8 April 06
The Fractals of GM Equity Valuation...... The
Leading US Economic Indicator.....
It is intuitively reasonable that the former grandfather of American
manufacturing will lead the way into the equity devolution abyss. GM,
enfeebled with its noncompetitive aging appendix factories, albatross
SUV's, and its undeliverable massive IOU promises to pensioners and
an aging work force alike owes vast seas of monies - equivalent to the
Canadian national debt. Unlike Canada, GM has no citizens to tax, no
oil sands to raise revenues, and no printing press to issue GM
currency. Its swirling poorly rated junk bonds will soon have the have
the value of used tissue paper disappearing into the porcelain bowels
of an old commode.
Its workers and, more timely, the point guard workers at its critical
parts supplier, Delphi, represent a crystallization of the current
dilemma of economic globalization for US workers. Delphi, GM, and US
blue collar and private employee white collar workers have debts and
routine cost of living denominated in inflated US housing dollars. As
the inflation pig travels through the record high raw commodities to
finished product pipeline and slowly works its way to the end of the
python's tail for delivery to the American consumer, the American
worker already finds himself with an inadequate paycheck, resulting
in a negative national savings rate.
Added to this, US CEO's, armed with the bargaining chips created by 10
solid years of NAFTA and NAFTA look-alikes, are now offering US workers
new US wage scales and health care benefits bench marked by a median
salary somewhere between current American and Asian workers' salaries.
Therein lies the rub: decreasing American worker wages against higher
cost of living and a heavy debt load made worse by rising interest
rates. This vice grip has placed both the American worker and the
American economy in an untenable unbalanced position
The fractal progression of GM equity valuation since October 1998 and
more particularly during the Wilshire's secondary shoulder since March
2000 tells GM's story better than auto and GMAC sales and financial
GM is at the end of both a major weekly, daily, and 15 minute unit
The daily fractal progression began with a starting set of 5 days.
Last Friday GM completed a x/2.5x/2x progression or day 26 of 26:
........5...... 13 /
33 / 26
X / 2.5X / 2X
On a weekly fractal basis starting from the low in March 2002:
First weekly sub fractal series: 11/27/18 = (x/2.5x/1.6x) = 54 weeks = X
Second fractal series = 108 of 108 2X weeks with a first nonlinear
break between in week 107.
On a fifteen minute pattern GM has also completed a 14/36/28 fifteen
minute pattern with the 28th of 28 15-minute units completed in last
Friday's last 15 minute unit trading block.
The weekly, daily, and 15 minute patterns are all aligned with Friday
7 April as a final point before a nonlinear disruption. GM's balance
sheet and precarious position with its Delphi supplier aligns with
this fractal position.
For the Wilshire, there is a complex integrative fractal formulation
that aligns with 7 April 2006's reversal day [gapping to a new high
(secondary high to March 2000) and ending very near the low of the
First a review of two non complex fractal configurations and progressions:
First non complex fractal pattern:
The lengths of the last two sub fractals of about 25 weeks each are
matching in average length from bottom to bottom in the first sub
fractal as directly compared to the second sub fractal which evolves
in blow-off fashion from bottom to top:
First sub fractal: growth 12/30/24 decay 11/27/27 with:
day 22(11/27/22 of 27)representing the
primary low and day
27 the secondary low
Second sub fractal: growth: 12/29/24 blow-off decay: 11/27/27
day 27 of 11/27/27 of 27 - Wednesday 5 April 2006 as the final daily
This x/2.5x/2.5x daily final blow-off comes as a direct extension of
the 30/75/75 weekly pattern previously identified.
Second non complex fractal pattern:
If days 22-27 of the first sub fractal decay cycle are shared, i.e.,
those trading days from 13-20 October 2005, the length of the first
sub fractal is 119.5 days which exactly matches the 119.5 days that
ended on Friday 7 April 2006 with its the intraday high (and ..as of
now...technically a key reversal day.)
Thus, both 5 April 2006 and 7 April 2006 are perfectly timed highs
from a fractal perspective: from a 11/27/27 second sub fractal
mirrored blow off version of the first sub fractal - and from a total
length of 119.5 days (6 days shared) of the bottom to bottom first sub
fractal matching the 119.5 days length of the second sub fractal's
Those are the non complex fractal progression considerations.... The
complex consideration is very intriguing and supports an integrative
nature of a perfect complex money-debt-asset system.
While it has been shown repetitively that valuation growth evolves in
simple X/2.5X/2.5X and X/2.5X/2X/1.5X ideal patterns, this pattern may
evolve under the umbrella of a larger dynamic with an integrated
X/2.5X/1.6 -2.5X pattern. In this dynamic the typical division between
the first two growth fractals is not clearly defined but an ideal base
may be solved mathematically knowing the total length of the first two
fractals and identifying the end of the second both by the
characteristic nonlinear drop and the integrative daily equity
valuation low. The base is then used with either 2x or a Fibonacci
The 1.6 or 1.618 Fibonacci ratio is a empiric constant in nature's
growth fractal patterns. It represents a natural ending point of
maximal growth where bending occurs.
Friday 7 April 2006 has the curious position of being poised exactly
at the end of an integrated X/2.5X/1.6X daily Wilshire series starting
at the low in March 2003.
The first two fractals X and 2.5X end with the identifier nonlinear
break and an integrated averaged low day on April 18 2005. From the
low in March 2003 to 18 April 2005 there are 530 trading days that
compose the first and second X and 2.5X fractals.
Solving for X, X = 151.7 days.
2.5X = 379.25 days
The sum of the first two fractals subtracting one day for double
counting of the last day of the first fractal and last day of the
second fractal is 151.7 + 379.25 -1 = 530 days.
While its is possible using this data that the third growth fractal
might rise to 2X or 303.4 days, a curious phenomena occurs when
multiplying the base times the golden ratio.
151.7 times 1.618 = X times 1.618 = 245.45 days.
Friday was day 246 from the integrated low on 18 April 2005.
There is something else unanticipated. Money is moving out of long
terms bonds, driving long term interest rates higher. Could it be
that foreigners prefer electronic cash and mattress cash over US long
term debt instruments? This very troubling recent turn in US long term
debt fractal evolution, in concert with GM's and the Wilshire's fractal
progressions, represent a possible firestorm combination for the
unbalanced US and global macro economy.
The tentative new beginning decay series is:
First decay fractal 4/6 of10/10 with 10 April day ten of a 22 day
Second Decay Fractal : 55 days
Third Decay Fractal : 35-55 days