Current fractal analysis

Conditions: Federal Reserve Quantitative tightening; grossly inverted 2 year to 10 year US debt yield: 3.867% vice 3.45 %.

General timing: Implosion of Chinese debt bubble and collapsing 60 dollar equivalent real estate valuations. 

Quantitative Fractal timing: near the end of a 24 January 2022 y/2-2.5y/2-2.5y day decay series of 31/71/64 of 65 to 77 days. The current 64 day third fractal started on 16 June 2022 and is composed of a 19 day base. The final sequence could 9/20/15/5 of 12 days :: x/2.5x/2x/1.5x. This would end a 24 January 2022 31/71/71 day decay series  on Tuesday  27 September 2022.

On a larger fractal scale the Sept 2022 devaluation occurs near the very end of a 2009 US composite equity 16/40 quarterly  :: x/2.5x  first and second fractal series.

The Shanghai Bank is following an November 2017  9/23/18/12 month decay series. The final daily decay series is an 8/23/2022 4/9/9/6 days.

The Chinese property index and the Shanghai composite index is following a 6/14/13/9 day sequence.

The CRB appears to be following a 28/58/44 week x/2x/1.6x fractal series from its April 2020  low.  From a 4/11/2022 intermediary low the CRB is following a 20/41/39/23 day sequence.  A remarkable drop in commodity prices would accompany a nonlinear drop in equity prices.
Silver as representative of the metal commodity group is following a 14 July 2022 8/20/16/12 day decay fractal series.

The final daily sequence for Bitcoin in USD is a 5 September 2022 3/8/8/5 day sequence.  

The CRB, precious metals and useful commodity metals, the Eastern and Western Composite Equites, the Chinese property index,  the Bank of China and Shanghai, and cryptocurrencies  arrive at a common fractal low point  on Tuesday  27 September 2022. 

The final decay sequence from its 9/12/2022 secondary high is 2/5/5/3 days with a low on 27 September 2022.

A 1987 like nonlinear devaluation?

Current Fractal Analysis: End of US trading day 15 September 2022

Global assets including housing are grossly and historically overvalued relative to prevailing total debt loads and prevailing interest rates, the latter which have been increased at a historical pace by central banks  to combat consumer inflation which  was caused by grossly both too low and too long low of interest rates and by the central bank’s underwriting of mortgage backed securities.

From its March 2020 lows, the valuation hegemonic composite Wilshire (and Bitcoin) qualitatively appreciated to 8 November 2021, at which time both the resulting consumer inflation was evident and the central bank’s required response to that inflation was evident. 

Gold’s valuation in US dollars on 15 September 2022 collapsed to a 2 year low. Gold  bears no interest, unlike the one year US treasury currently  earning 3.8275 % at the end of today’s trading day.

Quantitatively for the Wllshire, a 33/66 week :: x/2x first and second fractal is observable from the March 2020 low ending 24 January 2022. From this low, a 31/72/63 day :: y/2-2.5y/2-2.5y decay fractal is observable. The current 63 day fractal started on 16 June 2022 and consists of a 19//(9/20/18 of ?20) or 19/45 of ? 47 day self-ordering first and second sub fractal series composing the third fractal of the 24 January 2022   31/72/63 to maximum 77 day series.

Is it possible that a 1987 type of nonlinear asset devaluation event will occur over the next 2 equivalent trading days for equities, crypto’s, and commodities including gold?

Both the Wilshire composite and Bitcoin in USD had an average daily peak valuation on 8 November 2021. By the time of this peak it was apparent that the western central banks’ credit/money creation had caused significant consumer commodity and living expense inflation. This required central bank counter regulatory tightening. For the Wilshire, 2021 was the 90 th peak valuation year of a 1807 36/90/90 year :: x/2.5x/2.5x maximum growth cycle of progenitor US trading stocks with lows in about 1842/43 after the Panic of 1837 and in 1932 after crash of 1929.

Since 1982 credit expansions have been fueled by cascadingly falling Volcker interest rates, Reagan military expansion and deficit spending, a late 1990’s tech bubble, NAFTA et. al. outsourcing of US manufacturing, derivative financial engineering, CDO and CLO tranche financial engineering creating the 2007-8 housing bubble, abandonment of Glass-Steagal laws, and, after the early 2000’s, Ponzi scheme financing of the Chinese property bubble

Credit expansion since 2009 has been facilitated in a historically unique fashion by central bank trillion dollar bail-outs of the financial industry, support for the automotive industry, huge corporate tax cuts, use of those tax gains for buy-backs of stocks which have promoted paper gains for the board members, life support of nonviable industries via low interest rates and extension of loans, and finally a massive social spending program to offset the impact of covid.

Since 2009 the monthly fractal groupings have been: 5/13/10/7; 3/7/7; 8/17/16-17; and 10-11/26-17/16 ending in March 2020.

The Wilshire had a valuation low on 23 March 2020. At the time of the valuation low, the details were known of the CARES Act which was passed on 25 March 2020 and signed into law by President Trump on 27 March 2020. The CARES ACT more than reliquified the economy; many people received more money than they had received from wages earned during the preCovid period. The decay fractal series from 31 January 2020 was 6/15/14-15/10 days with the last 8 days of the 10 day fourth fractal starting a post CARES Act Wilshire valuation growth period. This was associated with a annual 400% increase in the M1 money supply.

The current monthly fractal groupings from the 23 March 2020 low appear to be 3/6/5 and 4/9/9 of 10 months, matching the time period of central bank money/credit creation because of covid and the later central bank tightening because of consumer inflation. From the March 2020 low these two monthly fractal groupings correspond to a 9/25/19 week :: x/2.5x/2x growth cycle followed by a 16/33/currently 33 of 39 week cycle :: y/2y/2.5y. 

US housing valuation prices are at extreme levels with Wallstreet corporations, advantaged with with lower corporate tax rates and cash, competing directly with blue collar Americans. Observable from 15 August 2022 is another possible 6/15/15/10 day decay fractal series. This decay series starts at the end of a 24 January 2022 31/71/41-42 day :: y/2-2.5y/1.5y declining growth aeries. Unlike 2020 the last 10 days of this 6/15/15/10 fractal decay series will not be supported with a repeat of the 2020 CARES Act. Nonlinear devaluation of equity and commodities of historical proportions is highly likely given the excesses of money/credit creation..