...(More on the Theory and Reasoning of the Contracting Fibonacci Spiral)
My old history teacher in high school
once said that "It is amazing that we live in a period of time where access to historical records have been thoroughly
documented so that humankind can learn from mistakes of former civilizations.
Instead we as a society tend to choose the easy way out, make the same
mistakes and never learn from history". Governments throughout history
have attempted to manipulate the masses so that the upper elite can have
access to greater control. This has been done through propaganda etc. with no
consideration for the future or examination of historical consequences.
Propaganda, censored news,
advertising with use of proven psychological tricks to entice buyers to
purchase their products etc. are all pushed on everyone everyday who turns on
the TV. This can create changes to subconscious behaviour
that will cause people to be pre-programmed to act. Hitler did it and
governments throughout the ages have done it...living in a time with global
communication available at the touch of a button, it is even easier to sway
the masses, whether it be to try and sell a gizmo or
the evening news.
The biggest problem with our society
is that media outflow is controlled by 3 major syndicates in the United
States. Canada receives US, British broadcasting and we do have our own CBC
etc. But no one up here is immune to pushed views either. Media is a tool for
business and business often gets support for their vision through a political
party they financially contribute to. If by chance a majority government
forms, they can then have their decisions made without any interference. The
best sort of political environment is to have a minority government where all
interests are met somewhere in the middle.
The tail end of the last sentence is
the key to success in life..."somewhere in the middle". Moderation
of everything in life is critical and when it comes to herd mentality, this
middle ground is often lost and distorted. With a herd mentality, people tend
to shift from one extreme to another, so many different people try to gauge
"the middle ground" for investing...others will then use "this
group" to form their opinions as "that group" may have a biased
view for where the middle truly lies. No one individual will get the
"middle ground" quite right without stripping the emotional aspect
from their core. Unless one can be like a Vulcan, it truly is humanly
impossible to avoid this scenario. Everyone will be feeling some emotion...the
stock market is based on Greed and Fear and an infinite combination of the
two. An entire population will have individual settings at a particular point
in time for how they fall on this scale, but as a collective, the average for
where this lies is the gauge to examine. With human behaviour,
some noted cycles have been noted that indicate good times and bad times.
Tying into cycles is very
important...Tim Wood does extensive cycle analysis as does Cliff Droke. Many think that cycles do not exist and are phooey.
My answer is that these people are closed minded and do not have a brain to
rationally think out anything. The Earth rotating the Sun as it spins once
every 23:56 minutes is a cycle, the tides of the ocean are a cycle as is the
circadian rhythm found in humans. Scientists some years ago connected many
probes and examined many different regions of wave frequencies and spectrum's
for potential signals from the body. They found heartbeats, blood pressure
etc. and around 6-8 other signals for cycles they did not even know existed.
Discovery is based on the art of
observation and knowledge base that allows for experimentation and trying out
new ideas. This is the foundation for science and discovery. The Contracting
Fibonacci Spiral )*) is a Cycle that the broad stock market indices have been
following since 1932 is a discovery that has yet to have intricate details
worked out. Every cycle will have its own unique rhythm...this one is
Fibonacci based. When someone can crack what signal a cycle is based upon, it
becomes crystal clear. One thing about thing about the CFS is that its roots
are linked to currency manipulation which controls everything...even how gold
and other commodities will be valued in the future. This cycle trumps all
others and I invite anyone to study this and prove this hypothesis to be
wrong.
Cycles are unemotional...they follow
their own rhythm unless external forces cause them to shift or alter their
pattern. Some cycles like Circadian rhythm are genetically locked in place,
much like the Earth rotating the sun and would take a HUGE event to disrupt
them. Other cycles like heart rates, blood pressure etc. are very subject to
external factors (internal changes are linked to external changes i.e. diet,
fight or flight, music). Elliott Wave analysis attempts to unlock patterns
and cycles within the stock market and track its path in a quantitative
manner...there still is a personal bias to everyone who does this form of
analysis for the most part (or any other form of technical analysis) because
everyone has an opinion. To try and remove this is nearly impossible unless
many different items distracting everyone, including others personal opinions
are blocked. This is mechanical and is very difficult to do. One way to help
cycles have a basis is to have a statistical basis to a conclusion.
Statistical analysis is one of the
great mathematical discoveries and is highly applicable in science to
determine if a result is statistically significant or an aberration. The
importance of field testing results is to have a large enough pool of data in
order to have an average, or mean. From this mean one can determine the
standard error, standard deviation and %CV (covariance of variance (standard
deviation/mean*100). From this, t-tests, different forms of ANOVA's can be
compared, factorial analysis (to examine multiple factors tested at many
levels to determine responses that have interactions) etc
can be used to further support or reject a hypothesis. The above sounds
complicated and it is very complicated. The bottom line is that you need a
data base in order to have access to that information that can provide a
sound statistical basis for support or rejection of an idea.
Tim Wood originally is noted for
being a DOW Theory Technician, which is based upon key criteria to determine
whether or not a bull or bear market is in force. He integrated cycles work
with a heavy statistical basis to determine when turning points occur and if
they do not, it quickly allows for an appropriate change in an investment strategy.
So, having access to data is good...the larger the data base the higher the
probability and confidence that it supports or rejects the claim.
The Contracting Fibonacci Spiral is a
time based cycle that only calls the market tops based upon Fibonacci theory.
The problem with time is that it only moves in one direction and can never be
repeated (If there are multiple realities we are only aware of the one we are
in and can not tap to see "what could have
happened if...") so unfortunately, the data base for this is rather
sparse and there are no comparators that I have really found (or had the time
to examine). We have 1966, 1987, 2000, 2008 and soon around early 2013 before
the next supposed point in time as the only available reference data. The
collective of core human emotions around late 2011 were much like that of
fish head guy...going with the societal consensus rather than backing off and
looking at things from a distance to see where things were actually heading.
All of the stochastics,
Bollinger band analysis and Elliott Wave analysis I do pointed to 2012 being
a good year, but finding something like the Contracting Fibonacci Spiral was
something found outside of my normal work...it was based upon examination of
a very limited set of historical data and saw a pattern emerge. If I was
unaware of Fibonacci theory, I would not have been aware of this pattern at
all (It is important to always learn and build upon individual knowledge base
already in place).
Although the ideal world would have
many other examples to aid in quantification of this cycle, the data so far
suggests it is quantifiable with the limited data set. Human beings have one
extreme problem and that is the failure to realize that we are a part or
nature rather than being unique created in the eyes of God. Since we are
derived from nature, the emotional core of human beings has a mathematical
basis, which is proven with the Contracting Fibonacci Spiral. Some scientists
recently worked out the mathematical basis for human sight...everything has a
mathematical basis, it just has to be discovered.
Knowing and accepting that human behaviour is
mathematically based is profound and could be hugely profitable.
By knowing what the bi product of the collective behaviour
at a particular point in time is, one can ignore the short-term herd
mentality and focus on what lies ahead. The collective of human behaviour, or herd mentality is very similar to looking
at the rear view mirror...it is no indication of what lies ahead, only of
what was before. This is very important to grasp because removal of the
background noise to obtain the true signal is the most important thing to do
for obtaining any sort of result, whether it is electronically based, bias
from a survey or attempting to profit from the stock market.
This turned out to be a longer piece
than anticipated, but the take home message is to be open and aware of one's
surroundings and that it is the collective behaviour
that govern the path of the future, which by no
surprise is linked to past events. When the Contracting Fibonacci Spiral
reaches its point of Singularity sometime in 2020-2021, what happens after is
up for discussion. If the pattern continues to behave as anticipated, then we
will have the continued stagflationary environment
(inflation and deflation existing at the same time), not the deflationista view that Mish expresses (deflation deflation deflation)'. After 2020-2021, we likely will
experience very sharp inflation that will carry the DOW to 200,000 as per
Glenn Neely's wave count put forth in 1988 (Truly one of the greatest market
technicians of our time).
Remember, the things that I
hypothesize about what will happen within this Contracting Fibonacci Spiral
are extrapolations of what has happened...each point of the cycle will have
events happen at an accelerated pace. In theory, we should have huge market
rallies followed by huge declines. Gold and silver should rise in price and
experience sharp declines, but overall put in higher lows. Things should
continue to go well until the expected dates (sorry, that is for subscribers
only) and then fall apart. Remember that 1987 was a point on the Contracting
Fibonacci Spiral...it was a very sharp and painful correction that was brief
and quickly bounced back for a continued 13 year advance until 2000. What
does the early 2013 top mean?
The next top after that is in 2016
(again, I can not share this information) so the
2013 correction will either be brief like 1987 or last longer, followed by a
rebound within this 3 year time frame. The important thing to note is that
this 3 year period will see a very sharp decline followed by a very sharp
rally. After 2016, a two year period of the same, then 1 year, one more year
and then singularity...this is when things blow up and go bad. Everyone is
talking about 2015 being the year... Martin Armstrong's work is suggestive
that 2015.75 is when things fall apart and Jim
Sinclair also states this point in time. The Contracting Fibonacci Spiral is
suggestive that it will last longer than anyone suspects. This is a higher
order operative cycle that is underway and has extremely powerful
implications but what if it became derailed?
Derailment of this cycle would occur
if government seized control over the stock market and every aspect of
business with control measures...this would remove the human collective
psychology from the equation and stop it in its tracks...implications of this
would be massive riots unknown to our era that would be a deep tragedy. As
stated earlier in the article, humankind tends to take the most difficult
route which is often perceived as the easy way out. So with my understanding
of humans, we are going to continue to embark on the current path for another
8 extremely difficult years. The best thing to do is go with the flow...don't
go against the current, don't go against the wind. The Contracting Fibonacci
Spiral cycle can be used to profit and flourish or ignored and face financial
peril. Continuing to build a personal knowledge base will keep mental acuity
long into old age (look at Richard Russell) and allow for better decisions to
be made. Let the world of knowledge be your personal lab for experimentation
...seek and ye shall find. Some topics of the article may seem to be out of
place or not have purpose, but elements of government was required up front
in the article to bring full circle to what could derail this cycle and what
drives even more so now the collective psychology of the populous.
I really hope that tying in many
different elements of this article help to paint a picture with a higher
pixel base to clearly see where I am coming from and why I think this cycle
is important. There is some personal bias in this cycle that I will have
obviously, but it will work until it doesn't work.
David Petch
Treasure
Chests.com
Treasure Chests
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