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DUALITY IN THE MARKET

DUALITY IN THE MARKET
 

 

In a perfect world you wouldn’t be reading this now, since originally I didn’t plan on writing it until next week sometime. So much for perfection. Last weekend I was thinking about how wonderfully compliant the stock market was in following my forecast to the tee, based on all my models and calculations. Since July 18, when the market bottomed out, I was expecting ( and observing) a steady price rise in what would complete the 5th wave, taking the Sept. S&P past the 3rd wave’s peak which occurred on July 8, and on towards my projected target price of 1380. Yes, until today everything was perfect, and then I woke up and found the dow down 100 points.

However perfect, perfection is, it has its shortcomings. First off, its boring. Nothing would ever happen if everything were perfect. Actually, perfection is just a concept that as humans we came up with to appreciate and grasp the idea of singularity. It is singularity that I really find boring, though I used the word perfect as its stand in. Whats better than “singularity-perfection” ? Duality! (think opposites) The moment there is duality, things heat up and get interesting. In fact it is my contention (though I cannot currently, completely prove it) that it is duality which allows for time to flow. There would be no time if it weren’t for duality! How boring would that be! Think about it up/down, hot/cold, left/right, black/white, love/hate, right/wrong, etc……. I could go on and on. Duality, though exciting, has its own set of problems. It tends to complicate things. It is because of the dualities listed above, as well as others like them, that life often seems so perplexing. Since the markets are a reflection of life, they end up bearing a lot of the burden that these dualities deposit into existence. Thus the complexity of markets and the joys of trading!!! I wouldn’t have it any other way!

Out of desperation, we have over time become clever in an attempt to comprehend the complexity around us. Simply put we develop models. Whats a model? It is a semblance or an approximation (usually a very very simple one) of surrounding complexity. As humans, we have models for everything. Naturally, we have many market models. In the markets as in all realms of life there is an entire culture of models. We develop, buy, sell, critique, tweak, perfect, use, apply, discard, reflect on, worship at the alter of, etc…. all sorts of models. But at their best they are mere reference points in the sand, so to speak, to facilitate our navigation about whatever obstacle besets us.

This brings me back full circle, to a discussion of the market. The duality implicit the the models I use to generate my market forecasts (and my money!) enable me to make sense of a day like today, when at first glance all of my scrutiny seemed for naught. So, a week ago when I assumed stock prices would rise past the highs that formed on July 21 or 22, depending on what index you follow, the market seemed as I said above to be in complete accord with a particular path that my model had indicated. Today’s behavioral detour by the market, merely provides the opportunity to test the nimbleness (duality) of my market model, and see if it can first explain and ultimately anticipate for profit the future path of the market!!! Bottom line, instead of stocks trending higher through Monday, August 1, as I projected months ago, my model tells me that the market high that formed on July 22 was a shorter than normal 5th wave, and that in all probability today’s market plunge, marks the start of a new bear cycle (Wave 1). I expect the market to find support within the next session, if not sooner, and rebound (correction wave 2) into next Monday. Monday or Tuesday of next week should mark the top (start of Wave 3) that I’ve been expecting for some time now, based on my model. If nothing else it should be exciting to watch (And make Money).

The explicit details of the model I use to derive my views will be presented in my Webinar this Saturday July 30.

 

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