrew into obscurity. His discoveries, however, have drawn a following over time, and others have taken his “displaced” moving averages and timing techniques to a new level of sophistication and forecasting competency. The chart below is but one example:

Charting software, employing Hurst’s timing techniques, generated the above plot, complete with moving averages and the “Yellow Circle”, well before the prevailing trend had run its course for the popular “Nasdaq 100” ETF. The major discovery by Hurst was not in proving that cycles exist or ferreting out their exact formulas, but in using the cyclical data that is already present in basic ticker information. While his book and training materials never explicitly detail his methods, perhaps because he thought they were obvious, analysts have been quick to extend his theories to practical and actionable trading strategies.

For the uninitiated, reading Hurst’s materials can be a complex journey into Fourier series, intensive math analyses, and pure “rocket science”. Perseverance is required, but newer software tools can make the subject matter come alive. Many analytical types, however, may walk the other way once they determine that Hurst distilled his complex theories down to the nuances of his simple moving averages. How could anything as simple as the oldest indicator known to man ever yield positive trading guidance? Hurst supporters would shout an unequivocal “Yes” to that query.

Elliott and Gann have their avid enthusiasts, but the “band” that has recognized the value of Hurst’s contribution is growing day by day. Several websites are devoted to his methods, and customized software or ebooks are available for those that wish to dig deeper into a relatively obscure technique. As with Elliott and Gann, critics have been quick to discount any worth in cyclical concepts that are not instantly understandable in easy to implement steps. However, experienced traders have learned to appreciate complex trading models that are not acceptable to a broad public audience. Secrets have more lasting value when confined to a few.
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