MAP Analysis Part 6 – Understanding Fractal Waves and Time Warp

The use of pitchforks as cycle, or wave forks, predicatively on a small scale was proving difficult.

Having watched wave development now for a couple of years it appeared that depending on where a wave fell on the next bigger scale it behaved differently and so I wanted to filter out the noise and went back to the biggest scale in the hope of finding better fork combinations and better understanding wave characteristics.

As a result I have spent a lot of time looking at wave structures. I tested over 20 of the top used indicators as a means of sorting matching wave scale, but all are not only retrospective and have no predictive value what so ever, they do not pick up sub-wave formation. They are just confirmatory signals.  I made a few indicators to help sort out pivots, but still the same problem!

This lead to my revised RULE BASED METHODOLOGY of sorting pivots using pitchforks. However I had to know where we were in time fractal wave cycles to the point where it really does not matter in my lifetime which resulted in me having to go back to the start of the industrial Era. Those that have been following my work received my post How the DAX on the 3 December at 11:24 Confirmed a Long Term Bull Market. I am not sure many people actually understand how this insignificant break can determine the long term bull market.

Simply I made the assumption until then that the 2007 was the 309 year cycle top – pivot 5. However due to the fractal structure of MAP Wave Analysis that break once worked back meant that the 2007 top is wave 3 of one fractal wave scale down. So looking at the data I have I make the new assumption that it is quarterly wave 3 top as shown below which follows MAP Wave Analysis rules from the 1932 bottom.

DJIA long term projection

We are in the final quaterly wave up so I am expecting the roaring 20’s which was the last quarterly wave 5 as shown below

1929

In order to understand and make your own judgment as to how valid this option is you really need to understand what fractal waves are and how waves form. So I want to develop further understanding assuming you have the basis of MAP Wave Analysis parts 1 through 5. You can find it either on my blog My Analysis or here.

The following reference material I found the best and is invaluable to improve your understanding of not only wave structure, but the global economy and the history of time!!!

Economic Confidence Model Martin Armstrong I would strongly recommend you spend a lot of time on his blog, as I have (but still am only scratching the surface!), on all his works because he has a very unique understanding of how the global economy works and the inter-connectivity of politico-socio-economic interrelationships!

A well presented non Pretcher endless bear market case is presented in Grand Super Cycle Revisited by Tony Caldaro

 12,000 YEARS OF ELLIOTT WAVES AND WHAT THIS MEANS FOR THE 21ST CENTURY Joseph M. Miller, Daan Joubert,  Marion Butler (2) is also a very interesting read with some interesting view points.

Firstly what are fractal waves? If you look at the chart above you will see that each bigger wave scale is made up of 5 smaller waves, which in turn are made up with 5 more smaller waves, each wave scale being grouped by a single colour. With the DAX break I now use the following wave scales and colour coding as a result of the additional wave fractals.

Colour coding

Quickly summarizing and reviewing the key points.

MAP Waves are a modified Elliot motive wave. Unlike Elliot waves, MAP Waves have defined tops and bottoms and hence overcome the endless unknown possible corrections and possibilities and as a result are much more intuitive to understand and does not have numerous simple and complex patterns, variations, retracement and extension rules etc.

MAP Waves have the following simple 5 wave rules, for up waves pivot 1 must be >= pivot 0 / pivot 2 <= pivot 1 and >= pivot 0 / pivot 3 >= pivot 1 / pivot 4 >= pivot 2 / pivot 5 >=pivot 3 (the opposite for down waves). So unlike Elliot waves MAP Waves look for tops and bottoms, and so highs and lows are used.

Every pivot above was identified using MAP Wave Analysis. As a consequence of the DAX break previously mentioned I have had to add further fractal wave scales so my colour coding has been revised and I am in the process of updating my charts.

Understanding wave structure

I have discussed the basic wave structure (transverse wave) and identification in MAP Analysis Part 1 – Elliot Waves revisited – Motive Wave probabilities – An End to Endless corrections and here will be discussing the little known longitudinal wave.

We are all familiar with simple 2 dimensional sine waves. What goes up must come down (even taxes will once the power structure collapses!! But that is on a much longer cycle!).

sine-wave

Looking at any stock chart we see nothing that resembles this! Why? Because there are multiple wave cycles. As discussed in MAP Waves Part 3 I believe this is a behavioral cycle where actions cause reactions once we reach critical mass of participants which result in pivots – high or lows.

Depending on the scale of the action the reaction will be affected.

For example if you look at the reaction of a Bernanke speech it tends to have a 10 minute pivot scale reaction, sometimes only 5 minutes. If you think about a long term government policy action, eg. coming off the gold standard in the 1970’s that allowed unaccountable government spending as a consequence FIAT money (the gold standard is NOT the answer  – like anything else it is just another commodity that changes value relative to its demand). We have not yet seen the reaction point to this but history shows us that typically there is an increase in corruption (self interest – lobbying or bribery what ever you prefer to call it), erosion of personal freedoms fought for by our forefathers (think surveillance, tax hunts , protectionism) and decay from inside as those in power do what ever they need to in order to stay in power (think Arab Spring, PIGS riots in European periphery, Occupy movements).

So using my fractal wave model I am following at least 8 wave scales, but sometimes upto 13! As each cycle has a different amplitude and frequency we need to add these at any point in time to see the resultant wave, as shown in the simplified example below.

sineWaveAddition

You can see that the resultant wave bears no correlation to either, and note that the resultant wave may be zero or double, despite a peak in either of the colliding waves!

However if you look at any stock chart any kid can tell you there is no correlation! It certainly looks better than the simple sign wave!

Time to reprogram and look with an open mind otherwise we will just repeat mistakes: our own, our parents’, multi-generational and societal.

Martin Armstrong (p60) has the best description of wave shape and explains a lot as to why waves are not nice simple sine waves (transverse waves), but are longitudinal waves:

This was a pattern that I had recognised from much watching of price action on charts, and looks like this:

Adding in MAP Wave counting:

Martin Armstrong talks about the building of intensity of waves so if we relabel our waves as follows it highlights what he describes:

This shows what fractal waves are – waves within waves, building in power.

Can we see this over the long term? Looking at Martin Armstrong‘s reconstructed chart:

Armstrong DJIA since inception MAP Waves Compress Overlays

Those people who think pattern recognition is a waste of time maybe it is time to take the blinkers off – one man’s terrorist is another mans freedom fighter. Keep an open mind. Knowledge is progress if we are not to repeat the mistakes of the past!

One final thing about wave formation is the effect of time. Below is a more detailed look at the current 5th wave from the end of the 1929 correction:

 This really looks like a total random method of pivot selection.

However welcome to time warping! I heard about it, read a bit but way over my head…. but Martin Armstrong’s chart made sense to me and then I noticed the time warp….. log scale!!!! (unfortunately I do not have the starting point of the cycle but I think the picture is clear):

DJIA long term projection

This later long term count is my current preference, as the count approximates Martin Armstrong’s fractal structure of time of 6 8.6 year cycles making up one 51.6 year cycle, of which 6 make up the 309.6 years cycle, where each colour represents a different time cycle, or the way I look at it waves within waves.

Below I have compared my wave counts to that of Martin Armstrong’s ECM (another rules based system) 1200 years… and Tony Caldaro’s counts:

Count comparsons

EW wave counts are visibly random was the first conclusion I reached when I coloured them up.

Out of 6 of Martin Armstrong’s 51.6 year cycle waves 3 have fallen within 3 fractal wave level midpoints on my largest wave scale. That is not coincidence!

5 Responses to MAP Analysis Part 6 – Understanding Fractal Waves and Time Warp

  1. mapportunity says:

    Did not realize Phi 1.618, but being a sailor was familiar with the nautical mile 1.618! It is all geometrical and if you use fab ratios it is there as well! This is all not coincidental!
    What I have found is with the forks which are purely geometrical you don’t need fab ratios!

    The time warp and fractal wave is the main reason I have changed the big picture to their new format. You can better see the fractal wave development on different tick sizes (another way of time warp but not as the log scale)) and sort them much easier! With the ABC thing is interesting because you get abc up and down and as well as simple balanced waves (symmetrical 1 2 3 4 5)..Going down a tick scale you can see that abc are actually 5 waves – where ab is the complex correction and in c is the simple correction – the law of alternation! If you look at the DOW update look at the last 2 charts – you can clearly see abc on the bigger tick scale and 5 waves on the smaller tick scale!

  2. DOW 50,000 would be quite a sight to behold. No ones even talking about that type level nowadays. The ‘DOW 36,000’ book doesn’t even get any smack any more.
    Could this be similar to the Nikkei end of the 1980’s run – 40,000+?

    • mapportunity says:

      If you look above the gold ML you will see there is nothing for a while – this is what I call a “gap” which is where moves occur fast as there is no resistance. (bear in mind the time scale!), If you look at the latest DOW update you will see the smaller wave scale forks, are showing 20 000 ish by late 2015. I can’t tell yet, but I suspect that 2015 will be M3 – then we get a 1987 type crash before final high.
      What can cause this – exactly what caused the Nikkei peak – capital flows – then it was SE Asia currency crisis, this time Euroland causes capital flight to “safest” of rubbish currencies – the US$ and with no returns in the bank it will go into the stock exchange and just like then it will not flow into gold! Gold will go parabolic when confidence in government totally fails – no more can kicking.

  3. sisyphusstone says:

    Great stuff Marc!

    Sometimes one has to question apparent coincidence. Just this morning I was re-reading some notes on Biblical numerology by Daniel Farerra – fascinating stuff regardless of whether you do or don’t believe in either – and I decided to plot out his ‘Adam’ cycle which begins with his ‘birth’ with Mars at 0 degrees Aries and is 1502deg 18′ 20″ long. From the ephemeris I randomly picked 17/12/2003 as a start point and ended up at 24/6/2011, which is 8yrs 6 months! Of course you will have a new cycle starting every 360deg so there are potentially 4 of the same cycle running concurrently 360deg out of phase.
    Another curiosity he points out is that the speed of light when measured in Nautical mph ie angular (arc) motion, is 161,803.4 mph Look familiar? Phi = 1.618034!
    Your mention of Log scale in relation to time warp immediately made me think of Gann, who always emphasised that charts should be ‘squared’ for price and time and that time was the more important factor. The tricky bit with this is figuring out the price: time ratio for any instrument to get accurate squaring. If you can do it (and your charting software allows for it (Wave 59 is the only one I’m aware of that does) then all of a sudden pattern recognition takes on a whole new meaning!
    Personally, I am convinced that we should be measuring time (and price) in angular measure in order to see their true relationships.
    Your diagram of the composite longitudinal wave reminded me of the composite wave of individual planetary cycles used by astro-traders.
    Finally, with regard to the 5 wave model. I binned EW long ago due to the ‘endless corrections’ you so aptly describe! In my search for something more meaningful/useful I came across the ‘Goodman Wave Count’. There’s little on the web about him/it and what there is is far from comprehensive, but the gist is that he sees all waves (fractals?) as A-B-Cs that build into larger and larger fractals, but that at some point all the swings in the cycle cancel out. ie. if a C wave is shorter or longer than its corresponding A wave, then at a higher degree there will be inverse compensation. It’s a much simpler methodology and probably should have had the ascendancy over EW, but that’s probably all about marketing! A much better place to start with waves/fractals than EW for certain!
    Still haven’t figured out what it all means, but it’s all about an open mind as you say, Marc.
    Keep up the good work!

    SS

  4. Pingback: MAP Analysis Part 6 – Understanding Fractal Waves and Time Warp | MAPanalysis

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