30 July 2005
The Wilshire 5000 Double Exhaustion Gap
(written before US trading began on 29 July 2005)
July 28, 2005, while not a key reversal day, represented the second
exhaustion gap day to new multiyear highs for the behemoth Wilshire 5000
without retracement of its now preceding two gaps. On 11 July 2005 the
Wilshire (TMWX), on a minutely basis, gapped, skidding and skipping upward,
during the range from 12110-12140 to a multiyear high. This gap has not
been retraced during the last 13 subsequent trading days. The 28 July gap
occurring near the 12405 level to yet another multi yearly high did so with
further growth ascension and without retracement. Technically the equities
are displaying classical peaking characteristics.
It is quite remarkable that a summation index as huge as the Wilshire can
have ascending exhaustion gaps - a one percent valuation growth represents
a 150 billion dollar rise in valuation in this approximately 15 trillion
dollar equity basket. Offset by the poor performances of large companies
such as Delta who yesterday were reportedly worried about bankruptcy- a
common problem for American companies dependent on the non-federally
assisted and, otherwise stated, private selling of American made products
or services- it is unrealistic to expect the great Wilshire to blow off in
grand exponential fashion. Small trading gaps for the Wilshire to higher
new multiyear highs will have to do.
On the other hand, rotational money suddenly invested into individual
media-focused 'hot stocks' can well show the classic blow off pattern. A
look at DCX Chrysler's yesterday performance is instructive in the technical
anatomy of a blow-off: its fractal growth pattern on July 28, 2005 was ...
12/30/24 of 24. Just as 7/7 was a transient one day aberration of the
underlying growth pattern for both US and European equities, so will
Chrysler's terminal one or two day Supernovae performance at the conclusion
of its third fractal growth pattern find the retrenching gravitational field
of the consumer- saturated, forward-consumption black hole that lies
immediately beneath its transient levitation.
This morning's early trading in Europe (July 29, 2005) shows valuation
exhaustion gaps to new 4 year highs for all three of the major indices, the
FTSE, the DAX, and the CAC. Watch for the possibility of a key reversal day
for those indices.
Beware the coming deluge.
... As a postscript written at the end of the 29 July 2005 trading day; it
appears that a key reversal day did indeed occur for the three European
indices. A retreat from the trading high on July 29 puts 28 July 2005 - at
least for now - as the March 2000 secondary top for the Wilshire 5000.
Devaluations and decay patterns for second growth fractals - even grand 147
year growth fractals - are expectedly and unfortunately ... nonlinear. Hope
for the best, but expect the worst.