20 May 06
The Second Postscript to the 6 May 2006 Nonlinear posting
This weekend, most traders with linear expectations comfortably
believe that the inevitable oversold conditions will lead to a new growth
phase which will commence next week. Friday's trading appears to be
the classic technical reversal day with new lows ending on a high.
Likewise the ten day trading curve provides evidence of the typical
decay curve that approaches a selling saturation asymptote, with
expected new growth - just as has occurred in a linear fashion at the
preceding lows during the last three years. Prospectively this is exactly
the type of linear thought processes, i.e. psychology, oversold-overbought
ratio, and chart graphic linear decay asymptote activity that will be
the exact conditions before the great Nonlinear event concluding the
second 140 year plus US Grand Fractal.
With the present so stated conditions, a major break down within the
next multiple hours of trading is a very possible and would fit the
recurrent 'expect the unexpected' EF theme that characterizes this
time window in macroeconomic history. While it is useful to watch the early
Asian and European markets for directional guidance, remember where
the debt load is disproportionally the greatest. That country is likely to
lead the way in the major global asset devolution.
Nevertheless. there is yet, fractally possible, a chance where
there may be less than one to two weeks of growth left
in the Wilshire with 0-8 days of lateral to upward movement. This
possible scenario which ironically and appropriately further adds
to the previous collection of misdirecting linear thought processes
has, as a last observation and fractal construction, two possible
operative intertwined mathematically and deterministically competing
weekly growth fractals since 2002.
One is a:
30/75/75 x/2.5x/2.5x weekly fractal.
This dominant fractal series has a 30/67 of 60-75 x/2.5x day maximum
daily extension with the 30 day base containing the 75th week of the
third weekly fractal. A nonlinear break in the daily extension
fractal series has already occurred after the 60th 2x day. A
nonlinear break down characteristic of second fractal terminal
activity is evident at the terminal portion of the second 75 week
fractal ending in August 2004.
The 30 week base of this dominant fractal series is an integrated
fractal with 23 weeks starting in October 2002 and 7 weeks 'borrowed'
from the concluding 12 week terminal portion of the preceding
2000-2002 32 month decay fractal. (Most of the European and Japanese
equity fractals tracked lower for the entire 30 week US first fractal
base period. Plummeting US short term interest rates orchestrated by
the Federal Reserve gave the Wilshire the disproportionate liquidity
needed to lead the way in global equity growth coming out of October
The other possible competing weekly growth fractal is a:
34/85/83 of 85 weekly fractal.
The third growth fractal of 83 of 83-85 weeks is already completed as
demonstrated below on a x/2x terminal daily count basis. The third
fractal concluding sequence of x/2x is consistent with fractal
terminal sequences mimicking larger patterns: i.e., 70/148 years
This weekly fractal series couples the 12 and 23 week base (minus 1 for
double counting) whose 23 week second segment started in October 2002.
Note that a 0- 2 week maximum extension to 85 weeks would conceivably
match the x/2.5x 0-8 day extension of a maximum daily second fractal
series of 30/67 of 75 days which has extended the 30/75/75 week sister
fractal series as elucidated above.
Possible, though very unlikely, equity lateral to upward movement
would conceivably match US bond activity which could have another 0-7
days of lateral activity completing a 9/22/11 of 18 daily series -
after which long term US interest rates should fall in concert with
all non paper dollar assets. The weakness of the recent 11 day of
11-18 day third fractal implies a coming breakdown in TNX and TYX,
i.e., lower interest rates.
Characterizing the 30/75/75 Weekly Fractal Series.....
The 30/75/75 week growth series with its 30/67 of 75 x/2-2.5x daily
extension series has been repetitively characterized. A nonlinear
break down after day 60 of the second daily fractal extension series
has been identified and is easily seen on a daily chart series of the
NASDAQ 100. Fractally a break down at 2x of a second daily extension
fractal series interpolated at the breakdown point of a second
fractal series of 148 years would be most congruent with fractal
The 75 week series of the second fractal is a close caricature of
ideal fractal growth with a 50/129/110/79 day series :: x/2.5x/2x/1.5x.
A few days are off of the ideal pattern, but this was a dynamic period
of very low interest rates and rapid money creation.
The first lower high plateauing daily closing peak of this daily series
occurred on 26 January 2004. This began a curvilinear decay and
growth x/2.5x/2.5x series of 40/100/100 days where the closing daily
low of this second fractal series was on 12 August 2004. An intraday low
on 13 August2004 was made with the closing valuation above 12 August
2004. The second 100 day fractal was composed of a 28/29 daily base with
successive integrated low and closing daily lows respectively on day
70, 9 August and day 73, 12 August - exactly 2.5x after the 28/29
bases, i.e., 28/70 and 29/73 :: x/2.5x. A nonlinear drop occurred in
early August 2004 which served as the terminal second fractal
landmark for the respective 40, 28 and 29 first daily fractal bases.
A 2.5x perfect high was made 100 days later on 31 December 2004 to
complete the rolling combined and defining x/2.5x/2.5x 40/100/100
decay and growth fractal.
The 75 week series of the third maximum growth fractal ended on 11 January 2006.
There are two possible intriguing daily fractal series that progress
to this landmark apical day which was the apogee for the 75 week of
the third fractal. Thereafter, a 30 day base which incorporated the
75th week, served as a base for an extension series of 30/60 days.
The first possibility of the daily fractal sequence of the the third
75 week fractal has an incipient daily fractal series of 56 days
beginning on 8 August 2004.
56/140(a nodal, not actual low) characterize the first two fractals.
The third fractal is characterized by a 31/77/62 day series with a low
on day 77, 13 October 2005 and a high on day 62, 11 January 2006,
which represents the apogee of the third 75th week in the 30/75/75
weekly fractal series. Day 62 is then included in the 30/60-75 daily
x/2-2.5x extension series.
The alternative intriguing possibility is a 52/130/130/130 complex
daily series which ends at an apogee on 9 May 2006. (there are three
130 day sequences x/2.5x/2.5x/2.5x in this more complex
The first fractal series occurs from 12 August 2004 to 25 October 2004
- 52 days. The second fractal series occurs with a characteristic
fractal nonlinear break on 15 April 2004 between 2x-2.5x and an exact low at
2.5x , or day 130 on 29 April 2005.
The daily fractal series for the third series starts on 29 April 2005
and proceeds 12/31/28. A decay fractal of 11/27/22 days takes the
series to a low on 13 October 2005. 13 October then begins a 12/30/24
day series that arrives at its expected apogee on the third daily fractal of
day 24,11 January 2006, exactly matching the 31/77/62 of 62 day expected
apogee of the previously cited alternative fractal series. Day 4 of the second
fractal 30 day series of the 12/30/24 fractal occurs on 1 November
2005. This day is a nodal low and is day 130 of a 52/130/130 day
sequence. Commencing on day 12 on 27 October 2005 of the 12/30/24 day
45/90 daily sequence is evident with the second fractal of 90 day
composed of the final extension 30/60-75 day subset.
This fractal series ends on day 60 0f the 30/60 extension sequence or
9 May 2006 and occurs exactly 130 days after the nodal low of 1
November 2005. In this more complex series the second 130 day fractal
series with its nodal low rather than actual low might represent an
extension of the first 130 day second fractal series.
Both of the alternative third fractal daily growth possibilities from
August 2004 have matching solutions of 11 January 2006 as the apogee
day contained within the 75th week third fractal of the 30/75/75 week
secondary March 2000 Wilshire progression.
31/77/62 of 62 and 12/30/24 of 24 x/2.5x/2x of 2x = 11 January 2006.
Characterizing the Possible Competing Sister 34/85/83 of 85 Weekly
The possible competing 34/85/83 of 85 week sister fractal, if it is a
mathematical factor, is recessive to the dominant 30/75/75 weekly
fractal series. Unlike its sister it does not have a nonlinear break
at its 85 second nodal low. For the dominant Wilshire this nodal low
does not contain all intervening valuation points from week 1 to 85
of the second weekly fractal series as defined by an underlying slope
line. Curiously for the Dow Jones the underlying slope line does
contain all interval valuations.
The first daily base of the third 83-85 week fractal is 130 days. It
is defined by one of the two alternative possibilities previously
described for the third fractal of the 30/75/75 weekly series:
52 day first fractal base sequence beginning starting on 12 August
2004. The 130 day base starts on 29 April 2005.
The apogee of an expected 2x second fractal sequence with a 130 day
base sequence would occur at day 259 or 260 which was on 9 May 2006.
The 14/35/35 day inverse growth fractal could be extended to 9 May
2006. Since 9 May 2006, a telltale nonlinear break has been noted in
the daily charts of NDX and the minutely charts of the Wilshire.
While both 30/75/75 weekly with daily extension and 34/85/83 weekly
growth fractals suggest the major nonlinear event will occur immediately
ahead, there is yet a remote possibility and a micro time window
for lateral to upward growth within the context of a 30/67 of 75 day
daily extension of the 30/75/75 weekly fractal and the 34/85/83 of 85
maximum weekly possible sister fractal series. On a daily basis both
the 30/75/75 week fractal with its extension series and the
34/85/83-53 week sister series have completed their maximum growth 7-8
trading days ago with closing high on 5 May 2006.
Against this possibility of even a slight minutia of time remaining,
relative to the antecedent 148 years, is the real state of macroeconomic
debt-asset-money-wage affairs in the US. It is the US debt engine that has
produced the majority of recent global expansion through an enormous
burst of future debt obligation by its consumer citizens over the last
four to five years.
Presently there is the uncomfortable heaviness in the air. A dysequilibrium
tipping point of negative equity is now found in a good percentage
of 2005 acquired US homes. And the negative equity grows every day with
the growing backlog of oversupply. One of the last major American
manufacturing holdouts, the housing industry, with better blue collar
salaries, mitigated by a proportion of labor provided by the south
border non Ellis Island immigrants, is in steep decline. Coupled to its
decline is the US lending industry and the over populated and bloated
real estate industry. Add to this the 2-3 trillion dollars of value lost in the
last 7-8 trading days in the global equities and commodity markets.
The 44 trillion dollar debt bicycle has stopped moving and fallen 8 degrees
to the left. Is it possible to right its position one or two degrees for a few
seconds before gravity has its way? Historical Nonlinearity ahead.