Wednesday, June 30, 2010
Monday, June 21, 2010
"Mood Matters"
Cause & effect is the most basic human assumption about how the world works. Much of the time the assumption proves correct:
A pebble dropped in a pond (cause) will make a splash (effect).
The premise is simple. Everyone gets it. Alas, "much of the time" does not mean all of the time. Not everyone "gets it" when it comes to an equally important truth: mistaken cause & effect assumptions lead to the most common failures of human logic. For example:
The Sun moves across the sky (effect) because it orbits the earth (cause).
That premise was also simple. Everyone got it. And as we learned in history class, this all-time doozy of failed human logic was virtually unchallenged until a 16th-century fellow named Copernicus changed everything.
And today, from solar systems down to the atomic level, science has conquered every major frontier of flawed cause & effect thinking -- at least about how the physical world works. But there is one major frontier to go: The false cause & effect thinking about how people work.
When a dropped pebble splashes in a pond, the cause & effect does not include psychology. But if you fail to include psychology in your assumptions about people -- specifically the collective mood of people in groups...
...Then your conclusions will be like astronomy before Copernicus.
That's where the new science of Socionomics comes in. And award-winning scientist and author John Casti's just-published book --Mood Matters: From Rising Skirt Lengths to the Collapse of World Powers -- is the next big step in the advance of socionomics.
Robert Prechter's hypothesis that social mood drives social events holds the promise of doing for the social sciences what Copernicus did for astronomy.
John Casti's Mood Matters builds on Prechter's hypothesis. A Ph.D in mathematics and Research Scholar at the International Institute for Applied Systems Analysis in Laxenburg Austria, Casti's work has earned favor among his fellow scientists and a broader audience.
Mood Matters is indeed written in clear, straightforward language that speaks to non-scientists who think for themselves. John Casti spells out one major flawed assumption, namely
"thinking of humans in a society as being simply 'particles' buffeted about by mysterious 'outside forces' that give rise to the ever-changing patterns of human behavior.... Mood Matters says Not so! Just because 'everybody' believed the earth was flat didn't make it so. And just because everybody believes events cause moods doesn't make that so, either."
What does the future of social science look like? Find out in Mood Matters: by John Casti From Rising Skirt Lengths to the Collapse of World Powers.
Recommended reading by GeaSphere LLC to help you understand the path we as a people are on.
Eduard Hamamjian
GeaSphere LLC
877-351-4902
A pebble dropped in a pond (cause) will make a splash (effect).
The premise is simple. Everyone gets it. Alas, "much of the time" does not mean all of the time. Not everyone "gets it" when it comes to an equally important truth: mistaken cause & effect assumptions lead to the most common failures of human logic. For example:
The Sun moves across the sky (effect) because it orbits the earth (cause).
That premise was also simple. Everyone got it. And as we learned in history class, this all-time doozy of failed human logic was virtually unchallenged until a 16th-century fellow named Copernicus changed everything.
And today, from solar systems down to the atomic level, science has conquered every major frontier of flawed cause & effect thinking -- at least about how the physical world works. But there is one major frontier to go: The false cause & effect thinking about how people work.
When a dropped pebble splashes in a pond, the cause & effect does not include psychology. But if you fail to include psychology in your assumptions about people -- specifically the collective mood of people in groups...
...Then your conclusions will be like astronomy before Copernicus.
That's where the new science of Socionomics comes in. And award-winning scientist and author John Casti's just-published book --Mood Matters: From Rising Skirt Lengths to the Collapse of World Powers -- is the next big step in the advance of socionomics.
Robert Prechter's hypothesis that social mood drives social events holds the promise of doing for the social sciences what Copernicus did for astronomy.
John Casti's Mood Matters builds on Prechter's hypothesis. A Ph.D in mathematics and Research Scholar at the International Institute for Applied Systems Analysis in Laxenburg Austria, Casti's work has earned favor among his fellow scientists and a broader audience.
Mood Matters is indeed written in clear, straightforward language that speaks to non-scientists who think for themselves. John Casti spells out one major flawed assumption, namely
"thinking of humans in a society as being simply 'particles' buffeted about by mysterious 'outside forces' that give rise to the ever-changing patterns of human behavior.... Mood Matters says Not so! Just because 'everybody' believed the earth was flat didn't make it so. And just because everybody believes events cause moods doesn't make that so, either."
What does the future of social science look like? Find out in Mood Matters: by John Casti From Rising Skirt Lengths to the Collapse of World Powers.
Recommended reading by GeaSphere LLC to help you understand the path we as a people are on.
Eduard Hamamjian
GeaSphere LLC
877-351-4902
Monday, June 14, 2010
Three times a charm!
The technical landscape,, today's S&P high at 1105.91 is the third time in the past three weeks that the index has attempted to push above the underside of its 200-day moving average. Each try has occurred on lesser upside momentum. The May 27 test occurred with a NYSE Tick of +1318 and NYSE daily volume of 1.4 billion shares traded (CQG data) as well as 493 of the S&P 500 issues advancing on the day. The June 3 test occurred in conjunction with a Tick of +1298, NSYE daily volume of 1.21 billion shares traded and 336 of the S&P's 500 issues advancing on the day. Today's test, the third and weakest, occurred with a Tick of +1194 and NYSE daily volume of 1.13 billion shares traded. Out of 500 issues in the S&P 500, 266 were up for the session. These figures suggest that the effort to rise above the moving average is becoming exhausted.
Another subtle reason to suspect that the entire correction is complete is seen on the above chart. Each wave since the April 26 has unfolded in a Fibonacci time proportion when measured in trading days. Thus, in terms of time, wave 2 is related to wave 1 by the Fibonacci ratio (.619) at today's high. Info from Elliott Wave International.
Eduard Hamamjian
GeaSphere LLC
877-351-4902
Another subtle reason to suspect that the entire correction is complete is seen on the above chart. Each wave since the April 26 has unfolded in a Fibonacci time proportion when measured in trading days. Thus, in terms of time, wave 2 is related to wave 1 by the Fibonacci ratio (.619) at today's high. Info from Elliott Wave International.
Eduard Hamamjian
GeaSphere LLC
877-351-4902
Friday, June 11, 2010
Monday, June 7, 2010
Markets must decline if history is our guide.
The major stock indexes extended their respective declines from last week's highs. Selling pressure was strong today: There were 2.75 stocks down for every one up on the NYSE and 84.8% of Big Board volume occurred on the downside. But with such an extreme sell-off on Friday, there was little way that today's decline could match Friday's downside intensity, which it did not. We are in a major decline in all markets. History defines this best.
Some of history's biggest market declines occurred after stocks were deeply oversold. Right now, stocks are deeply oversold. We are not interested in trying to forecast a near-term low as this exercise reaps little reward in the currant environment.
It is probable that we are at the end of this wave, with a near term bounce to follow. However to be long or aggressive in this environment would in my view be irresponsible. Hold on to your wallet as the roller-coaster is at the top of the ride. There are a couple of declines and rises before the screamer comes at the top. You will be fine if your seat-belt is on tight.
Eduard Hamamjian
GeaSphere
877-351-4902
Some of history's biggest market declines occurred after stocks were deeply oversold. Right now, stocks are deeply oversold. We are not interested in trying to forecast a near-term low as this exercise reaps little reward in the currant environment.
It is probable that we are at the end of this wave, with a near term bounce to follow. However to be long or aggressive in this environment would in my view be irresponsible. Hold on to your wallet as the roller-coaster is at the top of the ride. There are a couple of declines and rises before the screamer comes at the top. You will be fine if your seat-belt is on tight.
Eduard Hamamjian
GeaSphere
877-351-4902
Thursday, June 3, 2010
Reality Hurts When You Expect Fantasy
Reality hits people the hardest when they are expecting fantasy. That explains the shock too many investors felt on the recent day when the Dow Industrials dropped some 1,000 points within moments (Thursday, May 6). What made that reality even more shocking, however, was the realization that a peak may already have come -- on April 26, 2010.
For more than a year, economists and other experts were doing their best to tell the public that we were back in a bull market. They jumped on every optimistic event and used it to strengthen their claim. Yet here's the ironic truth: the bull market advocates were making their loudest claims -- evidenced by examples such as Newsweek’s “America’s Back” cover story in April -- at precisely the time the market peaked.
There is a large difference between looking for something vs. finding it. The over-optimism of these bull market economists amounted to looking for reasons to say that the bear market was a thing of the past. Elliott Wave International wants nothing to do with "looking"; our analysis is all about finding solid evidence to make clear, rational forecasts. An obvious example is the head and shoulders pattern that we identified.
In the April issue of The Elliott Wave Theorist, Robert Prechter showed subscribers the head and shoulders pattern unfolding in the Dow Industrials -- and he explained what it meant in full detail. The conclusion of this well-known technical pattern produces a significant change in the trend. The peak to the market rally in April came as a shock to many, and bullish economists still refuse to believe it.
"In late April, one scribe stated that the coast was clear for a continued stock rally because the sentiment readings never hit 'maximum exuberance. In short, investor sentiment doesn’t seem to be at a peak of euphoria.'"
Eduard Hamamjian
GeaSphere
877-351-4902
For more than a year, economists and other experts were doing their best to tell the public that we were back in a bull market. They jumped on every optimistic event and used it to strengthen their claim. Yet here's the ironic truth: the bull market advocates were making their loudest claims -- evidenced by examples such as Newsweek’s “America’s Back” cover story in April -- at precisely the time the market peaked.
There is a large difference between looking for something vs. finding it. The over-optimism of these bull market economists amounted to looking for reasons to say that the bear market was a thing of the past. Elliott Wave International wants nothing to do with "looking"; our analysis is all about finding solid evidence to make clear, rational forecasts. An obvious example is the head and shoulders pattern that we identified.
In the April issue of The Elliott Wave Theorist, Robert Prechter showed subscribers the head and shoulders pattern unfolding in the Dow Industrials -- and he explained what it meant in full detail. The conclusion of this well-known technical pattern produces a significant change in the trend. The peak to the market rally in April came as a shock to many, and bullish economists still refuse to believe it.
"In late April, one scribe stated that the coast was clear for a continued stock rally because the sentiment readings never hit 'maximum exuberance. In short, investor sentiment doesn’t seem to be at a peak of euphoria.'"
Eduard Hamamjian
GeaSphere
877-351-4902
Wednesday, June 2, 2010
A 64-Year Bear Market: History Shows a Precedent
Who says a bear market must only last one year?
Somewhere along the line, someone got out a calculator and concluded that a typical bull market lasts about two and a half years, while a bear market lasts about a year, on average.
So if you see an article in a financial magazine about the start of a new bull market, they might suggest keeping your money in stocks for at least two years. If they see a bear market coming, a market professional might suggest staying in cash or bonds for twelve months or so.
A little problem: History shows examples of when bull and bear markets did not follow the presumed average.
If investors bought a year after the South Sea Bubble collapse in 1720, believing they'd catch the start of a new bull market, almost all of them would never live to see the day when their investments paid off -- if they ever did. Look at this 300+ year chart from EWI president Robert Prechter's Conquer the Crash (now in 2nd edition). As you can see, stocks and the economy remained depressed for 64 years after the crash:
"In the 1720s, extreme over-optimism developed in what came to be known as the South Sea Bubble, which Mackay (1980) described in his work, Extraordinary Delusions and the Madness of Crowds. The social mood retrenchment from the South Sea Bubble ended in 1784, a 64-year period of retrenchment that should give pause to those with a buy-and-hold strategy."
-- Bob Prechter, The Elliott Wave Theorist, June 2001.
Now, notice the last labeled leg of "Prosperity" on the chart. See how long that uptrend lasted without a major downturn? Not your "typical" two-and-a-half-year run!
Eduard Hamamjian
GeaSphere LLC
877-351-4902
Somewhere along the line, someone got out a calculator and concluded that a typical bull market lasts about two and a half years, while a bear market lasts about a year, on average.
So if you see an article in a financial magazine about the start of a new bull market, they might suggest keeping your money in stocks for at least two years. If they see a bear market coming, a market professional might suggest staying in cash or bonds for twelve months or so.
A little problem: History shows examples of when bull and bear markets did not follow the presumed average.
If investors bought a year after the South Sea Bubble collapse in 1720, believing they'd catch the start of a new bull market, almost all of them would never live to see the day when their investments paid off -- if they ever did. Look at this 300+ year chart from EWI president Robert Prechter's Conquer the Crash (now in 2nd edition). As you can see, stocks and the economy remained depressed for 64 years after the crash:
"In the 1720s, extreme over-optimism developed in what came to be known as the South Sea Bubble, which Mackay (1980) described in his work, Extraordinary Delusions and the Madness of Crowds. The social mood retrenchment from the South Sea Bubble ended in 1784, a 64-year period of retrenchment that should give pause to those with a buy-and-hold strategy."
-- Bob Prechter, The Elliott Wave Theorist, June 2001.
Now, notice the last labeled leg of "Prosperity" on the chart. See how long that uptrend lasted without a major downturn? Not your "typical" two-and-a-half-year run!
Eduard Hamamjian
GeaSphere LLC
877-351-4902
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