1 November 2005
52/130/130 Maximum Daily Growth Fractal Completed.
Like a plane that has gone off the radar screen, the venerable Atlanta
based superairliner Delta Airlines, formerly DAL, no longer has a
valuation tracing on Big Charts. Delta, Northwestern, GM, Delphi, and
Ford all share the commonality that, unlike the badly run corporate-like entity
known as the United States, they cannot directly tax present day and future day
citizens to maintain the current questionable promise of their substantial
outstanding debt instruments. These private organizations must depend on bottom
line profitability in a disequilibric competitive global economy to
maintain the promise of their debt instruments, their pensions, their health
care benefits, and ultimately their economic viability. The nonlinear reality
of bankruptcy or imminent bankruptcy and the imminent death
of these formerly world class and solid companies serve as canaries in
the coal mine for America's future global economic viability.
The nonlinear mechanistic imminent fractal decay of equities and asset
valuations is, with great probability, at hand. 31 October 2005
completed or nearly completed a maximum growth fractal sequence of
x/2.5x/2.5x or 52/129-130/129-130 days dating from August
2004. A lower high exhaustion gap so technically characteristic of
dying markets making their lower highs occurred on 31 October for the
NASDAQ. Before falling back at the close the Wilshire TMWX, likewise,
showed minutely exhaustion gaps to lower highs in the last hour of
The final decay daily fractal equity sequence will likely either be a
6/15/15 or a 7/17/17 sequence, the former starting 3 days ago and the
latter starting 4 days ago. (The other possibility is a splitting of
the difference with a 6 plus/16/16 decay sequence as alluded to in the
previous EF posting).
One other less likely, although nostalgic solution, is an exact
replay of the 1929 11/27/27 decay fractal sequence. The count on this
possible sequence is: 11/19 of 27/27. This has some appeal because
maximum growth in the second decay fractal would be a fib ratio of the
base, i.e., 1.62 x11 = 18-19 days.
All of these fractal decay solutions end in 31 to 35 more trading days
for completion of the primary decay fractal.
A corroborative litmus test in the next few days for the coming equity
devolution could be an expected decline in TNX and TYX, the ten year
note and 30 year bond respectively, even as the fed fund rate is
raised (albeit, very temporarily) to 4 percent. Exiting money from
equities, will flow into the debt market, lowering interest rates.
Likewise, three month treasuries IRX 'struggling' to match the 4
percent fed fund rate because of the money exiting from equities will
also provide early evidence that the devolution is in its beginning
Just like the formation of galaxies and hurricanes and nautilus
shells, the universe of the macroeconomy operates through non stochastic fractal
growth progression and nonlinear decay. Expect the unexpected.