Wednesday, November 13, 2013

Scary Accurate

I have climbed highest mountain
I have run through the fields
Only to be with you
Only to be with you

A few months back we discussed log periodic bubbles, a concept shared by John Hussman for modeling bubble-like behavior. At the time, Hussman noted that stock market behavior was tracking the log periodic model well, although the analog had not reached completion.

This week Dr J updated market performance versus the model. I'd be lying if I said I was not impressed by how close the SPX has been tracking the model. Scary accurate.

The apex of the model stands at about SPX 1900 which, if the SPX follows the analog to completion, is forecast to be reached in January.

Hussman notes that we are already in the zone of 'finite time singularity'--meaning that previous market peaks have been reached at similar relative levels. The SPX 1900 apex represents the extreme case.

In other words, as Dr J notes, "Risk dominates. Hold tight."

position in SPX

1 comment:

dgeorge12358 said...

As seismologists gained more experience from earthquake records, it became obvious that the problem could not be reduced to a single peak acceleration. In fact, a full frequency of vibrations occurs.
~Charles Francis Richter