Sound Wave Cycles 2 - Harmonics


#1

Yesterday I got time to watch December webinar. I almost fell off the chair. Not because of boredom. Not at all.

I saw Perfect and I have to emphasize it- it was a perfect example of a harmonic PQRST wave in the stock market.

Here is a diagram of human heartbeat

Later the presenter showed 256 Hz vibration of an OCTAVE - Yes, the musical octave!!!

I am going to explain why an Octave is so important in markets concept. We are on the way of decoding the fabrics of trading markets.

First I would like to demonstrate how Expanding Triangle is formed and why a bear market is usually 3 times shorter than a bull market (although it may vary).
Here is my Elliot Wave count on Dow Jones Industrial Index.


… should it happen?
maybe yes,
maybe no,
The answer is hidden in The Law of Vibration. If you read Tony Plumer’s book 3 times you will easily understand The Harmonic Concept. It is much more complex than I am showing in my presentation.
Coming back to harmonics. Please take a look at this picture:

It is a harmonic waveform which may cause boom and bust cycles on Dow Jones Index.

Here I would like to show you why it is difficult to find a clear cause of it happening.

Take a look at amplitudes of each harmonic forming this particular waveform. The amplitude of the second harmonic is only 50% of the first one. Amplitudes of all other harmonics diminish in perfect linear curvature.
If you would like to have a little experiment with it here is a like to the website I used http://meettechniek.info/additional/additive-synthesis.html

So why are HARMONICS of Heartbeat so important?
If you read “The Law of Harmonics” very carefully you should notice that PQRST pattern can be applied to "Information Shocks"
My belief is that Information Shocks are prime force behind market moves. Information shocks create market vibrations.

Take a look at these two charts:

Have you read the comment to the chart???
If no, read it very carefully.

Only used only first 5 harmonics to create almost perfect sawtooth function.

Look at this picture:

http://lpsa.swarthmore.edu/Fourier/Series/WhyFS.html

I used first 4 harmonics and nothing have happened. Also if you read the comment to the picture you must have noticed that to create Heartbeat function ALL odd and even harmonics are needed. The spike is a sum NOT of major harmonics, but a sum of minor harmonics.

That is why it is so difficult to apply Law of Harmonics to the financial market.

To decode it I would need a lot of computing power and a team of at least 5 people including RADIO Engineer - anyone knows where we could find Hurst to ask him a few questions?

Hurst must have been aware that Harmonic form market patterns, but with market noise caused by major and minor information shocks it is extremely difficult to determine exact harmonics.
Also the same as in real life markets suffer from abnormalities eg. such as Elevated or Depressed “ST” component in human heartbeat.

Is anyone ready for a challenge? There are more secrets I learned from Tony Plumber’s book.
It will be all in my assignment for IFTA’s Master of Financial Technical Analysis. Stay tuned.


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#9

Hi Alain,

Thank you for your input. Looks really good. I will keep it as an example.

Here is one more thing I found. PQRST harmonic pattern might be caused by information shocks.
I think, there is no better example of a speculative market than Bitcoin. It is run wild by “Information Shocks”.
Information shocks often create distorted PQRST “Pennant” pattern.

Bitcoin if full of them.

Depressed ST

Elevated ST

And that leads us to three interesting things about triangles.
Triangles form when market is awaiting further information or decision

That gives us two scenarios:

  • Triangle forms before Information shock - Break out of triangle is an effect of expected news.

  • Triangle form as PQRST pattern after information shock

The third finding is equally important in investment decisions because it is a direct outcome of investment decisions.
An apex of a Triangle is nothing more than the “Market Intrinsic Valuation” level.
After an “Information Shock”, currency markets tend to stabilize at one particular level (until next information shock). That is why apex of a triangle usually represents solid Support/Resistance level.
It is not that anyone would remember that level years after.
2+2=4 and it will equal 4 in years to come. Once the new valuation is done eg. 54 years later and the valuation conditions are very similar, supercomputers will come out with the same number as other people did using pen and paper.

If you see a triangle, think the market is awaiting an important decision.

Currency markets are either flat or volatile. Currencies are moved by political decisions.

No decision = Market Flat
Decision = Market Mayhem

Stock are different because companies expand and contract. Products are cyclical. If you removed information shock from the system and “Credit Expansion” read inflation, we would likely see much more rounding tops and bottoms.

*Note:
Currency markets do fluctuate but in form of ABC Triads which represent boundaries of an existing (political or/and fundamental) system.

In period of 2012-2014 there was an expectation of a fundamental change in either USD or AUD, but nothing happened and the market returned to its original Triad pattern.

ABC up and down “corrections” will be happening until Fundamental Change occurs and we see additional ABC pattern
described as “Impulse Wave” 3 =A

Followed by very shy wave 4 correction. =B

And finally wave 5 =C*

And the market is going come back to normal ABC cycle Pattern shifted to the new level of valuation.

What program are you using? It is the same as in the video presentation.


#10

love this i believe in this combinations, either way, nobody can tell the market what to do, different situations has also different amounts of people and as a resault different spam of time.Interesting


#11

It looks like market movements is a combination of three factors

  • Cyclical motion (divided into harmonic sub-cycles)
  • Sudden Information Shocks
  • Symmetrical Triangles

Here is a full publication. It is rather a rough script, but I tried to do my best to present all my findings in the little time I had to write it.

https://www.linkedin.com/pulse/music-markets-classic-patterns-technics-fully-piotr-walkowski

I am hoping that one day we will be able to use Sentient Trader to search for “Harmonic Cycles”. It needs a lot of computing power. I would start with known patterns and see if they fit the concept.

I have a theory why Ascending and Descending triangles are formed, but it has to wait a couple of weeks. It is very easy - all to do with Wyckoff theory and big players on the market.

Hope it will help

Piotr


#12

understand,Setient Trader site i got the feeling is serious that is what i like the most, i agree with that.a
I will read slowly all to pay close atention thank you


#13

I was going to start a new topic on wave harmonics, then discourse suggested this old topic. Very interesting to see the heartbeat wave.

I found this video during lunch. I too fell off my chair when he did a third harmonic. It mimiced the combined curve of the summed sine curves of the 3 waves in our of David H’s webinars.


#14

I did not post it on the forum as I thought it was showing how incorrect Nominal Model is…

https://www.linkedin.com/pulse/music-markets-classic-patterns-technics-fully-piotr-walkowski/

Later, much later I learned that Harmonic Theory in contrary reinforces the value of Hurst Nominal Model.

The most common ration in harmonics are1:2 and 2:3
Here is a fragment from a discussion forum about stock market and music
"The equitempered scale is designed around the ratio 2 because each semitone is a ratio of 1 to the twelfth root of 2. As it turns out this accommodates ratios of 3 almost perfectly, which is of course why it was chosen. It also can deal with a ratio of 5 roughly, although the chords that want ratios of 5 are not called “perfect” like the ones that have ratios of only 2 and 3. A ratio of 7 is a bad fit however and 11 and 13 even worse. They simply fall down the cracks in the keyboard."

Here is full text VERY INTERESTING
http://ray.tomes.biz/alex.htm

I would also recommend
The Law of Vibration: The revelation of William D. Gann by Tony Plummer

It explains “secrets” of W.D. Gann

Look at this image


To me it looks like Gann Wheel, but it it just a theory of the music

Harmonics are everywhere, the whole universe is constructed out of harmonic waves
So why the stock market would be different


#15

hi Piotr
have you posted your article on a website where comments and questions can be asked? or should i ask questions on here? i recall reading it 2 weeks ago and having questions but i refuse to join linkedin because it’s interuptive


#16

Hi Balltrader,

Ask all questions here.
I posted linked to the article only because it is difficult to transfer so many pictures to the forum.

I am interested in practical use of Cyclic Theory to time start date (and months of preparation before that) of real life projects. Once commodity price rises is to late to start planning, especially for oil&gas or mining.

The model is still not perfect. But it would be so helpful. That’s why I try to answer how the cycles develop and interact.
Does anyone know a software to create, combine and shift in phase multiple cycles?

Any questions, comments and contributions are welcome. Please do.


#17

http://www.timingsolution.com/TS/Articles/Wavelets/w_cycles.htm