FINANCIAL INDEX FRACTALS
Defining The "Hidden Fractal Order" Within the Markets
Updated and Posted:
Wednesday, November 23rd 5:54 AM
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Wednesday, November 23rd
NOTE: I'll be interviewed this Friday by Ike Iossif from MarketViews.TV
Sunday 1:00 pm EST will be the broadcast time for the Fractal Webinar Part Two : What is a Fractal ?
The webinar and download for the presentation is free to Paid Subscribers.
Tuesday, November 22nd
The Third Fractal Solution
Friday's Wilshire close above the 3 August 2005 integrated daily average
provided the impetus for yet a third fractal solution to the ongoing query
into the exact nature and evolution of the coming global macroeconomic
and equity valuation devolution. Exhaustion gaps to new multiyear highs
were witnessed in a number of the premiere world equity composite indices.
These gaps and new highs occurred in the context of evaporating cash
reserves in US mutual funds, record new European bankruptcy filings,
inflationary pressures on consumer wages, loss of white collar jobs at
US manufacturing plants, profit loss and lurking bankruptcy
possibilities for GM,
negative consumer savings rates, and a negative endorsement of US
governmental fiscal practices by the Comptroller of the United States.
Why then, with all these bad internals, did the Wilshire make a new high? The
answer is simply this: there is still a positive quantity of money
competing in the equity markets to complete, as of yet, an
indeterminate but paradoxically deterministic
and non complex ideal maximal growth fractal. While it is possible
that Friday was the maximal valuation day for the Wilshire with decay
patterns as described in previous postings, there is an an additional
that merits attention and involves 7 more trading days to a maximal
final saturation point.
This possibility requires a re look at the valuation activity in early
The fractal sequence dating from August 2004 has been repetitively quoted as
a 52/130/130 maximal growth sequence using a base of 52 days. A
reasonable alternative base is 56 days vice 52 days. The first day of
this 56 day sequence is the last day, day 68 which ended in a gapping
nonlinear lower decay fashion of a 28/69 (x/2.5x) internal sequence.
Day 68 and the 28/69 fractal sequence was interpolated in a slightly
larger 29/73 day fractal sequence that jointly composed the declining
second fractal sequence of 40/100/100 days. Day 100 of the third
fractal sequence of 40/100/100 was
the high in January 2005.
The interpolated fractal pattern might serve as a fractal clue that
interpolation of fractal patterns (patterns within patterns)might be
something to be anticipated in future growth evolutions. Just as the
28 day sequence with its 69 day low was contained in a slightly larger
29/72-73 day sequence with a 72-73 day low, the subsequent 52 day base
may be interpolated in a slightly larger but 'correct solution' base of 56
days which includes 4 days prior to the 52 day original base.
With a base of 56 days, the next anticipated low is day 140. On
exactly day 140, a nodal low was made on the Wilshire.
Using a base of 56 days originating in August 2004, the maximal
equity valuation growth sequence that conceivably might consume all
available in-the-market cash, before investment is shifted from
equities into debt instruments would be a fractal sequence of:
56/140/140 vice the interpolated 52/130/130.
Note that the nonlinear break defining the second fractal occurred on
day 120 or 15 April 2005 with nodal low days on both day 130 and day
140 supporting the concept of two simultaneously evolving interpolated
In the proposed 56/140/140 daily maximal growth fractal series, the
Wilshire has completed day 133 of a maximal 140 day with 7 trading
days left to maximal completion, maximal growth, and terminal
saturation. A gap exhaustion key reversal day exactly on day 140
would serve as the ideal technical hallmark and support the deterministic
notion of market valuation evolution.
Interestingly Google likewise has the potential of a maximal fractalet
extending the maximal daily fractal series of currently 11/28/27 0f
28 days. In the last 28 day third fractal series a potential extension
sub fractal series of 6/15/8 of 15 with 7 more trading days to a final
Likewise the Wilshire has an identified sub fractal series of 4+/11/4
of 11 days to a saturation point with 7 additional trading days to a
The ideal low for this fractal pattern would come 56 trading days
after the 140 day top such that the length of sum of first two daily
growth fractals equaled the sum of the third growth fractal and the
final decay fractal 56 +140 = 140 + 56.
There is potential agreement and confirmation from a long term weekly
perspective where the sum of the length of the first two weekly growth
fractals are equal to the sum of the third weekly growth fractal and
the weekly decay fractal with a possible sequence of:
(6 +22) +54 =(12+30+ 28 of 30 third growth sequence) +12
or first weekly growth fractal = 27weeks
second weekly growth fractal = 54 weeks
third weekly growth fractal = 12/30/28 of 30 or 68 of 70 weeks
decay fractal = 12 weeks
Monday, November 21st
Friday, November 18th
Monday will tell the tale .....
The webinar will be offered next Sunday November 27th .. more details will be announced.
I'll be working on the webinar Part Two this weekend along with some chart updates.
Nothing new today ...... markets are still trending upwards ......
Gold shares are making a short term top .......... intermediate / longer term I am bullish on the XAU and HUI
That may be (gold) the safest place to go long at the moment .................
Thursday, November 17th
12:25 pm Update
DOW 30 has made a 5 bar bottom at 11:30 am
On a Intermediate basis ............... gold shares should continue higher ..............
Wednesday, November 16th
10653 to 10680 --------
that's 27 points in 30 minutes !
3:10 pm Update :
DOW 30 makes a 5 bar bottom for a base to rally
Potential Break Down at 1228 ......
if beyond e then another rally
XAU is up over 5% going to F3
15 November 2005
Fractal Decay Solutions Near the End of a 147
Year Macroeconomic Cycle.
The repetitive growth and decay fractal evolutions of equity and debt
instrument valuations have an internal recurrent patterned nature that
occurs with a predictive probability that approaches if not equals that of a
hard science. These fractals are the result of a completely deterministic
saturation process which most efficiently and optimally distributes the
ongoing convertible money available for investment. The application of that
convertible investment money efficiently flows into the most optimal of
investment pathways resulting in directly analogous optimal and efficient
growth and decay integrative saturation patterns or fractals.
There are maximum limits to equity growth based on the real ongoing
macroeconomic dynamics of debt accumulation and consumption saturation,
which are in turn further balanced by the countervailing limitations of wage
growth, savings growth, and asset overvaluation. The timing for the maximal
growth limits and subsequent decay cycles can be predetermined based on the
inductive knowledge and non complex pattern recognition acquired by
empirical observational analysis and the repetitive and seemingly constant
evolutions of - three fractal growth cycles and one decay cycle - patterns
in an idealized order of x/2.5x/2x and 1.5x at smaller, intermediate, and
larger time units with the 1.5x decay pattern further fractalized into an
idealized y/2.5y/2.5y decay sequence.
The global macroeconomy is nearing the end of one of those colossal maximal
growth limits, a 147 year sequence composed of approximately two 74 years
sub fractals. These two chained sub fractals followed a 70 year fractal
ending in 1858. The valuation top of the second 74 year sub fractal occurred
in March of 2000. While equity markets of lesser economic nations have
exceeded their 2000 summit - the top European, top Asian, and American
composite equity indices remain substantially below their previous 2000
peak, despite historically unprecedented massive credit expansion and
unfathomable new debt obligation in the ensuing five years. The obligations
for servicing this massive new debt which has supported the growing and
unsustainable 6 percent US GDP 'unbalance of trade' disequilibrium and has
been created primarily by the US and other leading nations' real estate
markets - whose valuations have been artificially skyscrapered by both the
stimulatory post-tech-bubble-collapse, historically low, fed fund rates and
irrationally imprudent lending practices, ultimately rests on the shoulders
of American consumer, whose real wages are not keeping pace with inflation.
Just like the historically low cash reserves of US mutual funds, the null US
consumer's savings rate is telltale of the near end time limit of the
current 74 year sub cycle. Excess money available for US equity investment
is contracting and otherwise drying up consumed by debt servicing; essential
consumer inflationary spending for fuel, real estate taxes, secondary
education, food, health care, et. al.; and the very large alternative and
safer investment area: US debt instruments.
A look at the longer monthly fractals originating in October 1998 which
includes the March 2000 peak as part of both alternatively a first monthly
decay - and a first monthly declining maximal growth - fractal sequences,
provides possible predictive information regarding the final maximum
terminal growth and decay patterns ending the 148 year cycle.
A maximum decay pattern of 15/38/33 of 38 months is apparent with a sub
fractal decay sequence after the first 15 declining month base
fractal(as defined by
the underlying slope of the second fractal) of 11/28/22/12 of 17 for ideal
x/2.5x/2x/1.5x completed sequence.
A maximum growth pattern also starting in October 1998 can be identified as
having a 15/37/37 monthly pattern.
There are two high probability solutions to the final daily fractal
devolution that involve the terminal third fractal portion composing an
expected 38 months of a 15/38/33 of 38 decay sequence:
1. The first solution involves a continuation and the normal expected time
frame completion of an ideal fractal pattern x/2.5x/2x/1.5x dating from
August 2004. The daily sequence for this ideal fractal evolution is:
In this ideal fractal pattern, the Wilshire, as of the end of the 15
November trading day, has 41 more days to complete the ideal 78 day
time frame decay fractal progression. The last two fractals of 104 and 78
days have been integrated into an optimal terminal growth and decay
composite fractal pattern, which represents a series of lower high
daily saturation trading areas which ideally and ultimately will culminate
in a nonlinear ideal terminal decay pattern of y/2.5y/2.5y.
2. The second solution involves a gradual and progressive shortening of the
above ideal sequence, 52/130/104/78 which has been transformed into the
following truncated version of
The reasons for this slight shortened and shortening version at the end of
the great 147 year second fractal could be attributed to an evaporating
money supply that is exiting the macroeconomic investment complex system
secondary to multiple developing conditions: looming pension defaults,
competing and more attractive long term debt instruments, cresting real
estate valuations, diversions of investment money into the low interest rate
associated inflationary cost of living essentials such as food, housing,
transportation, energy cost, real estate taxes, health care cost, secondary
education cost, et. al. Over the last ideal 52/130/104/78 day fractal time frame
investment money for equities has been contracting and otherwise 'drying up' as
evidenced by the historically low cash reserves in the mutual equity
In the second contracting and shortened solution, the Wilshire at the close
of trading on 15 November will have 23 to 24 more days to complete a 70-73
day shortened decay time sequence. In this last 70-73 day pattern, just as
for the first above ideal solution, there are saturation growth
periods with sequentially
lower highs before a final and terminal nonlinear daily decay sequence occurs,
which can be expected to be in a daily pattern of y/2.5y/2.5y.
Within the umbrella fractal time frames of both of above two solutions, two
fractal decay patterns have emerged, one whose base sequence of 19 days
contains the 3 August Wilshire high and the second whose 26 day base
includes both day 104 of the longer 52/130/104/78 day sequence and
additionally the lower high day 100 of the 52/123/100/71-75 shortened
The two fractal decay patterns respectively are 19/47-48/24 of 47-48 with 24
more days to a primary low and 26/24 of 65/65 with a primary low expected
day 65 of the second fractal with 41 more trading day to a primary low.
Notice that these two daily solutions match the expected lows of the shorter
52/123/100/71-75 and the longer ideal 52/130/104/78 day fractal sequences
respectively. The 26/24 of 65/65 day decay sequence is particularly
appealing because it matches the expected monthly low of the greater
umbrella decay fractal of 15/38/33 of 38 months. Likewise a possible
11/28/28 day sequence composing this second 65 day fractal is possible.
Tuesday, November 15th
2:43 pm Update
Needless to say what a trader can do in the futures or commodity /forex markets with
the fractal principles ....
A Perfect Bar Top !
SPX Down 5 points ! wow
2:10 pm update
Watch OUT !
1:46 PM UPDATE
OEX REVERSAL ON THE BUTTON !
SPX Reversal ......................
Picture Perfect !
1:19 am Update
this may be a better trade :
THE AMAZING NASDAQ FRACTAL EXPANSION IS SET FOR NEW HIGHS !
Long Term Subscribers have seen this fractal unfold during the last 24 months.
11:47 AM UPDATE
ODDS ARE STILL FAVORING A PULLBACK FIRST
LOOK CLOSELY AT f2 : f3 and "Scale" the fractal to f4 : f5
This looks low risk for a day trade today ...
10:10 am Update
Although we made a 5 bar bottom on the 30 minute yesterday afternoon,
if we top in the 1234.87 area in the first 30 minutes today we will
also have a 5 bar top, so it looks like we could have back to back
bottom/top formations. Very interesting.
FRACTAL CYCLES AND BARS ARE SUGGESTING A TOP FOR THE S&P
NOTICE HOW EXACT THE FRACTAL CYCLE IS FOR THE TOPS AND BOTTOMS !
Monday, November 14th
3:52 pm Update Alert
30 minute bar bottom on the SPX/OEX
Goodbye General Motors
The current best decay solution to a primary low is 19/17-48/21-22 of 47-48. This leaves only 26 trading days left to a final primary low. The recent equity rally is so very right from both a contrary sentiment perspective and terminal monet flow perspective. There are very few to any of the tradtional pessimists left contemplating such a near term drop. This psychology dynamic, even among the most pessimistic economic realists, is as it exactly should be at this point in the second 147 year Grand Fractal. All eyes and linear thought are focused on possible valuation growth targets for the traditional December rally. Recent multimonthly partial liquidation of bond mutual funds has provided the final money fuel along with the last few dollars left in the historically low cash reserved equity mutual fund industry to cause today yet another minutely exhaustion gap to a multiweekly high, lower than the 3 August 2005 Wilshire Maginot Line valuation high.
The current best solution for the final subfractal containing the 26 days is 3 of 5/13/13. For the long term debt instruments the dominant subfractal count if 15/35 of 37-38 meaning that the next two-three trading days should, just as today, have an influx of money driving TNX and TYX lower consistent with lower interest rates. Today, the smart money which was made by selling equities, near their top price secondary to 3 August 2005, was invested in long term debt instruments driving interest rates lower. The Wilshire is softly whispering: beware of the technical implications of minutely exhaustion gaps to lower highs involving me for I am the near sum of US equity valuation activity.
GM, which soon will likely follow the way of Delta, United, Northwestern, MG Rover, and Delphi collapsed to a 13 year low two trading days ago. Because GM's pension solvency is coupled to its stock market valuation and the overall equity market is in a 6 week (using the best current solution) to 9-10 week(using a secondary solution) decay process, GM will likely face bankruptcy, changing the face of US corporate smokestack and labor union economic dynamics. These dynamics have provided 75 years of substantive US manufacturing might and real American made goods to the world markets. They have provided real living wages for blue collar workers. How will these displaced blue collar workers send their children to college, pay health care bills, and pay inflated real estate taxes. Who will be able to afford the entry level homes that have been and are being built?
The over investment, overproduction, over consumption, and saturation point of the 2000 tech market has been replaced by like elements constituting the housing bubble. This crested catastrophe has been fueled by far more powerful easy lending practices and transient lower interest rates than the ten percent marginal buying practices and nadir fed fund rates of the late 1920's.
Saturation macroeconomics at the American consumer level will determine the course of valuation trading for the next 8-12 months. The degree of positive sentiment that exists in the market today will be replaced by its antipodal like image at the end of decay process.
THERE ARE 2 ITERATIONS COMPLETE ON THE BOTTOM CHART
1:40 pm ......
A ceiling here
So far a quiet day
10:30 am Update
Markets are testing their highs today ........ nothing clear yet
Could be a little profit taking ....
NO setup yet today ...... on the sidelines ..
On the 60 day SPX chart , there is a slight chance of a third iteration that could develop.
There may be a sell off ............... though at this point there is no confirmation YET
I would want to be a bit defensive today
F2 was set on last Friday on the below chart .............. creating the boom into 111 !
F2 appeared sooner for the trigger ...... ......... but it still projected the rally
52/130/130 Maximum Daily Growth Fractal
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