12 July 2005
The Real Secondary Peak?
Saturation Points, Contrarian Sentiment, and Fractals
As the ultimate contrarian indicator litmus test, some of even the most
continuously cautious and pessimistic about the equity markets' valuation
sustainability will be fooled at the major secondary top of market
(the primary top being March 2000). At the secondary summit even a few of the
diehard contrarians will believe that the valuations are either going higher
immediately or will shortly thereafter blow off to newer highs after some
initial minor decay.
By their curious nature, fractals replicate themselves at different unit levels
of magnitude. In light of yesterday's minutely blow-off in the Wilshire to new
(secondary) highs and the position of the long term completed or nearly
completed weekly fractal pattern of 22/54/49 of44-54, this replicative fractal
feature may now be curiously relevant.
From the August 2004 lows: 51-52/129-130/51 of ?52 x/2.5x/x
For the last 51 days: 12/30/11 of ?12 y/2.5y/y
Is this repetitive fractal footprint indicative of the real secondary top?
Time will tell.