THE BENNER CYCLE, FIBONACCI

NUMBERS
& THE NUMBER 56

David McMinn

MOON - SUN FINANCE

Samuel Benner, a prosperous farmer, was wiped out financially

by the 1873 panic and a hog cholera epidemic. In retirement,
he set about to establish the causes and timing of fluctuations
in the economy. In 1875, he published business and
commodity price forecasts for the period 1876 to 1904 (see
Diagram 1). In his book, charts were produced giving;

* an 11 year cycle in corn and pig prices with peaks

alternating every 5 and 6 years.

* cotton prices which moved in a cycle with peaks every

11 years.

* a 27 year cycle in pig iron prices with lows every 11, 9,

7 years and peaks in the order 8, 9, 10 years.

Samuel Benner's book is available at Open Library.

E R Dewey, Director of the Foundation for the Study of Cycles,

assessed Benner's pig iron price forecasts over a 60 year
period. Remarkably, he regarded this cycle as showing a gain -
loss ratio of 45 to 1, which was “the most notable forecast of
prices in existence”.

Benner's pig iron price cycle may be broken down into three
series, all of which were based on 9 years and its regular
deviations (see Diagram 1). Those years listed by Kindleberger
(Appendix B, 1996) as containing major financial crises have
been presented in BOLD throughout the text.

Diagram 1 THE ORIGINAL BENNER CYCLE CHART AS

PUBLISHED IN 1875.
The 54 Year Panic Cycle arises from panics every 16, 18, 20
years, with this series repeating every 54 years (see upper line
Diagram 1). According to Benner, “it takes panics 54 years in
their order to make a revolution or to return to the same order”.
The key years were 1819, 1837, 1857, 1873 which were all
found in the 36 ysc Series 1 of the 9/56 year cycle (see Table
A, Appendix 1).

Pig Iron Price Highs of good years took place every 8, 9, 10

years (middle line Diagram 1) repeating every 27 years. The
high years were 1810, 1818, 1827, 1837, 1845, 1854, 1864,
1872, 1881, 1891

Pig Iron Price Cycle Lows of his business cycle occurred or

every 11, 9, 7 years (bottom line Diagram 1) repeating every
27 years. The low years were 1816, 1823, 1834, 1843, 1850,
1861, 1870, 1877, 1888.

Benner's cycle worked well throughout the 20th century and

was a very good indicator of US crises and/or recessions
(McMinn, 2004). The links between Benner's cycle and the
9/56 year panic cycle have been covered extensively by
McMinn (2004) and thus will not be discussed in this paper.

Alas, Benner's cycle is surrounded by some confusion. Either

Benner is not given credit as the originator of the cycle or his
name is misspelt - Banner and Brenner are two variations
given by some sources.

A J Frost's Adaptation

A J Frost presented a variation on Benner's theory (Prechter &

Frost, 1978). This gave peaks in the US stock market occurring
every 8-9-10 years and two additional 54 year cycles of historic
DJIA lows based on cycles of 16 -18 -20 years. Most
importantly, Diagram 2 is not an extrapolation of Benner's
earlier work into the 20th century, but rather was based on his
time cycles of 8-9-10 years and 16-18-20 years. These cycles
were aligned with observed chronological trends.

Diagram 2 THE BENNER - FIBONACCI CYCLE CHART

1902 - 1987
The 54 year Cycle in Table 1 may be strongly linked to
financial trends, as only the year 1995 did not align with a DJIA
bear market low. Importantly, the years 1903, 1921, 1941,
1957, 1975, 1995 all happen within the combined 36 ysc
Series 3 & 4 (see Table 6.2, McMinn 2004). Taking this series
and adding one year gives 1904, 1922, 1942, 1958, 1976,
1996 - all of which occurred in the 9/56 year cycles as
presented in Table B, Appendix 1. The only year in Table 1
that cannot be linked to a bear market low was1995.

Table 1 THE 54 YEAR CYCLE LOWS COMMENCING

IN 1903
AJ DJIA Bear Market
Add US Event
Frost Low
1903 1903-04 Crises 11/1903
+ 18 1921 1920-21 Panic 7/1921
4/1942 - 4 Months
+ 20 1941 1942 WW II
Late
+ 16 1957 Recession 10/1957
12/1974 - 1 Month
+ 18 1975 1973-75 Crises
Early
+ 20 1995 No Event No Major Low

Table 2 gives the second 54 year cycle of major trough years -

1913, 1933, 1949, 1967, 1987, 2003 - only the latter year did
not fall in the 9/56 year cycle (see Table B, Appendix 1).

Table 2 THE 54 YEAR CYCLE LOWS COMMENCING

IN 1913
56 Yr
Sq DJIA Bear
Add A J Frost US Event
36 ysc Market Low
S1
 7/1914 - 6
1913 Sq 41 1913-14 Crises
Months Late
Great 7/1932 - 6
+ 20 1933 Sq 05
Depression Months Early
+ 16 1949 Sq 21 Recession 6/1949
10/1966 - 3
+ 18 1967 1966 Crisis
Months Early
+ 20 1987 Sq 01 Black Monday 12/1987
After
10/2002 - 3
+ 16 2003 Greenspan
Months Early
Bubble

The 16-18-20 year cycle in Tables 1 & 2 are artifacts of 9/56

year patterns presented in Table B, Appendix 1 and Table 6.2
McMinn (2004). Many such artifact sub-cycles can be
generated from the 9/56 year cycle (Section 2.4 & Chapter 6,
McMinn, 2004).

8-9-10 Year Cycle of DJIA Highs

Diagram 2 by A J Frost also gives the 8-9-10 year trends in

DJIA highs since 1902. There is a consistent pattern for peaks
in the DJIA to take place every 8-9-10 years in line with
Benner's findings. This cycle has persisted throughout the 20th
century, with great accuracy. Only 1964 and 1983 were
markedly out in the timing of major highs. For 1964, the
secular peak occurred somewhat later in February 1966,
whereas the November 1983 record peak marked the
beginning of a DJIA correction market.

Table 3 THE 8-9-10 YEAR CYCLE OF

DJIA MARKET HIGHS
AJ Major DJIA DJIA Bear
Add
Frost High Market
June 17, 1901* 6/1901 -
1902
7 months early 11/1903
November 19,
11/1909 -
+8 1910 1909
9/1911
2 months early
November 3, 11/1919 -
+9 1919
1919* 8/1921
September 3,
+ 10 1929 9/1929 - 7/1932
1929*
+8 1937 March 10, 1937 3/1937 - 3/1938
+9 1946 May 29, 1946 5/1946 - 6/1949
4/1956 -
+ 10 1956 April 6, 1956*
10/1957
 February 9,
2/1966 -
+8 1964 1966*
10/1966
14 months late
January 11, 1/1973 -
+9 1973
1973* 12/1974
No DJIA Bear
+ 10 1983 No High (a)
Market
July 16, 1990* 7/1990 -
+8 1991
6 months early 10/1990
January 14, 1/2000 -
+9 2000
2000* 10/2002
Bear Market ??
+ 10 2010 High ????
??
(a) 11/1983 marked a record high and the
beginning of a 14.89% correction market that
persisted until 7/1984.

11-10-7 Year Cycle of DJIA Lows ????

The 11-9-7 year cycle of market troughs was not mentioned in

A J Frost's assessment on market cycles, even though it was a
key element of Benner's original cycle. No series of DJIA bear
market lows could be established based on 11-9-7 years, even
though it was extensively assessed.

Unexpectedly, a 11-10-7 year cycle of DJIA bear market lows

fits much more precisely (see Table 5). During the first half of
the 20th century, most important historic lows fall within this
cycle - 1893, 1904, 1914, 1921, 1932, 1942 & 1949. The
record for the latter half of the century was not as good
because the major bear markets of 1974 and 1982 did not take
place within the cycle. The accuracy of the 11-10-7 year cycle
was amazing as only there was one notable exception - 1960,
which was followed by a major low in June 1962 some 18
months overdue. All other lows fell within the cycle or or one or
two months before or after. Those lows exactly within the cycle
occurred in the months April to August.

Table 5 11-10-7 YEAR CYCLE OF DJIA BEAR

MARKET LOWS

11-10-7 DJIA Bear Market

Add US Event
Year Cycle Lows
1893 1893 Panic 7/1893
1903-04 11/1903 Two
+ 11 1904
Crises Months Early
+ 10 1914 WW 1 7/1914
1920-21
 1920-21
+7 1921 6/1921
Crises
Great
+ 11 1932 7/1932
Depression
+ 10 1942 WW 11 4/1942
+7 1949 Recession 6/1949
6/1962 18 Months
+ 11 1960 (a) Recession
Late
+ 10 1970 Recession 6/1970
2/1978 Two
+7 1977 No Event
Months Late
12/1987 One
+ 11 1988 1987 Panic
Month Early
1997-98
+ 10 1998 8/1998 (b)
Crises
No Bear Market
+7 2005 No event
Low
(a) 10/1960 was the low of a 17.4% correction market,
which commenced in 1/1960.
(b) This was a near bear market low, as a drop of 19.6%
was recorded. (A bear market is commonly defined as a
20% market fall.)

Why this 11-10-7 year cycle is so important remains unknown,

although 28 multiplied by two gives 56 a key number in cycle
theory.

Carolan's 16-20 Year Cycles

Chris Carolan found four 36 year sub-cycles persisted in US

market trends during the 20th century as follows:

1901 1917 1910 1930

+ 36 + 36 + 36 + 36
1937 1953 1946 1966
+ 36 + 36 + 36 + 36
1973 1989 1982 2002

These four 36 year cycles were presented in terms of two

series of 16-20 year cycles, based on the timing of major
market turns or financial panics. The interval between these
two series is 29 years or one Inex eclipse cycle (David
McMinn). Most of these years fall in the 9/56 year cycle
patterns as shown in Table C Appendix 1 - only the exceptions
being 1953 and 1989
 Nov 19, 1909
1910
DJIA High
May 9 US Sep 03, 1929
1901 + 20 1930
Panic DJIA High
Dec 19 DJIA May 29 DJIA
+ 16 1917 + 16 1946
Low Peak
Mar 10 DJIA Feb 9 DJIA
+ 20 1937 + 20 1966
Peak Peak
No Major Aug 12 DJIA
+ 16 1953 + 16 1982
Market Turn Low
Jan 11 DJIA
+ 20 1973 +20 2002 Oct 9 DJIA Low
Peak
Oct 13 Near
+ 16 1989
Panic

Fibonacci Numbers & Market Activity

The Fibonacci numbers, based on the tropical year, have been

linked by various sources to financial activity. For example,
beginning with the secular low of 1877:

1877 - 1877 Secular

Low
1932 - 8/1932
+ 55
Secular Low
1966 - 2/1966
+ 34
Secular High
+ 21 1987 - 8/1987 High
2000 - 1/2000
+ 13
Secular High
+8 2008 - ????

1932 - 1966 - 2/1966 2000 - 1/200

+ 34 + 34
7/1932 Low High High
+ 21 x 2 + 21 -
1974 - 1987 - 2000 -
+ 13 + 13
12/1974 Low 12/1987 High 1/2000 High

1966 - 10/1966 Low

+8 1974 - 12/1974 Low
 +8 1982 - 8/1982 Low
+8 1990 - 10/1990 Low
+8 1998 - 8/1998 Low
+8 2006 - ????

Adding Fibonacci numbers to the high of September 1929 (Sq

01) produced a reasonably accurate trend of DJIA Highs/Lows
through to 1942 with declining accuracy after that.

Sq 01 -
+3 1932 - 7/1932 Low
9/1929 High
1929 +5 1934 - 7/1934 Low
1929 +8 1937 - 3/1937 High
1929 + 13 1942 - 4/1942 Low
1950 - 6/1949 Low 7
1929 + 21
months early
1963 - 6/1962 Low 7
1929 + 34
months early
1984 - 8/1982 Low 20
1929 + 55
months early.

However, something similar could not be repeated for the

August 1987 record high (Sq 03).

Sq 03 - 1989 - No DJIA
+2
8/1987 High High/Low
1990 - 7/1990 High &
1987 +3
10/1990 Low
1992 - No DJIA
1987 +5
High/Low
1995 - No DJIA
1987 +8
High/Low
1987 + 13 2000 - 1/2000 High

The secular high of 1966 produced better results.

Sq 03 - 10/1966 1969 - 12/1968 High - One

+3
High Month Early
1971 - 6/1970 Low - 7
1966 +5
Months early
1966 +8 1974 - 12/1974 Low
1979 - 2/1980 High - 2
1966 + 13
Months Late
 1966 + 13
Months Late
1966 + 21 1987 - 8/1987 High
1966 + 34 2000 - 1/2000 High

Walter E White, in his Elliott Wave Principle (1968), believed

that "the next important low may be in 1970". This correct
forecast was derived by using Fibonacci numbers.

6/1949
1949 + 21 1970
Low
10/1957
1957 + 13 1970
Low
6/1962
1962 +8 1970
Low
2/1966
1965 +5 1970
High

Prechter (2000) predicted a bear market low for 2003-2004,

based on various technical forecasting techniques, including
the Fibonacci numbers. The following has been derived from
his work with only one year that was clearly amiss - 1995 which
produced no major market turns. The 10/2002 market low was
the nadir of the 2000-02 bear market and thus be a little earlier
than forecasted.

1857 Secular Low - 14

1859 + 144 2003
months early
07/1914 Low 1914 + 89 2003
6/1949 Low - 6
1948 + 55 2003
Months Late
6/1970 Low - 6 Months
1969 + 34 2003
Late
8/1982 Low 1982 + 21 2003
10/1990 Low 1990 + 13 2003
No High/Low 1995 +8 2003
8/1998 Near Bear
1998 +5 2003
Market Low
01/2000 Record DJIA
2000 +3 2003
High

These findings on the Fibonacci numbers are certainly

interesting, but they can be justifiably criticised. Such market
patterns may arise by selecting the data that confirms the
Fibonacci hypothesis. Contrary examples, which do not fit,
have been simply ignored.
have been simply ignored.

Causal Mechanisms

According to Benner, "the cause producing the periodicity and

length of these cycles may be found in our solar system". "It
may be a meteorological fact that Jupiter is the ruling element
in our price cycles of natural productions; while also it may be
suggested that Saturn exerts an influence regulating the cycles
in manufacture and trade". Additionally, Uranus and Neptune
"may send forth an electric influence affecting Jupiter, Saturn
and, in turn, the Earth". "When certain combinations are
ascertained which produce one legitimate invariable
manifestation from an analysis of the operations of the
combined solar system, we may be enabled to discover the
cause producing our price cycles, and the length of their
duration. Benner never fully explained the basis of his cycle,
but he did make a connection through the weather and climate,
suggesting he was aware of the earlier work on sunspots by
Jevons, Herschel and others.

The Sun, The Moon & The Number 56 showed that the 9/56
year panic cycle arises from cycles of the Moon and Sun.
Given the links between the Benner and the 9/56 year cycles, it
could be reasonably postulated that both are based on
lunisolar cycles. Hard evidence of a sunspot or planetary
influence in financial markets has failed to be established,
despite a tremendous level of research. Thus, Benner's view of
sunspots and/or planets influencing the timing of his cycles
cannot be supported.

The 11-9-7 Year Cycle of market troughs was not mentioned in

tA J Frost's assessment on market cycles, although it was a
key component of the Benner Cycle. It may be more than a
coincidence that 7, 11 and 18 are all Lucas numbers. These
are similar to the Fibonacci numbers except they commence
with 1, 3 instead of 1, 1 as for the Fibonacci numbers. The
Lucas series is as follows:

1, 3, 4, 7, 11, 18, 29, 47, 76, 123, 199...............

These numbers have been linked to lunisolar cycles (McMinn,

2004). Additionally, Benner's cycles of 16-18-20 and 11-9-7
can be broken down into various eclipse cycles of the 7 year
Tzolkinex, 9 Year Half Saros and 11 Year Tritos. The 8-9-10
year cycle of market highs is much more difficult to explain in
terms of know eclipse cycles.

Conclusions

The 8-9-10 year and the 16-18-20 year cycles are based on
the interval of 9 years and its regular deviations. This is quite
amazing as they have been so relevant in stock market trends
during the 20th century. The three 54 year cycles, proposed by
both Benner and Frost, may be directly linked to the 9/56 year
both Benner and Frost, may be directly linked to the 9/56 year
panic cycle (see Tables A & B, Appendix 1). As noted by
David McMinn (2004), the 9/56 year cycle only correlated with
the timing of financial crises. Something similar could not be
confirmed for the timing of peaks and troughs in financial
activity. Thus these findings on the 8-9-10 year cycle are very
interesting, as they may provide clues on the timing of peaks
and troughs in financial markets. If the Benner - Fibonacci
cycle holds up to critical assessment, it may offer theoretical
support for the use of these numbers in financial forecasting.

It is debatable whether the Fibonacci numbers can be found in

markets patterns, as suggested in this paper. This work can be
criticised for two reasons:

* The findings are presented selectively and thus are

heavily biased. Those series that do not support the Fibonacci
hypothesis are ignored. Thus, the Fibonacci series could arise
by coincidence alone and thus may not have any true
relevance in market trends.

* Both highs and lows may appear in a given series, but no

explanation can be offered as to why this is so. One could
reasonably expect a series to consist of all highs or all lows.
Why the peaks and troughs are interchangeable in a particular
series cannot be accounted for.

Whether Fibonacci numbers are actually valid in market trends

is debatable and more research is required before any firm
answer may be given.

It remains to be seen how accurately these 8-9-10 and 16-18-

20 year cycles will predict trends into the 21st century. The
9/56 year cycle and presumably the Benner Cycle must
change over very long time frames rather remaining fixed.
Furthermore, the business cycle has profoundly altered since
World War II (Zarnowitz, 1992), with much longer growth
periods and brief shallow recessions. With the abandonment of
the gold standard in the 1930's, the US Government has been
able to increase money supply continuously over the past 65
years. This has resulted in almost perpetual inflation and
altered the periodicity of recessions, which now occur as rare
events. A looming financial crisis is also now countered by
lowering interest rates and flooding the financial system with
money. Even so, the Benner Cycles of 8-9-10 and 16-18-20
years remain of great interest, especially given Dewey's
comments on their forecasting accuracy.

Copyright. © 2003. David McMinn. All rights reserved.

References

Benner, S. Benner's Prophecies of Future Ups & Downs in

Prices. Robert Clark Co.1875.
Prices. Robert Clark Co.1875.
McMinn, David. Market Timing By The Number 56. Twin
Palms Publishing. 2002. Revised 2004.
Mogey, Richard. The Mystery of the Forecast of an Earlier
Generation. Cycles. p 199-202. July - August 1991.
Prechter, Robert. A Major Stock Market Low Is Still Due in
2003-2004. The Elliott Wave Theorist. July 2000.
Prechter, Robert & Frost A J. Elliott Wave Principle: Key to
Stock Market Profits. New Classics Library. 1978.
Tsing.com Elliott Wave Principle.
www.tsing.com/theory/lesson25.htm
Zarnowitz, Victor. Business Cycles: Theory, History,
Indicators and Forecasting. The University of Chicago Press.
1992.

Moon Sun Finance