1 October 06
Solved: 12 March 2003 To Present...The Elegantly Simple Quantum
Fractal Pathway of the Complex Macroeconomic System....
The Fractal Conundrum of GM..... Solved....
The Classical Fractal Pattern of x/2.5x/2x/1.5-1.6x Starting 13
October 2005 and Its Relevance to the Wilshire 28 September 2006 Exhaustion
13 October's Classical Fractal Pattern's relationships to the 117 day
Fractal before and 163 Day Evolution Thereafter....
Synchronization of Terminal Portions (2X-2.5X) of Multiple Second
Fractals with Variable Duration First Bases (X)......
The NIKKEI- The zero Interest Rate True Global Equity Valuation
The Incipient Collapse of Global Equities......
The world is now entering the natural macroeconomic cycle's time frame of
limits and feedback and abrupt asset devaluations marked by
discontinuity and non linearity. This disruption is caused by a
likewise natural generational consumer saturation - consumers
saturated with assets and debts - amplified by excessively, albeit
transiently, Federal Reserve lowered interest rates and, more so, by
an unregulated lending industry trapping unwary consumers into
too-good-to-be-true debt contracts.
A hypothesis has been made that the saturation process is
deterministic and unfolds mechanistically to a necessary saturation
point that is determined by all of the integrated elements that make
up the complex debt-wages-money-asset macroeconomic system. This
system's saturation endpoint is independent of political and news
events with the exception perhaps, of outright destruction of assets,
lenders, and debtors in a global
confrontation. For instance, all the debts in Dresden were
essentially canceled after the Allied repeated firebombing of the
civilian population in February and early March 1945 - nevertheless,
from the ashes, the German equity market 'self-assembled' itself in an
optimal manner into a rudimentary quantum fractal pattern with the
meager money-debt-asset system remaining. And after fifty years the
DAX mirrors its sister European equity composite indices.
In order to validate 'the potential science' of the macroeconomy's
'self-organizing nature' to evolve and 'self assemble' the wealth of
its composite equity 'system' via discrete mathematical laws of
elegantly simple ideal quantum fractal patterns which lead
alternatively to buying and selling saturation areas - accuracy of
predictions are essential to identify rather precisely those ideal
expected tops and bottoms and expected periods of cycle dependent non
linearity. A science should be able to do that. A science should have
predictability and internal consistency when looking both at the whole
and at the small and intermediate parts that compose the whole.
The dynamic wealth of the composite equity system is derived from
its ongoing convertible composite paper worth staying within and
exiting the equity investment pool, and new investment money - from
wages, profits, rotation of money to and from bonds,rotation of money
to and from commodities and hard assets, et. al. The discrete
valuation units along the daily valuation curve composed of minutely,
5-minutely, 15 minutely, and hourly sub fractal patterns define over
time the integral collective worth of the composite equity 'system'.
The absolute nodal highs and lows determine the absolute buying and
selling saturation points, respectively . It is the validation of a
deterministic simple ideal quantum fractal evolution of equity
valuation reflecting the integrative natural feedback characteristics
of the macroeconomy and in particular nonstochastic saturation
macroeconomics that this website seeks. The Wilshire TMWX has been
used in this endeavor because it represents the integrative US equity
composition valuation and because of its largeness as compared to the
other world community individual nation's equity composites.
Using Fractal patterns allows predictions both on a yearly, weekly,
daily, hourly and 15- minutely basis. Precise predictions at the top
can be made by using 'the fine tuning instruments' of the lower order
hourly and 15 minute unit saturation fractal patterns. This last week
a prediction was made for a secondary top for the Wilshire on 27 or 28
September. Starting on day 334, the 2x expected apogee of a second
fractal with a 117 day base (X), an elegant hourly miniature extension
fractal pattern evolving in a delicate hour unit based x/2.5x/2.5x
blow-off progression of 12+/31/31 hours occurred. The apex was
heralded and identified by a predicted minutely exhaustion gap.
gaps occurred on both days but the Wilshire made its lower high peak
secondary to its high in May 2006 on hour 24 or 2x of the third 31
hour fractal occurring in the first trading half-hour on 28 September
2006 with again the anticipated minutely exhaustion gap. The
miniature hourly fractal progression from day 334 was again an elegant
x/2.5x/2.5x with a minutely exhaustion gap high at 2x or the 24th hour
of the third fractal and with the expected non linearity on a minutely
basis of the 31st hour of the second fractal.
Where to now? More fine tuning from even shorter time unit
fractals....Contained within the last 7 hours of the third hourly
fractal to the 31st hour was the initiation of a perfect 15 minute
extension fractal of classic proportions x/2.5x/2x/1.5x with a base of
4 - fifteen minute units for a 4/10/8/6 fifteen minute completed
fractal. None of the fifteen minute units exceeded the exhaustion
gapped high of preceding third fractal's 24th hour. Contained within
the terminal portion of this 15 minute unit 4/10/8/6 extension fractal
and from nodal low to nodal low was a 7 - fifteen minute unit fractal
which may have commenced the decay fractal. The possible operative
decay fractal in 15 minute unit are 7/17/5 of ?17 or 7/16/5 of
13-14/11. On a minutely chart the second fractal's characteristic
nonlinear gap is
found with the 15th unit of the 16 - fifteen minute unit second
fractal 7/16 :: x/2.5x sequence.
GM. GM has been a conundrum, much greater than the former Fed
Chairman's fed funds rate-long term interest rate conundrum.
Considering its pension obligations, health care obligations, and
massive one quarter trillion dollar corporate debt, by all reasonably
fiduciary accounting practices GM is a bankrupt company. Why would a
bankrupt company, coupled with a progressively failing business
practice with smaller and smaller market share and losses for the
year, have fractal growth during the last several months? The answer
could be because its dividends. GM's dividends are very competitive
compared to its very low yielding competitor stocks. Even with its
recent considerable terminal growth, GM on Friday offered a dividend
yield of 3.01 percent verses 1.77 percent of the SPX. Parenthetically
even if the SPX fell 50 percent, the ten year Note and 30 year bond
at current levels would offer a better return.
From its monthly low in 2003, GM's monthly fractal growth stands at
9/18/18 months x/2x/2x- with the characteristic nonlinear drop at the
end of the second fractal seen best using the daily charts for the 4-5
year period. The third 18 month fractal is composed of two growth
periods. The first is a down going fractal of 9 months duration with a
low below the 18 month second fractal's ending low. The second monthly
growth period is composed of ten months with 2 separate sub fractal
growth periods. The first sub fractal growth period is a 13/32/24-28
x/2.5x/2+x daily fractal evolution with a nonlinear break between day
15 and 16 of the second fractal and a five percent growth or
valuation slope from start to end. The second sub fractal growth
period has seen GM's valuation increase from 19 to 33.47. This
is now recognized as a perfectly evolving growth fractal as money has
flowed into and grown the stock's valuation, conforming to a perfect
first and second fractal pattern with the second fractal having
perfect sub fractal growth.
GM's growth since 11 April, 2006 has conformed to a 41/80 of 103 day
X/2-2.5X fractal with an expected nonlinear drop lower between day 80
or ideally 82 and 103. The 41 day first base is composed of a 9/20/14
day fractal and the second fractal is composed of a 15/37/30 daily
perfect x/2.5x/2x growth sequence. This is caricatured only in that
there is only a relative rather than absolute nodal low at day 37 and
there is no nonlinear drop within this second 37 day sub fractal
sequence. A chart of the last 5 days shows a fractal base of 1.6-1.7
days with a sequence of 1.6-1.7/3 of 3.2 - 4 to 4.3 days. As the
upturn at the end of the
day suggests there may be a hour of two of higher trading on Monday
October 2, before the expected hourly nonlinear drop between 3.2-3.4
and 4 - 4.3 days. GM should end Monday's trading day(day 81 of the
41/80-103 day fractal sequence) on its low.
Added to the second fractal synchronization listed below is the
Wilshire's perfect or near perfect fractal sequence starting from its
13 October 2005 low. This sequence has been elucidated many times
previously and conforms as a caricature of the classic sequence on the
Economic Fractalist main page. Double counting the first day(an up
going day) a 12 day first fractal base is formed. A classical
x/2.5x/2x/1.5-1.6x fractal pattern then emerged : 12/30/24/18-19 days.
A relative low did occur on day 30 (2.5x) of the second fractal with
apical high on day23/24 (2X) of the third fractal. No gross nonlinear
drop was seen grossly on the terminal 30th day of the second fractal
and minutely charts are not available for retrospective confirmation.
Two additional days occur after the 19th day to form a lower low.
Should the market crash from the September 2006 area below the October
2005 low, these three days could be seen as integratively either
shared between the first fractal and second fractal with the start of
the second on day 19 of the 12/30/24/19 day sequence or alternatively
as the complete property of the second fractal with the initial 3-4
downward and the first fractal ending in an ideal 12/30/24/19 day
sequence of 81 days.
The maximum length of the potential completed nodal low to nodal low
fractal first base fractal is 11-12/30/24/19-21 or 83 days from low to
low. From day 21 of the 11-12/30/24/21 day fractal to 29 September
2006 was 161 days for a fractal series of 83/161 of 166 days.
If a rapid decay occurs below the October 2005 low, the fractal
83/161 of 166 days with a 11-12/30/24/21 or 83 day base
83/163 of 166 days with 3 days between days 19-21 shared between the
81/163 of 162-163 days with day 162 occurring on 28 September 2006,
the exact day of the Wilshire's current secondary exhaustion gap peak.
If day 162 holds as top and the market falls below the October 2005
low it will be an exact 2x multiple of the perfect 81 day evolution of
the 'perfect' fractal evolution x/2.5x/2x/1.5-1.6x 12/30/24/19 days
as outlined on the Main Page of EF.
This adds yet another second fractal nonlinear break point to the
collection of synchronized second fractal break points previously
18/36 of 36-45 days
24/53 of 48-60 days
81-83/161-163 of 162-203 to 208 days
117/243 of 234-293 days
8/16-20 years or 97/192 of 194-242 months (193th month in October)
70/148 of 140-175 years
From the world global equities the NIKKEI has the clearest monthly
fractal pattern just as described in the main page of this website.
From its 2003 nodal low and noting that the first month is up going a
8/19/16 monthly or x/2.4x/2x fractal pattern s evident. The apex of
the second fractal occurred on month 16 or 2x of the base and a
nonlinear drop occurred during month 18 of the second fractal between
2x and 2.4x as described in the main page
of EF. The third growth fractal of 16 months is exactly 2X of the
base. In weekly terms the third fractal can be subdivided into a
12+/29-30/29 weekly fractal or a near perfect x/2.5x/2.5x extension
fractal. A NIKKEI's 20 year chart depicts the the natural course of
deflation with the NIKKEI less than half of its 1989-1990 value.
Inflation adjusted, at less than
16500 it is less than 25 percent of its 40,000 1989-1990 value. This
has occurred in spite of massive Japanese federal deficit spending
leaving Japan with one of the the highest federal national debt/GDP
ratios of all industrialized countries.
Like the Wilshire, the absolute values of the fractal valuation curves
and the nodal lows and highs of the FTSE, DAX, and CAC - in contrast
to and unlike the NIKKEI with the Japanese permanent near zero
interest rates lending parameters - were distorted by the variable
interest rate adjustments effected by the central banks during
2002-2004. Valuation curves and nodal lows were affected by Fed Funds
rates of less than 1.5 percent from June 2002 to August 04 and less
than 2.5 percent until February 05. Money growth was amplified in
this period by the real estate mania and by ultraeasy lending
practices such as LIBOR loans, low ARMs, other interest only
mortgages, and aggressive lending practices to include high default
risk mortgagers. Like wise equity was extracted from rapidly
appreciating and overvalued homes. Some of this money found its way
into the market and much found its way into the consumption and buying
of services, products, leisure items, et. al., which resulted in the
record corporate profits of the last two years. The net result of all
this extra money was a distortion of nodal lows of the Wilshire and
European equities. The correct global fractal template appears to be
the rather constant near zero interest rate dependent NIKKEI. The rest
of the major national equity composites are variable interest rate
caricatures of the NIKKEI and can be aligned with the 8/19/16 monthly
crisp and classical NIKKEI three phase growth pattern.
The NIKKEI's use as the correct and true template fractal pattern
becomes eminently relevant for the the Wilshire's evolution since its
low in 2003. The monthly three phase fractal growth pattern for the
Wilshire which started its 2003 rise 2-3 months before the NIKKEI is
8/20/17. This last 17 month pattern starting on 29 April 2005 is
composed of the two prior identified large fractal patterns, one :117
days starting on 29 April 2005 and ending on 13 October 2005 and the
second: 81-83 day starting on 13 October 2005 and ending on either 8
or 10 February 2006.
Looking at the expected second fractal evolutions of the sequential
117 and 81-83 first base fractals, the nonlinear break is expected to
occur in the same time frame with the expected low points only a few
117/293 days with a nonlinear break between day 234 and 293 (from the
13 October 2005 low)
81-83/203-208 with a nonlinear break between 162 and 166 or between
day 243-290(from the 13 October 2005 low)
The 2.5x expected ends of the two fractals are only 3 or so days apart.
The ideal Fractal pattern with the decay fractal for the NIKKEI in
terms of months from the 2003 lows is 8/19/16/12 months.
As October 2006 begins there is an appropriate lulling complacency
within the global markets that are often emoted at saturation areas.
Remember the positive psychology that was present at the beginning of
May 2006. it is present in late September again. Interests are coming
down. The Fed is expected to further support the lowering of interest
rates as the housing market cools. With the lowering of interest
rates, there are expectations that new buyers will chew into the huge
and growing supply of houses on the market. Mortgager's with ARM's
coming due may not default and may manage the higher payments if
interest rates fall enough. Commodities prices have been tamed.
Lowered gasoline prices are like a cooling splash of aloe gel on
sunburned cheeks. The composite US market Wilshire is just shy of its
May 06 secondary high. Expectations are that this is not a lower high
double top but that the Wilshire is on its way to higher highs, maybe
to surpass its March 2000 high. . Taxes on corporate profits are
filling the coffers of the national treasury. Consumer sentiment has
improved. The whenever possible optimistic American
middle class, is hopeful that the low gasoline prices will provide
paycheck to paycheck wiggle room.
With all this lulling and comforting background, the real fiscal
situation and liabilities of the citizens, major smokestack
corporations, major airlines, local, state, and federal governments of
this country reflect a very bleak even black picture. The real balance
sheet, the vulnerable and unsustainable service jobs, and vanishing US
manufacturing sector are more consistent with a debt-laden,
consumer-asset-saturated macroeconomy that appears to exactly match
the generational, poignant, major, and potentially catastrophic
nonlinear area expected and defined by fractal equity valuation
quantum mechanics. The coming very short time frame period described
explicitly above is well anticipated by the discontinuous nonlinear
terminal portions of synchronized second fractals. It is consistent
and anticipated by the completed three phase 8/19/16 monthly x/2.5x/2x
NIKKEI fractal growth progression and the completed 8/20/17 monthly
Wilshire fractal progression with its May2006-Sept 2006 double and
secondary lower top. All of the ongoing mathematical relationships are
consistent with and caused by the macroeconomy's self-organizing
natural quantum fractal laws. It is by these simple mathematical laws
and simple empirical and 'necessary' relationships that growth and
decay of composite equities to selling and buying saturation points
occur. The predictable fractal progression of composite equities
parallels and describes the macroeconomy's current state and, more
importantly, provides predictive information of the macroeconomy's