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?
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:
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.