Chart of the Week: DJIA Making Higher Lows

Tuesday, September 13, 2005 | 12:04 PM

The DOW has made higher lows and is now in the process of pulling back to its trend line. This is consistent with a minor retracement from modestly overbought levels.

DJIA Making Higher Lows
Dow_indus_91205

Source: Stockcharts.com

Note that if Traders get a sense that the Fed may not pause, or figures out that Oil still remains pricey, we may see more giveback of the rally. This does not affect our expectations for the rest to grind higher through November, and then . . .

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Quote of the Day:

"The two most abundant elements in the Universe are Hydrogen and Stupidity."
-Harlan Ellison

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The Fractal View:

East Meets West - World Equities At the Top by Two Different - but Perfect -
Weekly Third Fractal Growth Paths

(Written 13 September 2005)

The weekly count for the third of three sequential major
growth fractals dating from 2003 for the Nikkei and Hong Kong indices
is 10/25/20. For the western US-Euro equities the weekly fractal
sequence of this final third fractal is 11/26-27/22. The two different
eastern and western equity indices weekly sequences conform to an
idealized x/2.5x/2x pattern and have reached their respective apogees
in very same week. While the Nikkei and some of the Euro-indices have
shown very characteristic exhaustion gaps within the past 3 trading
days matching the multi-yearly blow-off patterns of the high flying
NYSE and AMEX equities, the collective US Wilshire has not been able
to best its August 3, 2005 apex.

The underperformance of the premiere summation American Index, the
Wilshire 5000(TMWX), reflects the disproportionally negative
integrative burden on the US macroeconomy of its valuation fractal
determining elements - total quantitative personal, governmental, and
corporate debt, the latter of which has become much more expensive to
service under some behemoth's new junk bond status; unpayable private
pension funds soon to assumed by American taxpayers- of formerly
great, soon to be bankrupt, US corporations; expensive war cost which
have historically withered every prior major overextended world power,
record lack of US collective personal savings used as a base for
fractional lending, exhausted consumer discretionary spending running
up against near record energy costs; outsourced high paying jobs and
current wages not maintaining pace with inflation and debt servicing;
siren enticing and predatory unregulated lending practices leading to
asset consumption by a new group of extremely marginal buyers; rising
short term interest rates; the cresting of valuations of the US ATM -
equivalent asset, i.e., housing overvaluation; and recent massive
forward consumption of corporate profitless US automobiles akin to a
python eating its semiannual one time big pig bolus meal.

Relative to other leading world countries' above listed internal
economic parameters, the US and its protégée, the Wilshire, couldn't
exhaustion gap its way above its collective 3 August 2005 high. This
provides high probability information about the relative summation
strength of the US economy and its expected future asset valuation
activity in comparison to other world economic competitors.

From the Economic Fractalist archive on 28 July 2005:

Reverse Growth Fractal Top Patterns - Another Confirmational Indicator of
the Finale for the 147 year Second Great Fractal

'At major lower order valuations, top quantum units in individual equities
and commodities, many times complete classical inverse growth fractals. The
time units of the inverse top fractals can be in minutes, hours, or days
and usually are in a quantum sequence of either x/2.5x/2x or
x/2.5x/x,1.5x,1.6x,2.5x, the former being much more prevalent.'

A weekly reverse growth fractal of 15/37/30 weeks or x/2.5x/2x was identified
as a possibility on 28 July 2005. At the same time the possibility of a
x/2.5x/2.5x sequence was identified. This week, which ideally
completes a 15/37/37 week or ideal x/2.5x/2.5x inverse growth fractal
sequence, is in exact synchrony with the termination of a
11/26-27/ 22 of 22 averaged fractal weekly growth pattern.


Tuesday September 13 was day 26 of a 28 day ideal second fractal decay
pattern. Wednesday and Thursday, 14 and 15 September 2005 should
ideally be down days for the Wilshire ending the second decay fractal
of 28 days of a three sequence : 11/(28 of 28)/ 28 ideal daily decay fractal
pattern. An ideal next high for the third and final decay fractal would be on
day 104 of a 52/130/96(day 96 =Tuesday13 September) of a 104 day
sequence. The ideal final high of this nearly identical 1929 decay fractal
pattern would be on day 7 of a 11/28/(7 of 28 )day sequence. If the fractal
pattern identification is correct the last 28 days representing the third decay
fractal will be the major primary crash sequence equivalent to the final third
fractal of 27 days seen in the fall and Fall of 1929.

There are still lower probability possible decay fractal pathways
using a base with a range of 11-14 days. The extreme length would be
represented by a 14/35/22-35(1.6-2.5x the base)
decay fractal sequence with a maximum of a 14/35/35 day sequence. All
of bases include the 3 August 2005 Wilshire top. The second highest
probability daily base to the current high probability 11 day base
would be 13 days for a 13/33/21-33 daily decay sequence.

If the AMEX and NYSE characteristic exhaustion gap highs on
Friday 9 September remain unexceeded, a very ideal daily sequence
of 52/123/100 which when averaging, integrating, and reconfiguring the first
two fractal sequences of 52 and 123 days becomes 50 and 125 completing
an ideal 50/125/100 daily with a perfect x/2.5x/2x averaged configuration.

Gary Lammert http://www.economicfractalist.com/

Posted by: gary lammert | Sep 14, 2005 7:32:31 PM

The comments to this entry are closed.



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