aedens wrote:As Higgy correctly correlates the Herd changes polarity.
I contacted John the other night because there were 300 hits on the thread right after I posted that. But the hits were due to a web crawler, not various financial interests. If they do find this site, I will quit posting anything trade related that the parasites can use.
As far as the correlation, it goes a lot further than what I posted. The polarity shift started a few months back and I observed it and loosely discussed the correlation to the silver spike into April 25 with a lower high on May 10 indicating weakness (this also correlated to 3 other cycles I have discovered). The following polarity reversals can be observed on the 14 month lag:
January 15, 2010 (HIGH) and March 16, 2011 (LOW)
February 5, 2010 (LOW) and April 6, 2011 (HIGH)
February 27, 2010 (LOW) and May 2, 2011 (HIGH)
April 15, 2010 (HIGH) and June 16, 2011 (LOW)
May 6, 2010 (FLASH DOWNCRASH) and July 7, 2011 (FLASH UPCRASH)
A few observations.
Anyone who studies the charts and these dates carefully will notice the strong inflationary bias. As one example, looking at the April 15, 2010 high it can be noted that this high was followed by a slightly higher high on April 26, 2010. Had there been no inflationary bias in the system April 26, 2010 would have been a lower high. As a second example, the February 27, 2010 low is a higher low on the charts whereas May 2, 2011 was a high. Had there been no inflationary bias in the system, I am positive that February 27, 2010 would have been a lower low.
I believe when the market crashes, all of this bias will come out to the downside AND OVERSHOOT TO THE DOWNSIDE. The potential air pocket to the downside and potential overshoot is tremendous.
Looking out to the future, I am only posting this for long time readers of this forum (and hopefully nobody else) because I think this inverse correlation will soon end anyway. In other words, whereas May 25, 2010 was a lower low on the charts (below the flash crash low) I do not necessarily expect that July 25, 2011 will follow this correlation and be a higher high. My best guess as posted last weekend is that the markets are going to crash soon and the crash may well start to correlate again on the 14 month basis. In other words, I expect a much lower low could be reached on or around July 25, 2011. As usual, I would say that nobody knows what will happen. If someone were to want to be cautious, they could stand aside and wait to see what happens on or around July 25. If the markets are really getting hammered at that time, then expect the low to occur a few days after July 25.
I believe the polarity shift was due to the earthquake in Japan. The Fed cannot control this and they know it, or should know it. If the earthquake reversed the polarity of the herd, then the after effects will likely be strong. I would note two previous cycles related to earthquake and nuclear disaster.
First is the April 18, 1906 SF earthquake and fire. A financial panic followed this disaster with an 18 month lag time.
Second is the April 26, 1986 Chernobyl nuclear power plant disaster. A financial panic followed this disaster with an 18 month lag time.
Now we have both an earthquake and a nuclear power plant disaster rolled into one. However, this duo disaster has occurred at the tail end of an unraveling or early crisis period rather than at the tail end of a high. The 1907 and 1987 panics were false panics due to their location in the generational sequence and may have been held off for longer than this one will be held off. There are fundamental reasons as to why panics follow these types of disasters with a lag time. As noted, the systemic risk is higher due to the increased linkages in the world financial system as compared to 25 and 105 years ago. For mathematics fans, dividing these years by 5 results in 5 and 21, which are fibonacci numbers 3 removed on the sequence and have an ideal fibonacci ratio of 0.236.
It can also be observed that the 1930 rebound high in the stock market followed the 1906 SF earthquake and fire by EXACTLY 24 years. The theoretical rebound high in the stock market would have therefore followed the 1986 Chernobyl disaster by 24 years, which it did EXACTLY, as April 26, 2010 was the high in the stock market before QE2 was instituted.
Ben Bernanke, as smart as he is, has been cornered by the inexorable forces of the Universe. He has no way out. Goldman Sachs, etc., as smart as they are, have been cornered by the inexorable forces of the Universe. They have no way out. Any attempts to find a way out will only dig a deeper hole and result in a larger crash. It's written into the DNA of the generational constellations, the physics of the earth, and the mathematics. There is no escaping it.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.