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THE
MAGNIFICENT SEVEN Background:
You say there was a rumor from 1930 about a President who said the Depression was over just as it was becoming much worse! Well that sounds like human nature and the current NASDAQ. It is all about the money when you buy Tech stocks and think there is a big pay day coming at the end of the stagecoach line. I found this old map with a sketch about a future Purgatory coming after 2005. The Old Wild West: Charts 1 - 4 show the Magnificent Seven as they looked when they rode thru the NASDAQ from the 1980s. The filter sum of the seven largest cycles is a good match to the overall NASDAQ Index waveform since its formation but the trendline went “parabolic” in the 1990s – see what greed can do to a market with a little help from “its friends”. The amplitudes of the weekly cycles grew dramatically during this huge money expansion/Internet Era. I found this old tube of lipstick near the woodpile and it said Nas-Glossy on it. The Shootout at the OK Corral: The two-dimensional “limit cycles” or “weekly long-wave cycles” presented in the Magnificent Seven are actually n-dimensional waves of an “expanding vortex of money in circulation around the world”. The source of the vortex is the Federal Reserve M3 money pump (and its oscillations) which goes 24/7 and has no practical limits. There are very well-defined oscillations (long-term weekly cycles) in the NASDAQ Index including 40, 52, 69, 109, 176, 266, and 333-week cycles (same as all the other major world indices). The M3 longwave oscillations appear to be the “source” for the amplitudes of the cycles in the NASDAQ. A key NASDAQ cycle is the 176-week cycle. Chart 5 shows the four largest weekly cycles in the NASDAQ and the two largest cycles are still accelerating upwards. This game is not over yet despite this Index recently “falling below its 200-DMA” and looking very bearish – and Yukos Oil came in with its bad news right on schedule (bottom of 40-week cycle). Somebody has plans to pump this market to make it look like a “bull market” in 2005 with tops forming from March 2005 thru May 2005. It appears that the NASDAQ is making a “left shoulder” since the 40-week wave is bottoming and there is going to be an attempt to form a Head in 2005. It remains to be seen if this strategy can be implemented. The Modern West: Charts 6 and 7 presents the NASDAQ cyclic predictions thru 2010 given the present long wave weekly cycles continue in the waveform as well as a close-up for 2005/2006. This analysis assumed the NASDAQ will continue on a positive upward slope that it has maintained since the 1970s. However, when this market crashes, the trendline will turn negative and the actual waveform is predicted to become three “mega-waves” down. This has all the earmarks of a major “secular bear market” with attempts at rallies in 2007 and 2009 with a final bottom in 2010. This is eventually going to get ugly and somebody may get mauled along the trail. After 2005, one may be saying “Good Night Gracie” to the Next Market of the Future or did we do that already? “Ghost Riders in the Sky” (Words (modified) and Music by Stan Jones (1949)): As
the riders loped on by him he heard one call his name
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The
Magnificent Seven is a chronicle about the adventures of Seven
Weekly Cycles who rode onto the western scene many decades ago
to save a poor small village from being raided by a group of
vicious bandits.
