Harmonics and Octaves
Harmonics - Forces across a range of Octaves
One of the most important Laws of the Universe is the "Inverse Square Law", or simply stated: any Force declines exponentially with its squared distance. This Law applies to all known Forces in the Universe and is responsible for the common structures of growth visible in our universe. It yields the familiar spirals visible from the ultra large galaxies, down to the huge hurricanes, but also to the smallest shells.
Looking for Harmonics in US Markets
A Force can create Harmonics at lower and higher Octaves of Frequencies, just like the same patterns can be seen on many scales in Nature. This can easily be detected in the US Markets with charts of progressively larger intervals or Octaves. These charts of one year, 10 years and 100 years use the power of 10 since the decennial pattern is significant enough to already be recognized as useful. Just as expected, we do see a similar repeating waveform across all three Octaves, confirming the work of Harmonics. The waveform typically shows weakness near the first and second third of the seasonal 1 year chart, with a similar pattern also visible in the first and second third of the Decade, Century charts and even a Millenium timeline. This also yields the familiar Elliott Wave pattern of three drives up broken by two periods of weakness across all time frames as Elliott discovered and Prechter popularized.Charts courtesy of Moore Research Inc.
Charts courtesy of Moore Research Inc.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Using Harmonics to develop Strategies
Many already use seasonal and/or decennial strategies unaware of the principles behind their effect, but an enhanced understanding of the principles involved can increase their usefulness and confidence in the pattern. With this knowledge the well-known Sell in May and Buy in November seasonal strategy, can be fine tuned as follows: As usual exit on weakness near April, but enter the market again near June on signs of strength for a Summer rally, ready to exit again near September on weakness and finally return in November for the usual year end gains. The same strategy can be extended to the Decennial cycle where it is best to exit on weakness until the third year, but also exit on weakness in the sixth and seventh year coming up. This pattern suggests that the next weakness in the market could be serious because of the expected Fall and Decennial weakness due in the following months. The following chart of Silver confirms the Decennial pattern with Silver making highs in years ending in 2, 3 and 7, 8, but also making lows in years ending in 0, 1 and 5, 6, directly opposite the Decennial pattern in Equities.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
The Harmonics behind Benner's work
The Laws of Harmonic propagation predicts that a noticeable 4 year cycle will also display Harmonics at 8, 12, 16, 20 and some of their permutations. Benner noticed and wrote about this a long time ago, and I have updated his work to confirm it and make it more useable. About 20% of the years since 1837 saw serious declines, or 1 out of every 5 years. About 75% of them fall on repeating sequence of 20 and 16 years, with the midpoint of each cycle also yielding an approximate 18 year mid cycle. The lows from these cycles point out the cyclical nature of business, fear and panics, but their peaks are there to show the periodicity and not necessarily high points for the markets. The serious declines do not appear equally across all calendar years, with 50% of the declines ocurring in the years ending in 0, 3 and 7, while the years ending in 4 or 5 rarely see any decline at all. Although the information from this chart is mainly useful over many years, it does suggest that this pattern may hold back the rise of the 2006 to 2010 cycle, because of the pull down of the 18 year mid cycle heading into 2009.
