Stock market cycles are one of the most amazing and rewarding studies you can do. There are many different types of cycles that occur in the stock market. The one that I will be talking about today is called the Four-Year Cycle.

The stock market has a consistent tendency to bottom every four years going back to the late 1960s. That is really amazing when you think about it. Why does this strange cycle occur? Could it have to do with our four year political cycle?

Can you imagine how much money you could make if you knew when the market was going to put in a bottom?

You could make money by playing the short side on the 3rd year of the Four-Year Cycle or you could go long the market immediately after the cycle low.

In most cases, a four year bottom occurs in October. In rare cases, four year bottoms have occurred during July and August like in 2006. In other words, we may have put in a bottom last month. If this is the case, then now is an excellent time to go long.

Either way, an important bottom is due during the second half of 2010.

Now cycles are best used with other technical indicators and chart patterns. What is really interesting is that if you pull up a chart of the S&P 500, you will see a Bullish Head and Shoulders bottom forming. All we need is a nice good run to close the right shoulder at the neckline.

I know you might think that it doesn't make sense for the market to start a bull run right now with all the bad financial news but I challenge you to think back to January and February of 2009. In early 2009, the news was so bad that many people began pulling their money out of banks. Indeed, a systemic economic failure was spreading throughout our economy as the government was in a panic trying to stop the worst financial disaster since the Great Depression. Go and google the news stories back then and see for yourself just how bad things were. They were far worse than what they are today. But what happened? The market started its biggest 9 month rally in more than 70 years! The lesson to learn from this is that the stock market is the future anywhere from 3 to 9 months. All the bad news about the economy that you are reading about today is already priced in.