-->FIRST LOWER LOWS SINCE 1974... Chart 1 shows that the 2002 bottom was lower than the 1998 bottom. That's the first time that's happened since 1974 when that year's bottom was lower than the one in 1970. That was right in the middle of the 1970's which has been described as the last secular bear market. [The start of that secular bear was signaled when the 1970 bottom was lower than the one in 1966]. It wasn't until 1982 that a new secular bull market began. Whether or not we're in a secular bear market at present is open to debate, but the fact that the four-year cycle has seen its first"lower low" in 30 years has to make one somewhat cautious on the market's secular trend. At the very least, it opens up the possibility of a long-term trading range similar to the 1970's. Which brings us back to the presidential cycle.

1970's SAW TWO UP YEARS AND TWO DOWN YEARS... During the secular bull market from 1982 to 2000, the four-year cycle saw three up years followed by one down year. During the trading range years of the 1970's, the four-year cycle saw two up years balanced by two down years. Assuming that we're no longer in a secular bull market, we have to consider the possibility that the last two up years (2003 and 2004) could now be followed by two down years (2005 and 2006).
). Even if 2005 turns out to be an up year, odds are very strong that 2006 will be a down year. This coming October will mark the third anniversary of the October 2002 cycle bottom. From that point on, the market will be in the fourth year of the cycle which is usually the most dangerous. That seems to fit with my Elliott Wave analysis that the market is most likely in the fifth and final upwave in the cyclical bull market that started nearly three years ago.