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12 March 06 Cresting Dominant Equity Valuation Fractal Patterns Since 1998... Is this the X/2.5X/2.5X end point for the final cresting area of the140 plus year US Second Grand Fractal Sequence which initiated its final accent in the fall of 1998 ? For the US, the long term generational macroeconomic asset valuation fractals are in a 35 year window. - seven years beyond the 140 year 2X 1998 position. Senescent creaking is heard all along the rickety bad-debt ridden bamboo and plywood scaffolding that makes up the recent 2003-2006 shoulder. The recurrent fractal theme of X/2.5X/2.5X seems to have played out its hand. For the Wilshire the beginning of the crest of the tidal wave appears to have commenced between 9-17 February 1999 - closer to the 17 February date. Using the principles or rules of fractal analysis previously described, the end of the progression has its origins in the end of preceding fractal evolution beyond the low of Sept-October 1998. For the Wilshire an imitating weekly fractal sequence beginning about 17 February 1999 of 10-11/26/27 weeks for a base of 61 weeks (minus 2 for double counting). From that base a curvilinear massive X/2.5X/2.5x weekly progression has evolved. A 61/153/153 (the 153rd week in the bottom of a 149-157 cup) weekly fractal progression has occurred. Had the Fed pursued a lower interest rate policy, asset valuations dependent on debt created money would be higher in the US than they are currently. Perhaps a blow-off akin to the last two month NIKKEI or DAX might have occurred with a current hypothetical 2-3 percent Fed Funds rate. In the time area nearing the end of the 140 plus year old Second Great Fractal for the US economy, fractal lengths appear independent of governmental interest rate policy; its is only the level of overvaluation that appears dependent on that leveraging modality. While the American consumer is finding it more and more difficult to make ends meet with record foreclosures on real estate as a barometer of the actual state of those forming the eroding base of debt pyramidal scheme, Morgan Stanley's consumer index is nevertheless high flying. Linear projections from the best Irving Fisher minds in the economic intelligentsia, see the index sailing higher and higher on a perpetual thermal. What does fractal analysis of the long term valuation units of this important consumer index yield? It is the confirmatory and matching analysis of this, other major economic equity indices, and major individual telltale companies such as GM that indeed makes fractal analysis so very obsessional and compelling. For the the Morgan Stanley consumer index $CMR, the crest begins near the proximal portion of the integrated area under of the curve from14 December 1998 to 27 January 1999. The proximal portion of this area adds five months to a 11/27/24 weekly sequence for a total first fractal base of 63 weeks. The currently weekly evolution with a base of 63 is 63/157.5/157.5 of 157.5 weeks. Last week completed an exact X/2.5X/2.5X curvilinear fractal growth pattern. The Dow Transports congruently have a 63 week base with an initiating 4 week fractal 4/10-11/28/24 with an identical 63/157.5/157.5 of 157.5 completed weekly pattern. The short term ironclad prediction remains .... unaltered...but refined..... Further recent analysis has clarified a very high probability fractal course of the coming devolution. With the complex, mechanistic, non stochastic, non linearly and fractally behaving macro economy system, expect the unexpected. Gary Lammert |