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uclayoda87 (29.97)

Fractals!! – Revisited!!

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19

May 08, 2010 – Comments (3) | RELATED TICKERS: USA , DOO , MED

Is it possible that columbia1 underestimated the predictive accuracy of his Fractals!! blog?  In his post he extrapolated the previous pattern to predict the downturn that we had in mid January through February 2010.  But beyond this the extrapolation ended.

 

I am not good at handling images so I refer you to the original blog link above and to the chart link here.

 

If you look beyond the first oval, January 2008 to June 2008, you will see a correction between late May 2008 and mid July 2008, which he used to extrapolate the fall that we had in the beginning of this year.

 

Now look what happens between mid July and September 2008, we see a steady persistent rise in the market with little volatility, which eventually plateaus.  Sounds familiar, we had a similar gain following the February lows until this last couple of weeks.

 

Now look what happens between September and October 2008.  You see a brief spike down, followed by a rapid recovery in the middle of September and then the major crash begins in October 2008.

 

In his Fractals post I posted the following comment:

 

#8) On November 02, 2009 at 2:45 AM, uclayoda87 (30.45) wrote:

When I was an undergrad at UCLA I was fairly good at math.  Your blog was fun to read and had some very interesting repetitive grafts that may be due to a natural (biological) cause but you might want to consider another possibility.  You may have unmasked a computer code or algorithm that maybe used by program traders like GS.  I don't mean this to sound like a conspiracy theory; just that program trading exists with big money firms that might be loud enough to be noted in a repetitive market pattern.

It reminds me of the scene from The Hunt for Red October when Jonesie figures out that the whale noises that he had been hearing were actually the engines for Red October submarine. (Spelling and grammar corrected from the original comment)

 

What may have sounded like another conspiracy theory then may seem much more plausible now, given the events of the last few days.

 

The implications of course is that the most recent market correction was little more than a replay of the mid September 2008 spike down, which if the pattern continues we should have a significant rebound up this week and this will set up the big fall beginning in June 2010.

 

I encourage you to revisit the original Fractal!! blog for his original analysis and other comments.

 

3 Comments – Post Your Own

#1) On May 08, 2010 at 3:39 PM, binve (29.09) wrote:

Nice post man! I agree, Col's original work here was fantastic!

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#2) On May 08, 2010 at 8:19 PM, SamTheHobbit (34.42) wrote:

The repeating pattern is not as close as the orginal blog, but I guess it's good enough for government work.

If what you predict happens, the victory is likely to be shallow unless you moved all your money to cash and gold before the fall.  Based on your last blog you only appear partly protected from this possiblilty.  Is this correct?

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#3) On May 08, 2010 at 10:06 PM, uclayoda87 (29.97) wrote:

  SamTheHobbit

 "The repeating pattern is not as close as the orginal blog, but I guess it's good enough for government work."

 C, GS, JPM, the government, they are all effectively the same in that they all appear to be actively manipulating the market for their own goal.

 "Based on your last blog you only appear partly protected from this possiblilty.  Is this correct?"

 If the order of my last two blogs would have reversed would I still be buying CNI, EMC and VMW?  I did place another small buy order on VMW with money I just received from a 401K payment.  This amount is too small to make any real change in my portfolio, but I felt that I should trust myself and make the bet.  With the price changes in the stocks I own, it appears that metals and mining now represent about 60% of my liquid portfolio with energy making up 30% and the rest 10%.

If I had mostly cash at this point, I would buy AAPL, FCX, SLW, CEF, CNI, TGB, EMC, CNQ and AZK.  I would only use about 30% of my available money for buy limit orders, set at their current price.  Then I would wait to see what happens in the next three weeks.  The major move downward should dwarf what happened last week, so it won't be difficult to see if the pattern is repeating.

As I and others like you have said, metals will likely hold up better than they did in 2008.  I don't have the courage, faith or what ever it takes to make the concentrated bet that DarthMaul09 proposed in my last blog, but so far it appears to be working out for him, relative to my more diversified portfolio.  I definitely agree with his statement:

  "But even as the market is selling off again today, the miners and metals appear to be resisting this slide, because they are more than just metals, they are real money."

 

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