Fractal Super-Cycles and the Potentially Devastating Misuse of Analogs…

By: Joseph Russo | Tue, Jun 14, 2011
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The following is a reprint from our observational archives of stock market cycles relative to the inherent nature of Elliott wave fractals at the grandest of scales.


Introduction:

The study dates back to share price data beginning with the British All Shares index in 1693, the Clement Burgess Index from 1854 - 1895, and the Dow Jones Industrial Average from 1896 through November 1, 2009.

In creating the dataset, we are able to view the longest and most contiguous representation of share values in recorded history.

The first two charts and accompanying text reconcile our long-term fractal views of Elliott Waves resident at Grand Super-Cycle, and Super-Cycle degrees.


Analogs:

Back in September of 2009, we touched on the analog presented in chart three within an article entitled: SC-IV; Battle for Worldwide Financial Sphere Hegemony.

Today, we will share with you the other three analogs residing within the archives.

Charts 3, 4, 5, and 6 along with their respective text, attempt to correlate the past as prologue to plausible future outcomes through the use of congruent analog studies of similar geometric fractal patterns present in the historic price record, and then superimpose those patterns onto the present/future to gain prospective vision.

WARNING:

Though fascinating to build, ponder, and observe, three out of the four analogs presented have already blown-up.

The only remaining analog viable is our last, which aligns the chart of daily closes amid the 1929 bottom with the chart of weekly closes from the March 2009 low.

Since November 1 2009, this analog has been calling for a top in the spring or summer of 2011, or pretty much right ABOUT NOW.

 

 


Behold and Enjoy:


Summary:

Analogs can be very useful, informative, and impressive.

Given the plethora of historical price data, indicators, and vast correlation possibilities, it is always possible to find a plausible analog from which to make an educated guess as to where prices may be heading next.

Occasionally, we stumble upon some that appear to work like magic for a nice stretch of time - that is - until they inevitably blow up in one fashion or another.

At the end of the day, it has been our experience that it is most prudent to rely solely upon the real-time price action and the footprints left immediately behind in order to best prepare for what lay ahead in the future.

With that said, we'll still keep one eye opened on the near-term effects of our last analog standing.

Until next time...

Trade Better/Invest Smarter

 


 

Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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