Tuesday, March 03, 2009

Fractals

A fractal is generally "a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole," a property called self-similarity.


Here is a chart of the SPY on a Weekly scale taken as a snapshot during November-December, 2008:

SPY Weekly


Below is an almost identical pattern of the SPY, only on a 30 minute scale taken at the close today:

SPY 30 min


Here is the outcome of the first chart, Weekly SPY through today:


SPY - Weekly outcome


Tomorrow we will see the outcome of the 30 minute fractal. The bet here is that it will look about the same as the Weekly Outcome chart.


A



5 comments:

Anonymous said...

Allan,
Thanks for these updates. You feel like a friend in these turbulent times and I am at your blog on awakening each morning. Your market direction has been amazing. I bought in half yesterday however, according to a pre-arranged plan. Do you have any more favorites for the turnaround, just in case it actually happens?? I have GFRE, TGB, NNVC and ACTC (ouch!) already!
Thanks for the guidance.

Anonymous said...

I suspect we are in 4 of 5 of primary 1.

2 of 5 was a simple a-b-c flat, so I suspect either a zig-zag or a triangle in wave 4.

That 4th wave should have Dow resistance starting at 7314 or the 38.2% retrace of 3. The fourth wave of a lesser degree looks like about 7350 on my chart. That should be resistance too.

The Dow has to stay below the bottom of 1 which was about 7900 to keep that count intact.

After 4 of 5 ends, we should get 5 of 5 or a new low and that should end primary 1.

I have a cycle low coming due in late March.

I'm planning to put some 401k money back to work then.

What do you all think the count is now?

Alex

Anonymous said...

I suspect we are in 4 of 5 of primary 1.

2 of 5 was a simple a-b-c flat, so I suspect either a zig-zag or a triangle in wave 4.

That 4th wave should have Dow resistance starting at 7314 or the 38.2% retrace of 3. The fourth wave of a lesser degree looks like about 7350 on my chart. That should be resistance too.

The Dow has to stay below the bottom of 1 which was about 7900 to keep that count intact.

After 4 of 5 ends, we should get 5 of 5 or a new low and that should end primary 1.

I have a cycle low coming due in late March.

I'm planning to put some 401k money back to work then.

What do you all think the count is now?

Alex

David said...

I have the same count and am of the same train of thought on this. I closed out my shorts on Monday, figuring 5 of 3 of 5 was close enough to being finshed and didn't want to get caught by 4 of 5.

I was hoping the bet for downside today would pan out because it would have made for an even sharper rally and would surely have tempted me into some long positions. Oh well. For now I may just sit out wave 4 and play for the expected final plunge down.

David said...

The only thing that makes me question whether we are now in wave 4 of 5 is that the financials didn't participate in today's rally... XLF down 1.29%.

It's possible this could only be a relief rally to unwind the oversold conditions before the market heads lower again, much like we had last Tuesday. Looking forward to your thoughts Allan...