The tendency for stock markets to show similar price behavior within each decade — weak in years ending in 2, strong in years ending in 5 and 8.
Description
The Decennial Pattern (or Decennial Cycle) refers to the observation that U.S. stock markets tend to follow similar patterns within each decade. Years ending in 2 tend to be weak; years ending in 5 tend to be the strongest of the decade. This pattern was observed by Edgar Lawrence Smith and others and cited by Elliott as supporting evidence for natural cycles.
Key Points
- Years ending in 2: tend to be weak market years
- Years ending in 5: historically the strongest year within each decade
- Years ending in 0 and 8: also tend to be volatile/important turning points
- The pattern is a tendency, not a guarantee
- Elliott cited this as additional evidence that markets follow natural rhythmic patterns
