Archive for March, 2009

EMERGING FOREX - II

The best way to look at the connection between Forex and Equity markets would be to look at them together end of the month or after the end of a quarter. After a damaging bear market quarterly charts are still a bit unclear, but if you look at the end of month charts, you start seeing a glimmer of hope.

Fig. 1 and Fig. 2 are the charts of BETFI and Ron Dollar, the Romanian equity index and the local currency. The former has collapsed while the other has risen (weakened). And now we have a candle reversal formation on both of them. This means that both are looking at a reversal, a strengthening of currency on one side and the rising equity on the other.

Now one might say that emerging market Forex doesn’t move together. Fig. 3 an Fig. 4 are showing the comparison of the Indian equity Index Sensex against the Rupee. A similar relationship exists here. Both Emerging equity and Forex are at inflexion points.

Even if we don’t have a secular reversal immediately, we are nearing it. A few weeks should clear out trends. Till then watch the recent Forex highs and Equity multi month lows carefully.

The latest WAVES.FOREX carries ANTICIPATED and HAPPENED cases on Eurodollar and updates on the other Forex pairs.

Enjoy the latest WAVES.FOREX.

WAVES.FOREX is a perspective product published five days a week. The report highlights the top traded FOREX PAIRS (eg. EURO USD, DOLLAR INDEX, YEN USD, Indian Rupee, Romanian Lei, Swiss Franc, Hungarian Forint, Croatian Kuna, Canadian Dollar). The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools and sentiment indicators.

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TRIANGLE becomes a FLAT


The impending down leg got a bit delayed, but the very fact that OIL is back sub 50 does suggest that our continuing overlapping corrective structure might be valid.

There was another thing we mentioned last time. We talked about a TRIANGLE. And we concluded by saying that TRIANGLES were not fool proof and can be explained by time cycles. What we meant was that even though TRIANGLE is an Elliott Wave pattern, which is one among the 13 patterns listed by Ralph N Elliott in 1938 in ‘The Law of Nature’, the list of patterns could be further simplified.

Just like we mentioned in ‘A DOW THEORY’, TIME also can simplify the Elliott Wave Theory. It’s time that decides or governs what formation a price might take, whether the prices will remain a TRIANGLE or become a FLAT. What we as market traders, investors and researchers need to understand is that TIME is against everything and comprehension of TIME is what can keep us on the right side more often that not.

Coming back to OIL, the ANTICIPATED TRIANGLE seems to metamorphose into another continuation formation FLAT (A-B-C). The C wave is always impulsive, so there is a thin line dividing the corrective up more from the first up leg of a reversal trend. But we would still continue to look at another week of negativity before jumping on the positivity bandwagon on the OIL complex. The characteristics of this fall will tell us whether we have a few weeks of anticipated bottoming still pending or the worst for Oil is over. The latest WAVES.OIL carries our other ANTICIPATED and HAPPENED cases.

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WAVES.OIL is a perspective product published once a week. The report covers BRENT, WTM, XLE (Energy SPDR), top energy stocks, Natural Gas and related FUTURES. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools and sentiment indicators.

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A Dow Theory

dowcycles

The generational theory can be refined by understanding the significance of TIME

Charles Dow wrote ideas explaining the movement of the Dow Index (DJI). Robert Rhea compiled them and called it ‘The Dow Theory’. A majority of market theories and tools have come after that. The theory still makes the introductory pages of any basic technical analysis book after 125 years. Though we have studied it as a student and quoted it with reverence, we want to challenge it today.

This is not because the theory is any less profound or we have stopped looking up to it, but time refines everything, even historical theories. I don’t know how Charles Dow would have reacted to this article. The humble Wall Street editor who never used to get angry taught us everything we know today. He changed the world.

We are a trend focused society with our economic, fundamental, behavioral, cultural, statistical and scientific trends. The Dow Theory also talked about trends. Trend is what we technicians are taught to identify, to ride and get off before reversal, or to ride it down as a sharp shooter. Trend means bias, uptrend is a positive bias and down trend is a negative bias. Dow’s simple theory gave form to this bias.

He said that markets move in stages, accumulation, speculation and distribution stage. He gave market a three stage form, characterizing three degrees of price trends, a primary, secondary and minor (noise). There are clear tenets he defined in his work. Fig. 1 shows some illustrative examples how Dow’s observation of three stages was a clear observable pattern.

The first tenet of the Dow Theory is that prices discount all information and expectations, to the point that they are predictive of events. If information was supposed to be assumed by price and information has a positive and negative bias, one could assume that the theory studies the bias in price, which forms a three legged structure. Fundamentalists say that information (the cause) affects the price (gives it the bias). Bias measurement is tough, but the theory laid down a solid framework to interpret it. There is a large bias, small bias and smallest or unseen bias. The very fact that prices trend for years, also suggest a polarity in bias. However, the theory despite its simplicity and workability has come under criticism of being late.

The late part is what we would like to address here. Why is the theory late in telling us that the Dow is reversing? Why there was clear tenet in the theory saying that trends exist until definitive signals prove that they have ended? Why did Dow want to give the trend a benefit of doubt during reversals? The reason for such confusion was because unknowingly Charles Dow was studying time. It’s just that he did not realize it. Fig.1 illustrates the same three stages structures, but with unbiased time cycles underneath it. The cycles illustrate time not the bias in price. There are three time cycles defining every three stages in DJI structure. The reason the theory was late or slow was because the price bias was out of sync with time, delayed. In some cases the bias was too large to understand (200-2009) and sometime minimal (1970-1982). Since 1965 there has been average fixed time cyclicality.

Aristotle said the earth was stationary, Newton said it moved, Einstein came and said that the stationary and the moving status depended on the reference frame you looked at it from. Einstein’s relativity theorem explained time. Einstein could do it because he started looking at relative motion. Even Dow did this as he talked about relative movement of one index to another. What he was doing was unknowingly detrending, discounting bias and understanding time. One of the theory’s tenet said that relative movement of the railroad indices against DJI explained the status of the trend on the Index, whether it was ready to reverse or not. Here again, Dow was focused on the trend of two indices and not the time. If both of the indices make higher highs, trend is in place, if not the trend is under question and could reverse.

Can the new railroads, the Dow Jones Transports (DJT) ever secularly outperform Dow Industrials? No. There is no Dow Transports without Dow Industrials. This means that DJT best performance is when it reaches parity with DJI’s average performance. What does it means in terms of trend? Transports have a limit of outperformance against the DJI. When it reaches there, the worst of DJI weakness is over. And the blue chip index should rise not only against DJT but also reverse the ongoing trend.

In Fig.2 we have illustrated the DJI (in price bars) along with the relative cycle line between DJI and DJT. The movement of the underlying cycle suggests that whenever Industrials reached an extreme performance against Transports (point F, G) DJI topped and vice versa. A simple relative cycle, timed the two historical tops of DJI in 2000 and 2008.The current status of the cycle also suggests now that DJT out performance is reaching a historical high against DJI suggesting that 2009 should witness a multi month reversal in DJI.

transportsvsdji

There are various other tenets of the theory which we can systematically be challenged. They all point to the same thing. One; the theory was generational because it was partially in sync with time. Second; the reason the theory was late was because it focused more on understanding the price bias and not the underlying time. Third; the idea of lower low or higher high in confirmation is a crude tool to understand time. Relative cycles are the real tool, objective and unbiased.

Fundamentalists and Technicians debate a lot about cause and effect. One says it studies the cause, while the other claims to study the final effect, the price. The debate made sense till the time there were many causes affecting the price. The debate ceases to exist when time becomes the only cause. Till we start focusing on time, indicator failure will remain a reality and life will look random. Predictability is about time, accepting or not accepting it is something else.


THE DOLLAR CYCLES

During a telecon, a senior MTA member and my mentor Rona Schehrer from Zurich remarked that markets move around a few key assets. And inability to miss out on one can imbalance any sound portfolio. What Rona was mentioning was that even she could generate real alpha, she still had to understand Forex risk. The wild movements in dollar made a fund managers already tricky task trickier.

I promised her to have a detailed look at Dollar Index, so here goes. We have studied the inverted dollar index in this report. Inverted dollar index (=USD) is similar to the Euro Dollar (EUR=). Despite a comprehensive attempt to study Dollar cycles, we could not make an immediate secular case of weakness on Dollar. What we could see was a broad stagnation on dollar for 12-15 months, followed by further strength at least till late 2010. Only after which the next round of secular dollar weakness should begin.

We could be interpreting the cycles incorrectly, but if what we see is correct, then it’s not over for the paper assets. DOW and Global equity has a large bout of strength left. This should be good news for battered equity bulls and bad news for the crisis believers (majority now). This
also means that Gold collapse is more real than what seems. The fool’s gold is trapping as many bulls as it can.

On the minor and intermediate terms, dollar index could push up till 92 (previous 4 levels). After which the large multi month stagnation should unfold. The latest WAVES.FOREX carries other Anticipated and Happened cases on INR and RON Dollar. Euro Ron triangle is fizzling out. We are still expecting a leg up on Euro Ron before the multi month strengthening starts on Lei. If majority of world assets are against dollar and markets core competence is to confuse and surprise, the large multi month dollar stagnation we are talking about is at the right time.

Enjoy the latest WAVES.FOREX

WAVES.FOREX is a perspective product published five days a week. The report highlights the top traded FOREX PAIRS (eg. EURO USD, DOLLAR INDEX, YEN USD, Indian Rupee, Romanian Lei, Swiss Franc, Hungarian Forint, Croatian Kuna, Canadian Dollar). The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools and sentiment indicators.

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WAVES.FOREX is a perspective product published twice a week. The report highlights the top traded FOREX PAIRS (eg. EURO USD, DOLLAR INDEX, YEN USD, Indian Rupee, Romanian Lei, Swiss Franc, Hungarian Forint, Croatian Kuna, Canadian Dollar). The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools and sentiment indicators.

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GOOD, BAD AND THE UGLY

The good part of this market is that we got the steepest two – week gain since 1938. The bad thing is that market needs hope to move up and not low valuations. The ugly thing is that throwing good money after bad is only going to make things uglier.

The best of MAR is behind us. In fact we think MAR CYCLE highs are here. And we should considerable our self lucky that the ‘up but topping view’ managed to eke out a best 70 year two week performance.

This is what we said on 16 MAR

“Markets moved up 12% from the 9 MAR lows and are back to NOV lows. On a minor basis the DOW looks overstretched, so will be not surprised if this week we see some retracement. But any serious top should not happen till end of MAR. We can call it an ‘Up but Topping’ situation. We have carried the anticipated and happened scenarios and the latest tracker.”

MAR cycle highs are an inch away and we will indeed be surprised if this leg up has steam to push beyond 8,000. If it does manage to cross it, which seems doubtful, DOW madness may push up till 8,300 before the correction begins.

But with Global Indices also topping, we don’t think DOW will have much support from its global peers. And these days EMERGING MARKET peers lead their developed peers. So the bad situation is only good till the time things turn ugly yet again.

We are still looking at a lower low in JUN. So for us any upside potential comes after a dip now till mid MAY, after which lower low in JUN is when the real primary turn should begin. We will keep you posted.

Enjoy the latest WAVES.GLOBAL

WAVES.GLOBAL - WAVES.GLB is a perspective product published on Monday. The report highlights top GLOBAL indices and emerging market indices viz. Dow Jones Industrial (.DJI), S&P 500 (.GSPC), German DAX (.GDAXI), Russian IRTS (.IRTS), Shanghai Composite (.SSEC), Nikkei 225 (.N225), Brazil BOVESPA (.BVSP), Indian Sensex (.BSESN). The product covers all the DOW 30 stocks. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers and market trends.

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The Triangular Harmony

triangular_harmony

A simple triangle can integrate all market theories. Can we spot it?

While writing ‘Theory of Moral Sentiments’ in 1776, Adam Smith would never have thought that after 2 centuries people will find it oxymoronic to see morals and sentiment in the same phrase. Now, sentiment creates the popular news, lack of morals are ascribed to capitalists and what’s left of the father’s work are fragmented theories.

Today markets and prices are believed to be efficient, inefficient, random and/or ordered. All efficiency experts won’t subscribe to the mathematical order and some believers of inefficiency will call randomness preposterous. If this was not enough, we even have a few thinkers defining a new model of finance different from economics.

Unlike the coherent attempt to find a universal scientific string theory, there is no attempt to look for an integrated market model. A few behaviorologists are trashing efficiency theorists, who in turn call behavioral finance as nothing more than ‘anomalies dredging’. Meanwhile the other two viz. random and order experts tune their trumpets. It’s a cacophony out there, exacerbating the confusion as the historical crisis unfolds.

There is one thing common in all these market specializations. Implicitly or explicitly they all look at patterns. Behaviorologists are trying to model human emotion. Fundamentalists attempt to model market information. Random experts wait for the recurring odd event. And order driven experts call the market model a pattern or fractal.

Behaviorologists raise some questions like, “Can the human mind count?” There are of course limitations to the human minds computing ability, the very reason we cannot be called pure rational beings. This is the same reason why even if there was complete order till infinity, we would find it muddled with randomness. What if the whole debate regarding market type is because even specialists, like rest of us all suffer from biases? What if markets were efficient, inefficient, ordered and random on the same scale but on a different time? What if order or chaos was a factor of time?

If we assume this to be true, we start answering most of the discrepancies between the various theories. Behaviorologists say humans suffer from an extrapolation bias, suggesting that we can’t see the future and we judge the past and present to estimate the future. This is why when we are on the efficient side of the market mountain, we just see efficiency. Simply putting it, we just see positivity when we are on a rising trend. When markets are inefficient or say falling, we just look down and are unable to see the bottom or impending order. This extrapolation bias also explains why humans underreact or overreact. When we cannot see the top of the market mountain, we cannot judge how far the high is, this is why we underreact. And when we are on the declining face, we just can’t seem to place the low and we tend to overreact.
Behaviorologists call it momentum and reversal dichotomy as they don’t see the market mountain. We can explain every other behavioral human error of loss aversion, disposition, ambiguity, validity, representativeness, winner’s curse, gambler’s fallacy, heuristics, framing, risk return distortion, over and under confidence, hope and anxiety, optimism and pessimism, if we continue to look at the market as a two dimensional triangular pattern, a face up and down, a low- high - low, a cycle. One can see how the errors start getting polarized along the positive and negative slope, order being the positive and flip side of the negative uncertain chaos.

The triangle also explains why behaviorologists see the fundamentalist’s conservatism in earning predictions as the reason positive surprises tend to be followed by further positive surprises. The unanticipated surprise is the hallmark of overconfidence, a positive slope characteristic of the cycle. The three phased glitter and stock selections linked to excess volume, recent news and extreme price reaction is another up cycle character. The unending debate of the Fama and French three factor model, one side talking about efficiency and other side challenging it are also on different slopes of the same triangular cycle. Psychologists say fundamentalists select stocks like bonds, “good stocks are stocks of good companies”. The reason they follow thumb rules and extrapolation is because the ongoing polarity of the up cycles, makes them comfortable and complacent. This is why high degree of sentiment interest is followed by subsequent low returns. The turn down catches a majority by surprise. This is why psychologists compare option traders to farmers, taking more risk with cash crops after planting sustenance crops and hedging the downside. It’s our way to take more risk, inefficient risk when we feel hedged. This is the reason we always misprice options.

The same triangle can explain why buybacks happen more at market lows and cause under reaction compared to overreaction, meaning though buy backs end up performing better, they get less attention from investors, investors underreact. Possession and dispossession of dividend also leads to over reaction and under reaction. When investors feel they own a dividend, they tend to over react and take more risk and vice versa. The behavioral criticism that humans are naive trend watchers is because humans don’t understand cyclicality. It is this same lack of understanding of cyclicality why past performance fails.

The holistic pattern can also explain why prices will always keep oscillating between efficiency and inefficiency? Why riskless pair trading done on price will never be riskless? Why long-short funds playing on price are not hedged like LTCM thought and can fail? Why there will always be psychologists writing ‘trading is hazardous to your health’? Why existence of markets is linked with our inability to see the triangle? Why flipping coins can explain randomness, order, efficiency and inefficiency? Why there will always be a conflict and challenge to earn profits in economics? Why capitalism will always be driven by crisis? Why correlations are cyclical like performance? Why behavioral strategies have more tests to pass? Why saving for tomorrow is a hindsight bias? Why we save when we should invest, and why we invest when we should save? Why Mandelbort and Taleb work together, though one is the father of mathematical order and the other claims to be the philosopher of randomness? Why ordered fractals are very close to chaotic randomness? Why the Nobel Prize winning prospect theory is about ownership and disposition that blinds humans against cyclicality? Why Prechter-Parker’s Financial-Economic dichotomy in social behavior dynamics is not the new model of finance, but the other face of the mountain? Why demand sensitivity to price can rise and fall? Why we can make money in markets through physics, mathematics, history, psychology and so on? Why access to information and belief in it is triangular?

The two faced cycle links everything. We are not trying to simplify 200 years of market knowledge. It was always like this, simple. Psychologists are as biased as everybody else, even if they claim to be otherwise. Time contrarianism is not for everyone, as the preordained harmony kills all the beautiful stories.

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Oil Triangle

A triangle is one of the 13 patterns illustrated by Elliott. Triangle is one of the five patterns which work against the trend also called as corrective or counter trend patterns. A countertrend pattern typically does not cause a reversal and is generally seen as a pause in the ongoing trend.

The Triangle leads to a more sideways and contained price action representing a balance of buying and selling forces. The formation witnesses a decreasing volume and volatility as sideways action is tougher to trade and is a test of patience.

There are five overlapping waves, which are further subdivided into 3-3-3-3-3 formations, labeled A-B-C-D-E. Position of a Triangle generally occurs in a position prior to the final exhausting up move.

Just like other patterns, identifying triangles is an art. Triangles should be given time to develop rather than counting the five legs too early or forcing the formation.

The true signal of the continuation of the underlying trend down comes when the triangle pattern breaks. Triangles are usually measured by projecting the base of the triangle to the point where the triangle breaks. This way we obtain the first price target.

Here we have illustrated a triangle pattern on OIL (WTM). As you can see on the chart, the A-B-C-D-E structure suggests a corrective countertrend movement which suggests a sideways action before the final leg down on Oil. Current Oil prices are near 45 levels on WTM. As we said in our latest WAVES.OIL, we are expecting a final leg down before anything. Prices should turn down anytime now. The quality of the dip will tell us whether we are making a new low on Oil or the asset has already bottomed.


THE LEI NON CONFIRMATION

Unlike EUR RON which has pushed above 2004 high, RON DOLLAR is still below respective time levels. What does this mean? This means that RON has not weakened as much against DOLLAR as it has weakened against EURO. One can make another observation here. Not making a new high against one currency and making a new high against the other is a non confirmation.

Just like prices need volume to suggest a real turn around, a continued weakness on LEI can only happen if RON DOLLAR also breaks above 2004. A failure to do this would suggest that LEI has something else in mind compared to what the market thinks regarding the direction the local currency should take for 2009.

Non confirmation at a four year key level is no joke and suggest that prices could indeed be at a reversal level here. Either RON DOLLAR should break above 2004 levels, or we can expect that the anticipated final exhaustion we are expecting on LEI should be nearer than farther.

The classic ending diagonal formation (illustration) on RON DOLLAR compared to CONTRACTING TRIANGLE we illustrated last time (trading an extension) also brings out this difference clearly. Ending Diagonal is a terminating five legged pattern (a-b-c-d-e) while Contracting Triangle is a continuation formation. Anticipated strength on LEI also validates our MAR reversal case on equities. Though we are looking at JUN for a 13-15 month turn around on Global equity including Romania, the inter asset (currency, equity, energy, metals) bottoms may illustrate some leadership i.e. earlier tops and earlier bottoms compared to its other asset peers.

The latest WAVES.FOREX report carries CYCLES on RON DOLLAR and EUR DOLLAR. RON DOLLAR CYCLES suggest that prices don’t have much further up to go. This seems in sync with the EUR DOLLAR, which could see some minor weakness ahead. We have carried ANTICIPATED and HAPPENED cases on Indian Rupee and Yen. The FOREX market seems to be heading towards an intermediate reversal time window (MAR). We will keep you posted.


Oil Triangle

A triangle is one of the 13 patterns illustrated by Elliott. Triangle is one of the five patterns which work against the trend also called as corrective or counter trend patterns. A countertrend pattern typically does not cause a reversal and is generally seen as a pause in the ongoing trend.

The Triangle leads to a more sideways and contained price action representing a balance of buying and selling forces. The formation witnesses a decreasing volume and volatility as sideways action is tougher to trade and is a test of patience.

There are five overlapping waves, which are further subdivided into 3-3-3-3-3 formations, labeled A-B-C-D-E. Position of a Triangle generally occurs in a position prior to the final exhausting up move.

Just like other patterns, identifying triangles is an art. Triangles should be given time to develop rather than counting the five legs too early or forcing the formation.

The true signal of the continuation of the underlying trend down comes when the triangle pattern breaks. Triangles are usually measured by projecting the base of the triangle to the point where the triangle breaks. This way we obtain the first price target.

Here we have illustrated a triangle pattern on OIL (WTM). As you can see on the chart, the A-B-C-D-E structure suggests a corrective countertrend movement which suggests a sideways action before the final leg down on Oil. Current Oil prices are near 45 levels on WTM. As we said in our latest WAVES.OIL, we are expecting a final leg down before anything. Prices should turn down anytime now. The quality of the dip will tell us whether we are making a new low on Oil or the asset has already bottomed.


The Question of Time

greenwich

We are on our way to Greenwich to see the time laboratory, the conventional origin of time. We came for business to London, but the history of the place is too big to restrict the travel to just work. For more than two years, we have addressing the issue of alternative research, challenging conventional thought, understanding sentiment and a host of other ideas. We asked many questions. But the only question that really bothers or concerns the human today is the question of time.

What’s about time that makes it so important? The answer to “When?” is priceless. When will the Sensex bottom? When will the recession end? When will Gold reach 3,000 dollars? When will Oil reach 100 dollars again? When is it a good time to enter real estate? For the wise humans, Homo sapiens, there is no wiser question than the question of “When?” The question of time and future is why we also seek astrologers and ask them similar questions. When will I become rich? Or maybe, when will I die? The latter question is considered lesser important than the former one.

Time seems like a ‘Holy Grail’, with only the human psychology standing against it. The greed and fear flaws are enough for us to even screw this up, even if we knew “when”. Knowing it is one and believing it is another. Time creates everything and works against everything. This is what Saint Augustine (Augustine’s Time) tried addressing when he answered to a disciple questions. “What was God doing when he was not creating the universe?” He said “There was no time before and after the universe”. The Saint tried explaining the profoundness of time in many of his teachings. He also said, “So, what is time? If no one asks me, I know; if I seek to explain it, I do not”.

We have been asking our own economic cycle questions knowingly and unknowingly regarding time for more than a decade now. And we are ready to take you through ‘time’ over the next few years now, maybe more. The subject is simple but comprehensive, explicitly connecting everything but implicit, broken but continuous.

If the subject was so big, then it should be widely researched and written about. We asked about books related to time across the host of book stores in London. There were just two titles. One was ‘A Brief History of Time’ by Stephen Hawking and a book with a similar title by Leofranc Holford-Strevens. The subject so big had barely two books available in London and three books talking on reading time, space and time, philosophy of time and time travel are available on the biggest online book store. How come, such a big aspect of our life and we missed it?

The Time as we see is built around many assumptions. There are assumptions of linearity, assumptions of cyclicality, assumptions of periodicity and continuity linked with time. In the epics ascribed to ‘Homer’ and dating from the 8th to 7th centuries BC the Greeks regarded ‘Chronos’ as the foundation of their culture, Chronos denoting a lapse of time. According to Strevens, “The more complex life becomes, the more sophistication is demanded of the intellect not merely to distinguish one year, month, day or subdivision of the day from other but to relate the years and so forth thus distinguished to each other”.

It’s not just economics, which has time as an underlying. But every aspect of science, philology, history, mathematics, capital market forecasting, behavioural finance has not only evolved with time but basis consequences on time. One might observe it as a uncanny coincidence, but historians work overlaps with time cyclists (Lamprecht and Strauss), Capital Market technicians connect their work with mathematicians (Robert Prechter with Fibonacci), Mathematicians and Physics talk about similar underlying ideas (Euclid, Kepler and Ohm), Economists, Physicists and Mathematicians using similar models (Modis, Stanley, Malthus, Verhulst), Linguists and Economists (Zipf and Pareto), Mathematicians and Father of Fractals Mandelbrot raising a similar idea what Elliott raised few decades earlier. Why such overlap? Is this coincidence? Or is there a connection, which no body saw till now? Is time connecting all this research from 300 BC? Time came before mathematics. It’s just that we started understanding it after we developed mathematics? Is there something bigger than mathematics? We will answer many of these questions in our thoughts ahead.

But what we can now tell you is that Excitement cycles as mentioned by Professor A L Tchijevsky recurs over time. Weather and climate cycles of a thousand years occur over time. 1960-s, 1970’s social trends are defined over time. Time is a social construct and we see time through the life and nature around us. Understanding time can not only give a unifying theory to research of a few thousand years, but also help us understand the world we live in. Time evolves, oscillates and continues. Time comes before everything, even the measurement of modern distances came through time. And we believe that time as we measure today is flawed and the lunar Indian model is a better time measurement system than the clock which came after the sun dial based system. It’s just that sun seemed brighter on the dial than the moon. We believe what we see and this is why understanding what we don’t see is a challenge.

Understanding time could bring more than a conventional thought down, it’s a revolution, which could rock the very foundation of economic thought or the geometric structures Euclid laid down in 300 BC. We are at the start of the journey, but if time is indeed the real mathematics, we could see high accuracy in time forecasts. Something like saying that what happened on Sensex in October 2008 is what is happening now in March, a time low. After which prices should move up for a month or two and then head into June. We can’t see as far in Jun now, whether Jun will be a higher low in Sensex or not. But at this stage it seems a high probability case. From Jun global equity should start a 12 month-15 month rise on equity worldwide, the recession respite we are looking for. Let’s see how we tread on our time forecasting journey when we hit Greenwich meridian today.

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