An Example of Chaotic Scale Jumping


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.


This content was published on Dr. Al Larson's Chaos Clinic which you can attend each Friday for free.
Dr. Al Larson has developed a complete Chaos Model of Markets, four unique courses that let you become a Certified Chaos Trader, some very unique eMylar fractal pattern overlays, and tools that permit forecasting individual stocks and markets years in advance. You can also sign up for a free weekly email, and attend a free Chaos Clinic on Fridays. To learn more, click on the author's profile.
Be sure to sign up for the free weekly email! 

Information on this page contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions.