Ominous Waves

Coronavirus coming ashore

With so much information readily available at our fingerprints, it is not surprising that we often find ourselves in disputes with others over facts and data. I see a post headlined with the title “facts” about every other day on social media. The problem is that one person’s facts may be another person’s fiction. And if you can’t agree on the facts, you will never agree. With regards to data, one of the biggest ways to manipulate a narrative is to present a data set over a limited time frame, or by not disclosing particular control variables that could affect the results. Therefore when I look at something, I like to look at the biggest time frame possible, and then zoom in.

In the 1930s a man named Ralph Nelson Elliott postulated that the stock market was composed of natural recurring patterns that were driven by social sentiment and herd behavior. This became known as Elliott Wave Theory. Without getting into technical details of Elliott Wave, the thing that has always intrigued me the most is that tiny waves can be identified as fractal duplicates of very big waves. Meaning that the pattern holds, repeats itself, and can be seen repeatedly when zooming in and out of a timeframe. When I consider fractals, I automatically think of fractal patterns that occur and repeat in nature, like in ice crystals, trees, shells, etc. One then can’t help to consider, are human brains wired a certain way that reflects itself in the same recurring behavioral patterns, over and over again?

Below is a long term chart of the Dow Industrial Average, going back to 1900.

Long term Dow Chart dating back to 1900, log scale. courtesy of macrotrends.com

From left to right you can see the run-up to the 1929 crash, i.e. the roarin’ 20’s, and then a rebound that started in 1932 that has essentially lasted until the present day with a consolidation period in the ’60s and ’70s. In Elliott Wave parlance this is a 5 wave impulse move. I have labeled the waves below.

Let’s zoom in and look at the 5th wave above in greater detail. This is the move from the dreaded 2009 low.

5 wave move from 2009 low

See any resemblance? How about the move from 1921 up to the 1929 crash?

Uh Oh. So, what I am suggesting is that we are just completing a 5 wave move from 1932 to 2020!! There are others who point to this timeframe as terminating a bigger degree wave all the way back to the 1700s!! Either way, this portends something very bad and very big coming our way. Is Covid-19 (coronavirus) the trigger? War? A change from capitalism to communism? The fall of western democracy? We can rationalize all day on what might be the catalyst, but the waves speak volumes. Something wicked this way comes.