6 February 06
Before the Deluge... All's Quiet on the Western Front ....
March 2000's Right Shoulder Weekly and Daily Maximal Growth Fractals -
Is there a saturation point where composite wages of a
macroeconomic system - diminished by taxes, debt burden, and
inflationary cost of basic necessities - can no longer support
composite asset price increases? Is there saturation point of over and
forward consumption and production, dependent on prevailing lending
parameters and interest rates, where demand 'must' wan, leaving an
over supply of unneeded products? Are these two saturation points
interconnected with the integrative saturation point following, as of
now, unknown laws of near-quantum unit time fractal growth and decay?
Finally is the near-quantum time length of these valuation saturation
nodal high and low points independent of interest rate and lending
parameters - with only the degree of over valuation and subsequent
under valuation dependent on the system's ongoing lending and
interest rate parameters?
Last week completed a 31/77/77, x/2.5x/2.5x, maximal daily growth
fractal sequence, with day 77, 2 February 2, 2006, of the third daily
fractal falling with the timing precision of an atomic clock. Day 77
was a lower low than the Wilshire's recent 3 year high on day 62 (2X)
occurring on 11 January 2006. Day 62 was contained within week 75 of
the third weekly fractal of a 30/75/75 maximum weekly growth sequence.
Did the Wilshire, the composite integral of over 95 percent of US
equity valuation, bump into and otherwise deterministically achieve
its fractally predestined lower high saturation point on week 75,
completing the apogee bony prominence on the shoulder to the right of
March 2000's head?
Does the complex macroeconomic system operate according to mechanistic
non stochastic laws occurring in discrete fractal patterns? Is there
naturally occurring feedback operant within the complex macroeconomic
system that, with predictable periodicity, rights imbalances? Will the
imbalances created by fifty years of continuous GDP growth be
corrected in a nonlinear fashion which is the hallmark of the terminal
portion of second fractal growth? Will the 35 year window for the end
of the Second US Grand Fractal beginning in 1858, with a preceding
First Grand Fractal base of about 70 years, end suddenly and
unexpectedly? Will the Second Grand Fractal's second subfractal's
nonlinear end - match the time length of the first sub fractal 74
years, from 1858 to 1932?
The 'natural fractal laws' - of equity and easily tradable asset
valuation growth and decay - appear to be as exquisitely simple as
they are retrospectively and prospectively demonstrable - as easily
determined by valuation nodal or near nodal highs and lows.
There are four simple fractal rules that appear operative for equity
(bond, and commodity) valuation behavioral growth and decay:
1 Fractal valuation growth occurs in a x/2 -2.5x/ 2X-2.5x manner.
Valuation nodal lows occur at the end of the first fractal 'x' and near
end of the second fractal '2-2.5x.' Apogee nodal highs occur at
2X-2.5X of the third
1A. In the unique ' debt compressing' time period of the Wilshire's
great right shoulder to its March 2000 high, the fractal evolution at
larger and smaller time scales has been repetitively consistent in
following a x/2.5x/2.5x pattern where the nodals are at are near the
ends of first two fractals and the nodal high is at or near the high
of the third 2.5x fractal.
2. Second fractals (even second sub fractals) are usually
characterized by nonlinear drops near their 2 -2.5x ends. In the
Wilshire's right shoulder this has occurred at of near 2.5X.
Google's' recent nonlinear drop follows the non linearity
characteristics of a second
sub fractal terminal area with a preceding base of about 37 days. Of
greater relevance is the 35 year window non linearity window
3. The beginning of a major decay cycle rests in the third fractal of
the preceding major growth phase. There is fluidity and continuity of
growth and decay cycle where the kernel of the subsequent growth
period is found within the last measure of the terminal portion of the
preceding decay fractal and vice versa - much like the concepts of
Eastern Yin and Yang.
4. Primary decay cycles evolve in a y/2.5y/2.5y pattern where again
the terminal phase of the third decay cycles offers a base for the
subsequent growth fractal. These are not religious phenomena, merely
the most efficient mechanistic patterns for valuation growth and
Equity, commodity and bond patterns suggest a unified low or crash
with a nodal point in the April-May 2006 time frame. A nodal low in
the oil commodity stocks in this time frame (May-June) would confound
most prognosticators who are focused on Kuwait's recent revelations
and the volcanic unpredictability and volatility of Iran's recent
rantings and threats.