This was a chaotic week, with the Dow dropping 830 points on Wednesday. and more on Thursday. Many traders and investors were surprised. Following my analysis of a Fireball Top, I was not surprised that the market sold off.
But I was surpised by the size of the drop: about 3 times a normal big down day. Whenever I am surprised, I try to figure out physically what happened.
One of the hallmarks of Chaotic Systems is scale jumping. In his famous papers on chaos in markets, Dr. Benoit Mandelbrot showed that cotton prices had several scalings.
In my research, I have found that such scale jumps can be related to heliocentric planetary patterns. On Wednesday morning, I was watching a geocentric ephemeris, and saw the drop start as the Exchange coinjoined the Moon's Node. But one does not get 120 point S&P drops from a geocentric pattern.
So I looked at the heliocentric pattern, and found that at the same time. Mercury was coinining Jupiter, and trining Node and Chiron. I once had a student tell me that in his research of October crashes, Mercury and Chiron helio were always involved. In addition, the Moon squared the Node and opposed Uranus. So there was a 3:4 harmonic "chord."
This suggest the high volatility will continue. The Mercury/Jupiter/Nod/Chiron cycle is 91 days, 1/4th of a year. That suggests this downtrun could run to January 9th. IT may only be a move 1 of a longer downturn. It also suggests that day traders will have to cope with 3 or 4 times the risk.
The fact that this drop is being taken seriously as a sign of things to come is the jump in two ETF's I trade: gold GLD and short S&P SH. Traders may want to use these vehicles instead of futures.
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