22 July 2005
March 2000's Evolving Secondary Equity Fractal Peak.
By simple fractal analysis, the major indices are at a very critical
juncture. If they take a lower probability course of and break down
significantly over the next 1-4 trading days including a lower nonlinear
gap, there is paradoxically a reasonable chance of a later 'rotational'
blow-off period of 21-42 days. On the other hand, if the major indices
maintain the higher probability valuation growth increase over the next 2-12
days, the run to the March 2000's secondary equity top will likely be
Under the contracting weekly fractal umbrella of 22/54/50 of 44-54 the two
predominant future alternative daily fractal evolutions from August 2004 for
the equities are covered in a terminal x-2x daily timeframe of x/2.5x/x-2x
or 51-52/129-130/x-2x: x ranging from 51-103 days.
The first scenario is the high probability scenario: where the terminal x-2x
time length is defined by a daily fractal sequence of 12/31/19 of a possible
20-31 days. (1.62 times 12 = 20 days rounded and 31 days = 2.5 x.) Under
this scenario the valuations would continue laterally and higher reaching
the range of 20-31 days before beginning the deluge decay fractal cycle. A
terminal final trading exhaustion gap in the major indices may serve as a
final exclamation point. An even more spectacular pinnacle technical
hallmark concluding the March 2000 secondary growth fractal sequence might
be represented by a macroeconomic saturation exhaustion gap key reversal
day, where a gap to all time high (secondary highs with respect to March
2000) is made at the beginning of the trading day and the trading ends on
the low of the day but above the gap. The DAX came close to the character of
such a trading day on 21 July 2005. The last 19 trading days of the DAX
characterizes the essence of a parabolic blow-off.
The second scenario is less likely but possible. The second scenario would
involve a sudden drop in the Wilshire by 5 percent or so in the next few
trading days to be immediately followed by a 21-42 day fractal blow off
period during which American real estate properties might plateau. The
cresting money receipts from the last few musical housing chairs might then
be 'rotated' out of potential flipped speculative investment properties and
purchased new undeveloped land and into the terminal portion of a rapidly
blowing-off equity market - much like what has been occurring in Britain
during the last two months where real estate prices have crested and
equities risen. The breakdown of this potential fractal sequence is
21/53/21-42 where ten days are shared between the terminal portion of the
second 130 day fractal sequence and 21 days of a potential first base of the
third and final 103 day fractal. Note the total number of days of this
hypothetical final fractal sequence would be 103-104 which matches the third
daily fractal sequence of 51-52/130/103-104. The full excursion to 103 days
with 42 days in the final fractal would take the long term weekly fractal
sequence beyond 22/54/54 weeks x/2.5x/2.5x and is less likely.
The second sub fractal sequence of the second scenario is 53 days in length
(21/53/42). The fractal breakdown of such a potential 53 day second daily
cycle is 9/23/19(July22) (x/2.5x/2.5x) of ?? 23. As cited in the above
paragraph, if a breakdown does occur in the next few days, top real estate
transacted saturation money received by developers and real estate agents
from a plateauing housing market may be rotationally diverted to this final
blow-off in equities rather than reinvested in real estate speculation and
The trading valuations over the next few days will contain the directional
information needed to predict the intermediate pathway to an equity
valuation saturation peak. This saturation point will mark the start of the
inevitable self correction that will deflate lofty asset overvaluations and
align them with the ongoing inflation and after-interest-payment-adjusted
residual and diminishing wages.
After the end of today's (July 22) trading session, the first scenario has
become even more likely.
While daily fractal predictions are fraught with problems: the following
specific predictions are made for next week 25-29 July:
The dollar index will 'collapse' over the next three-four trading days with
a nonlinear trading drop to a level of 86.25 or slightly below.
The Swiss Franc and gold to reciprocally rise over that same time frame.
The financial media will attribute the dollar's decline to China's
revaluation of the Yuan which in reality has merely occurred coincidentally
at the ends of 28/66or67 of 70 day dollar index and reciprocal Swiss Franc,
growth and inverse growth of decay, respectively, daily fractal sequences.
The Wilshire should take the high probability pathway to the top and have a
exhaustion gap reversal day on Thursday July 28, 2005 for the market's
finale secondary top to March 2000.
Market's analysts will misattribute the Wilshire's rise to future
expectations of increased competitiveness secondary to the dollar's ongoing
decline and increased American exports of something other than empty
transport container cars and American dead presidents' paper.