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100-Year Market Theory
The 100-Year Market Theory is the first U.S. Equity Market theory which combines long-term fundamental valuations with technical analysis over an extended period. The theory is founded on the following premise:

"Excess market valuations, due to extreme price movement upward over extended periods, may take years to wane, as earnings catch up with prices."

The theory was developed by Kevin A. Tuttle, market technician & historian, in early 2001. The 100 Year Market Theory first appeared in the technical research paper titled “Ever changing market dynamics, or is it?”, and was later republished in the book “Master Traders: Strategies for Superior Returns from Today’s Top Traders.” It has since been republished in numerous financial works.

The Theory utilizes the long-term fundamental valuation analysis completed by Yale Professor of Economics Robert J. Shiller, particularly, the paper titled “Valuation Ratios and the Long-Run Stock Market Outlook.” Which was co-authored by Dr. Shiller and published in the Journal of Portfolio Management (July 1997).

The theory analyzes what can be deciphered from past market cycles which could can be applied to today’s environment in order to achieve a superior investment management philosophy? Historical trends in the market are categorized as:

1. Secular Trend: a trend which typically lasts five to twenty years and consists of two or more cyclical trends. It is viewed generally in monthly logarithmic charts.

2. Cyclical Trend: also referred to as a "primary" trend. A cyclical trend is one which lasts one to six years and occurs within a secular trend. Is is viewed generally in weekly charts.

3. Secondary Trend: defined as cyclical bull corrections or cyclical bear rallies, typically lasting from one month to one year. They are often deemed “corrective” or “counter cyclical” and viewed generally using daily charts.

4. Minor Trend: a very short-term move which is traditionally insignificant to investors and mainly used by traders. Typically last only days or weeks and viewed primarily using daily and occasionally hourly charts. Also known as “counter corrective”.

Historical Trends
Over the last 100 years the Dow Jones Industrial Average (DJIA) has been through four secular consolidation periods, one secular bear market and four secular bull markets. This interpretation is from a mega-macro perspective, however, and on a more micro level, there have been numerous shorter term bull, bear and consolidation periods. In actuality, all of the most devastating past cyclical bear markets - giving exception to the Great Depression - have occurred within secular consolidative channels. However, for the illustration of the underlying theory, we need only take into consideration the larger macro point of view.

1906-1924:								(Secular Consolidation)

The first (and thus far the longest) secular consolidation began in January 1906 at the 100 resistance level, respectively, and didn't break out until December 1924, almost 19-years later. All the while (and conceivably more important), the P/E (Price Earnings Ratio) remained in a downward trend virtually the entire period. This secular consolidation encompassed 11 cyclical cycles which included as large as 48% drops and corresponding gains in valuation.

Beginning 1922, the P/E ratio finally broke above its downward trend and began its ascent back above 10 in 1925. Notably, the market’s last re-test of the bottom side of the channel was in 1921 where it again turned from a cyclical bear to a cyclical bull market. In July of 1924, it finally broke the 100 technical resistance level and successfully re-tested the neckline in October of the that same year.This changed the phase from secular consolidation to secular bull.

 	1924-1929							:	(Secular Bull Market)

Once the market broke free of this consolidation, it gained in excess of 300% in just over 5-years and ended at just below the 400 mark in September 1929. Noticeably during this time, the P/E multiple shot up and reached an above 32 multiple which was followed by the great market crash of 1929 (“Black Tuesday”) which preceded “The Great Depression.”. When this happened in October of 1929, the market broke its smaller cyclical bull trend and subsequently changed the dynamics from a secular bull to a secular bear.

 	1929-1932	:							(Secular Bear Market)

The Great Depression’s secular bear market lasted approximately 3-years compared to the secular consolidation periods, each ranging 13 to 19-years. This watershed abandonment dropped the market an astonishing 89.5%. This downtrend and corresponding secular bull does not fit the typical consolidation/uptrend technical price pattern. On the other hand, the corresponding P/E multiple does fit the cycle of valuation change and had the same overall effect as the secular consolidation/bull periods. In other words, the vast drop-off during the Great Depression achieved the same result as a longer-term consolidation – wringing out the excessive overvaluation within the market. It is for this reason why we define it the only secular bear market – versus a secular consolidation period – of the 20th century.

 	1932-1937:								(Secular Bull Market)

In 1932, the P/E multiple, after again declining below the undervalued 10 level, broke above its downtrend as the market began its next secular bull phase. This phase began in July 1932 and lasted for just under 5-years with an approximate 385% return before it entered its second (and much longer) secular consolidation period.

 	1937-1950:								(Secular Consolidation)

In March 1937, the market hit the bottom side of the ‘floors & ceilings’ resistance from the 1929 crash – ‘Black Tuesday’ – at approximately 195. This again coincided with the P/E valuation reaching the overvalued 22 level. Once breaking its cyclical uptrend,initiated another cyclical bear market and began a second secular consolidation lasting 13-years and endured subsequent drops equating to as much as 50%.

 	1950-1966:								(Secular Bull Market)

By January 1950 the market broke free of the second secular consolidation phase at 195 and successfully retested technically in July. This began a 400% secular bull market that lasted over 16-years.

 	1966-1982							:	(Secular Consolidation)

In 1966 the P/E multiple crossed back above the 22 level as the market stalled out in the region of 1,000. Once the market broke the smaller cyclical bull trend, the third secular consolidation phase began and persisted nearly as long as its previous advance of 16-years. Similar to the 1906-1924 consolidation phase, this one also endured 11 separate cyclical segments which boasted market drops and succeeding gains of as much as 46%.

 	1982-2000:								(Secular Bull Market)

By 1982,a majority of the P/E valuations had been washed out and in October the market broke above its relative resistance at 1,000. It successfully retested the 1,000 for the following three months and began the largest secular bull market in history. It sustained almost 18-years and provided over a 1,000% return during its tenure. Even “‘Black Monday’s”’ crash in 1987 held the market’s mega long-term uptrend and merely appeared as a blip on the radar.

 	2000 to Present:							(Secular Consolidation?)

In January 2000, following the massive bull market, the P/E multiple hit an unforeseen level of 43. Later that year, the market broke its smaller cyclical bull trend and began one of the top five downturns in American history. This downturn came to rest in March 2003 at approximately 7,200 for the Dow Jones Industrial Average (DJIA)equating to a 38.5% drop. Simultaneously, the P/E multiple descended and broke the upward trend it began in late 1982. It is believed this began the 4th fourth secular consolidation period. Conversely, the P/E has continued to remain above the historic overvalued level of 22. Since the March 2003 transition from a cyclical bear to a cyclical bull, the market has again approached and breached the previous highs without ever once having the 10-year smoothed average P/E multiple drop below the overvalued 22 level.

== Key Observations ==

•	Subsequent to every macro technical uptrend, a macro consolidation period or excessive sell-off has immediately followed and correlated in length of time.

•	Consolidation periods have ranged from 13 to almost 20-years in length, not including the excessive market sell-off of the ‘Great Depression.’

•	P/E valuation trends have corresponded to every technical market uptrend, consolidation period and massive downturn.

•	Market breakdowns have all occurred after the P/E multiple breached the 22 “overvalued” level and proceeded to break its upward trend.

•	Breakouts from consolidation periods or new uptrend’s have not resumed without first having the P/E ratio multiple drop below the “undervalued” level of 10.

•	The first market sell-off and corresponding bottom of a macro consolidation period normally constitutes the floor of the larger technical channel which has begun.

•	All historic technical market channels have contained a plethora of 30% to 40% price fluctuations.

•	Within all the prior secular consolidations, there have been multiple occasions in which the market has broken above the channel for a relatively short period of time only to crash back through and start a cyclical bear market that journeyed toward the bottom of the respective LT channel.