
Fig. 5 extends figures 1 and 2 by performing a sensitivity analysis
on the log-periodic formula with a second log-periodic harmonic
(dashed lines in figures 1 and 2), in order to assess the reliability
and range of uncertainty of the prediction. Using the fit shown
in dashed solid lines in figure 2, we have generated 6 realizations
of an artificial S&P500 by adding white noise to the dashed
solid line. The white noise (shown as the blue dots) is drawn from
a student distribution with 3 degrees of freedom and with a variance
equal to that of the residuals of the fit of the real data by the
dashed continuous curve. We have then fitted each of these 6 synthetic
noisy clones of the S&P500 by our log-periodic formula. This
yields the 6 curves shown here in magenta. This test shows that
the log-periodic formula with a second log-periodic harmonic (dashed
lines in figures 1 and 2) is providing quite unstable scenarios:
the precise timing of the highs and lows seem to be quite sensitive
to the realization of the noise. This suggests that the predictions
based on the dashed lines shown in figures 1 and 2 are not reliable.
The real S&P500 price trajectory is shown as the red wiggly
line.
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