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