1929-1987 Spiral Calendar analog update. The
first three paragraphs introduce the subject and are only a rehash of prior
updates. Skip to the fourth paragraph if you’ve been following this
speculation.
The SC analog projects 4 dates in 2009 based upon the
comparable landmark dates in 1987 and Chris Carolan’s F25 interval (a
simple algorithm of the Fibonacci series’ 25th number).
See my first post and subsequent posts of this speculation dated September 25,
2009. The four dates and computations based upon DJIA are computed in the
following (ignore the “First bottom” which is not a landmark date
and which has NOT previously proven to provide SC significance):
http://www.screencast.com/users/Virginia_Jim/folders/Jing/media/dc727e07-5372-4181-a778-a229cc4ca671
Picking four dates that might have been picked at random
months or years in advance and represented to become significant turning points
in the 2009 market is, in my opinion, an occurrence the likelihood of which is
statistically so improbable that it cannot be computed. If the Gaussian
likelihood of the occurrence of the October 19, 1987 event was 1 in 5000
lifetimes (where one lifetime is that of the universe) as computed by Nassim
Taleb, then I expect predicting four unique dates surrounding either the 1987
or a prospective 2009 resonance of 1987 is similarly and, likely, vastly more
improbable. Without any hint of causality, the 1929-1987 SC analog is
simply numerology.
It has become an intriguing speculation because there are,
tentatively, three signs that it might work. FIRST, the interval between
1929 to 1987 divided by 1987 to 2009 is .381, a near perfect Fibonacci
coincidence. This first caught my attention but that was all; it was
‘cute.’ SECOND, in back testing the four dates it was noted
that the July 11, 2009 date (a Saturday) was a perfect projection of the bottom
that actually occurred on July 10, 2009. I call that a
“successful” projection realized because any projection cannot be
more accurate than its measurement interval; one day. That
date signaled the bear market rally had reached a midpoint bottom before a
final grand run-up into the second projected date. This low was projected
in contrast to the rampant speculation de jour that a head and shoulders top
destined an exactly opposite move down to test March lows. THIRD, the
October 16, 2009 date projecting a final highest high next preceding a
significant decline has resulted in a new recovery high on October 14, 2009 and
October 19, 2009. Given the 1 trading day allowance for measurement
error, October 16, 2009 has, tentatively, proven to be a success. It is
considered a tentative success because any new high after October 19, 2009 will
indicate the date was not a “highest high” and will reduce
confidence in the model.
This last week’s decline has increased the likelihood
that the predicted October 16, 2009 high (which occurred one trading day later
on October 19, 2000) was a successful prediction of the SC Analogy. Assuming
that to be the case, the November 23, 2009 secondary high becomes the next
important predicted date. That puts a gap in the model because the model
predicts the “final high” and the “secondary high” but
no “First bottom.” When does the first bottom occur and how
far will it penetrate? Carolan did not offer that date, I presume,
because unlike the four dates it was 4 trading days off between 1987 and
1929. In other words, the first bottom in 1929 plus F29 missed being a
valid projection by 4 trading days.
How far, then, will this first wave down go? In 1929
it was 20% and in 1987 it was 10%:
http://www.screencast.com/users/Virginia_Jim/folders/Jing/media/7b53d6e5-b6ca-49e8-ab14-c95f07ded5a3
Pretty big variance in “How far” and SC surely
does not give guidance on anything but the 4 dates. And when?
Again, I simply don’t know. But the model says after October 16 and
before November 23. Based on other SC estimation I’ve done,
I’m thinking November 17 or so with a one-week climb to the November 23
secondary high. You might take a look at the following comparison of 2009
to 1929 and 1987 which is aligned on the highest closing high of each year:
http://www.screencast.com/users/Virginia_Jim/folders/Jing/media/332e8bb9-9f06-4b5b-be72-c82d9b818c2e
Something else to look at are those two vectors.
Livermore and others liked to draw trend lines on the high and the first low
and then the high and the first reactionary high. Well, you can see in
1987 and 1929, those lines were pretty indicative of what followed.
I’ll leave it to your imagination.
One other implication of that chart. The 2009
ascension into the October 19, 2009 high is steeper than EITHER 1929 or
1987. If this market is destined to collapse, I expect it could be
historic. And if this is destined to be the greatest bear in history as
the Kondratieff Winter or the Grand Supercycle stature would suggest, would it
not be poetic that it sport the greatest crash in history? Vastly
unlikely.
Jim