PE Cycle Detection

The algorithm processes ~40 quarterly PE medians from 10 years of weekly valuation data. It applies a 3-quarter moving median to smooth noise, then runs a zigzag algorithm that confirms peaks when PE drops 30%+ from a running high, and troughs when PE rises 30%+ from a running low.

Each trough-to-peak segment is an expansion phase, and each peak-to-trough is a contraction phase. The current PE is then placed relative to the last confirmed extreme and historical averages to determine the cycle position.

The EPS Setup crosses cycle position with current earnings growth. The most actionable setup is GOLDEN SETUP — EPS growing while PE is at a cycle bottom or early expansion. This indicates the market hasn't yet re-rated the stock despite improving fundamentals.