Monday, September 3, 2012

A death spiral??

Based upon the Fibonacci sequence, 1, 1, 2, 3, 5, 8, 13, 21, 34 etc we see an amazing occurence. From the 1932 bottom to 1966 top was 34 years and 1966 to 1987 was 21 years...  subsequently we saw the 2000 top (13 years) and then the 2008 top (8 years). This is rather more than coincidence that every major top since 1932 was identified by following a contracting Fibonacci sequence. There is no indication for how long tops last, but in general, corrections are least 40-50%.

Five years from 2008 is 2013  suggesting a substantial top in 2013 followed by a 40-50% correction.

Implications for quickly approaching the point of singularity implies severe volatility, so do not take positions where money is required or involve leverage...this could kill you on the downside and if not, the sleepless nights could take a toll. We are just beginning to see a sampling of how volatile things are going to get in the coming years.

 Timing the tops and getting out before sharp declines will be critical for ensuring no loss of capital. Tops will be closer together if the market continues to observe the contracting Fibonacci sequence (2013, 2016, 2018, etc),

In other words a DEATH spiral. Spirals is another subject for another time, but those who have studied spirals often relate then to Fibonacci sequences.....

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