The Shemitah Cycle: Stock Market Impact

Shemitah Cycle and Stock Market

The world of finance is full of cycles and patterns, and one of the most interesting is the Shemitah cycle. This cycle, which is rooted in Jewish tradition, has been observed to have a significant impact on the stock market. In this blog post, we will explore the meaning of the Shemitah cycle, its impact on the stock market, and what happened in the last Shemitah cycle of 2022.

I. Definition of Shemitah cycle

The Shemitah cycle is a seven-year cycle that is based on the Hebrew calendar. According to Jewish tradition, every seventh year is a Shemitah year, which is a year of rest and release. During this year, debts are forgiven, fields are left fallow, and the land is allowed to rest. This cycle has been observed for thousands of years and is considered to have significant spiritual and economic implications.

II. Shemitah cycle stock market crashes

The Shemitah cycle has been linked to several significant stock market crashes over the years. Here are three notable examples:

A. 2001 – 9/11 and the dot-com bubble burst

The Shemitah cycle of 2001 saw the tragic events of 9/11 and the bursting of the dot-com bubble. The stock market took a major hit as a result, and the subsequent recession lasted for years.

Shemitah Cycle on Stock Market - Dow Jones
The fall of Dow Jones in 2001-2002

B. 2008 – Housing market crash and recession

The Shemitah cycle of 2008 saw the collapse of the housing market and the subsequent financial crisis. This crash had far-reaching consequences, with the stock market experiencing a significant decline.

Fall of Nifty in 2008
The fall of Nifty index in 2008

C. 2015 – Chinese market crash and global sell-off

The Shemitah cycle of 2015 saw the Chinese market crash and a global sell-off. This event caused panic in the financial markets, with many investors selling off their shares in a hurry.

III. Shemitah cycle and stock market in 2022

The upcoming Shemitah cycle of 2022 is expected to be particularly significant. Here are some events that are likely to impact the stock market during this cycle:

A. Financial problems in 2022

2022 was also a challenging year for the global economy. A series of severe and mutually reinforcing shocks. In 2022, the global economy took a beating from a number of factors, the ongoing effect of the COVID-19 pandemic, the war in Ukraine and resulting food and energy crises, surging inflation, increased attention to debt consolidation, and the ongoing climate disaster. These challenges also impacted the global stock market significantly.

B. Russia Ukraine war and stock market fall

Ukraine and Russia do not have any diplomatic or bilateral relations at this time. Still, the two countries have been in a de facto state of war since 24 February 2022, and all the major stock indices have tumbled. The conflict has led to a significant fall in the stock market, with investors becoming increasingly cautious.

C. Nifty index fall in India

Nifty has fallen from 18350.90 on January 2022 to 15183.40 on June 2022. The fall in the Nifty index is a cause for concern for Indian investors, with many looking for ways to mitigate their losses.

Russia-Ukrauine war impact on Nifty index
Russia-Ukrauine war impact on Nifty index

IV. Global impact of Shemitah cycle and stock market

The Shemitah cycle has a global impact, with many stock markets around the world experiencing significant declines during this cycle. Here are two examples:

A. Dow Jones and FTSE 100

The Dow Jones and FTSE 100 are two of the most significant stock market indices in the world. Both of these indices have experienced significant declines during Shemitah cycles, leading to widespread panic among investors.

B. Tadawul TASI and Bitcoin

The Tadawul TASI is the main stock market index in Saudi Arabia, while Bitcoin is a cryptocurrency that has gained popularity in recent years. During the Shemitah cycle, both of these have been affected in different ways.

In 2015, the Tadawul TASI experienced a decline of over 20%, which was the worst decline in seven years. This was attributed to the falling oil prices and the overall instability in the region.

On the other hand, Bitcoin saw a significant rise during the Shemitah cycle in 2015, with its value increasing from around $250 to $500. This was likely due to the increasing adoption of Bitcoin as a legitimate currency and the growing interest from investors.

V. FAQ on Shemitah Cycle and Stock Market

Here are some frequently asked questions about the Shemitah cycle and its impact on the stock market:

What is the 7-year cycle of Shemitah?

The Shemitah cycle is a seven-year cycle in the Jewish calendar that relates to agricultural land use. It is also believed by some to have a financial significance, with some investors claiming that the cycle has an impact on the stock market.

What are the 4 market cycles?

The four market cycles are the accumulation phase, the markup phase, the distribution phase, and the markdown phase. These cycles are a part of the technical analysis used to understand the stock market.

What happens in a Shmita year?

In a Shmita year, Jewish law requires that the land is left fallow, debts are forgiven, and certain business activities are restricted. Some investors believe that this year has a financial impact on the stock market.

What cycle are we in the stock market?

The current cycle of the stock market is difficult to predict, as it is influenced by many factors, including global events, economic policies, and individual company performance. However, some analysts believe that we are currently in a short-term bear market cycle inside a long-term bull market cycle.

VI. Concluding notes on effect of Shemitah Cycle on Stock Market

In conclusion, the Shemitah cycle has had a significant impact on the stock market, with many crashes occurring during these seven-year cycles. The year 2022 was also a challenging year for the stock market, with many financial problems and the ongoing war between Russia and Ukraine. It is important for investors to understand the financial cycles and use basic technical indicators, fundamental studies, and technical analysis to make informed investment decisions.

It is also essential to be aware of the share bazaar frauds and scams that exist in the market and to use trusted resources such as trading books, virtual trading platforms like NeoStox, and experienced traders like Radhakishan Damani, a Chartered Market Technician, or trader Facebook friends to guide you.

By using tools such as the Super Trend, Connors RSI, and Profitunity Trading System, investors can identify explosive stocks and potential opportunities while also minimizing the risk of significant losses.

Shemitah Cycle and Stock Market

In conclusion, the Shemitah cycle and its impact on the stock market provide an interesting perspective on the cyclical nature of financial markets. By understanding these cycles and using the right tools and resources, investors can make informed decisions and achieve success in the stock market.

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Author: Indrajit Mukherjee

Indrajit is a professional blogger and trading system developer. Amibroker expert, Wordpress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.

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V.KANNAN

There was a greek tragedy to be followed with a Chinese checkers and now a scary shemita ! god save us and preserve.

It is next week end and not a long way to go; you have already cautioned to go short selling and saving oneself.

The way Nifty is going down it may be probable that shemita strikes (I had seen from some of your past analyses that you had predicted a target of 7640 as far back as in Feb 15.

I am glad I have come to know about Stockmaniacs (but only that I had taken a Zerodha trading account directly which perhaps had denied me some advantages that Stockmaniacs could have given had I gone through the Zerodha Club.

Nonetheless, good show and all the best to Stockmaniacs

Kannan

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