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"The farther backward you can look, the
farther forward
you are likely to see."
The History of the English Speaking
Peoples
(1957)
Winston Churchill
"To make a success in trading stocks you must
get the knowledge first; you must
learn before you lose. Many traders go into
the stock market without any knowledge and lose a
large part of their capital before they
learn that it is necessary to go through a period
of preparation before they start trading. I am
giving you the benefit of more then 45 years of
experience in the stock market and laying down rules
which, if you learn and follow, will
make you a success."
45 Years in Wall Street
(1949)
W.D. Gann
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The Price-Time
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(PTR) is a professional
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and information service designed to
support a wide range of investors and traders
in the United State's stock and bond markets.
Our timely information and opinion will
aid most market participants ranging from the occasional
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The powerful
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-Please scroll down for Fibonacci Introduction OR click
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FIBONACCI:
Trend Charts, Retracement
Analysis, and the "Holy Grail" of long term
stock market trading and Mutual Fund investing.
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|
Overall, it's my opinion that the Fibonacci
numbers and series were, "most
likely," developed many centuries
ago as a kind of short-cut, look up table, or
"slide rule" to calculate the effects of "compounding
interest," and/or compounding capital
gains. Remember, you only have to go
back 50-60 years to get where finding exponential
growth, or compound interest, was a very daunting
and time consuming task without the aid of calculators,
computers, or "look up tables."
For example, while I doubt that there are many of us "Boomers"
who actually used a multiplication table,
I do remember the days when we used
a look up table to find the trigonometric
functions and squares of a number, and
I'm not even on Social "no-security"
yet.
Regardless of their origins, the Fibonacci numbers,
series, and retracements
have become a major "force" in the World's
stock markets, and every trader "must"
(or at least should) obtain a good working concept of
where and when this "force" is most likely to
manifest itself
.
Into The Looking Glass:
"The Fibonacci and it's Magic--Compounding
."
(2001)
B. Bonfoey
Co-Editor: The Price-Time Review
|
WHEN
a lay person or inexperienced
trader is "actually" shown the true
meaning and value of the Fibonacci
numbers, and the simple "
exponential growth curves
" they form, it is, "many times," an experience
like finally "seeing" in your mind the correct
placement for a "key" piece of a complex puzzle
that you have been working on. Boy! You talk
about having the lights come on, this is something
like being in total darkness and getting hit by the intense
light from a flash bulb...and if anyone thinks this is some
kind of joke or bogus hype then you are very wrong.
<Natures Law & the Fibonacci: VISUAL
proof of Fibo's>
IN this area, we will show the true mathematical
function of the Dow Jones Industrial Average
(DJIA),
a common exponential growth function
which can be accurately modeled by
a common Fibonacci series
, over the "LongWave(tm)" period from 1896 to
2006 (or the future when added). We then project that function
forward in time so you can see where the index
is "most likely" headed in the next twenty to one-hundred
years.
Dow 36,000 you say? Try Dow 17,711
as a near certainty by 2020, and "possibility"
a DOW as high as 28,756 by then! Don't
think so? Well, try a Dow Industrial Average
between 500,000 and two million 2,000,000) by the
end of this century that has a probability of being
correct which is nearly 95%...with that 5% error
in the "projection" being a discount factor for the end
of the world. Of course, I was just kidding about that
"end of the world" thing-ee.!
BY the way, If you're asking yourself: "is this guy nuts," the
answer is no, or at least not over this last "projection." FOR
those who can just do the simple math to find the FUTURE VALUE from a fixed
PRESENT WORTH at an annually compounded growth rate then just try using
DOW at 10,000 for PV, the annual growth rate at 5%, which is actually below
the long term "MEAN" rate of 5-0 to 5.5% it HAS RETURNED from 1896-1900
to 2006, and calculate the FV after 100 years...the start of the "next"
century (2200). Bingo, and now we're both nutty togeather!
BY THE WAY, "IF" you think I'm wildly bullish to ramp right on up to 100,000,
28,756, or even 17,771 in the DOW Jones Industrials, INDU, ANY TIME SOON,
then THINK AGAIN!
While I "fully expect" to get to 100,000 in that index by the end of this
century, 2099, I also think we will encounter at least two massive bear markets
on the way. In addition, while I'm not sure of the exact timing just
yet, I "highly suspect" that the first big bear is no more than a year or
two away, maybe three at the outside, in TIME.
My "full expectations" and projections for the MOST PROBABLE GEOMETRIC PATTERNS
and PRICE-TIME "targets" for this current BULL MARKET TOP, in DOW and SPX
but more likely a BEAR RALLY TOP in the Nasdaq based indices, are shown in
both our <YEARLY
LONGWAVE ROADMAPS>
and continually updated, and revised if need be, in our
<WEEKLY ANALYSIS AND FORECASTING SERVICE>
.
<Example: Fibonacci Trend
Chart--DJIA 1900-2004>
<Example: DOW-spur trend annual rate (CAGR) from
1896-1932>
FOR
Mutual Fund Investors
with only an interest in reducing their
long term "RISK," by keeping a "casual
connection" to the parallel universe
of Technical and Wave Pattern Analysis,
then you can learn as much about R.N.
Elliott's and C.J. Collin's "Fibonacci methods"
as you want, from our massive educational
material, ebooks, or tutorial, or you can just use our
Market-View weekly analysis, trend ratings, and alerts.
In addition, and thrown in just
for good measure, for those looking for a "black box" or "auto-pilot"
trading platform, we also post, on a weekly basis, the
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and "world class" trading model: the
MSAR
, which has gained over >700% since 1/1999 and
>780% since 5/1997, while the DOW and SPX are up somewhere between
15-25% over that same 7-9 year period and with the Nasdaq based indexes,
like NDx and IIX, up a meager 10%-15%.
Needless to say, while we do our best
to leave few stones unturned for those aspects
of complex Geometric Pattern Analysis that
can have a significant influence on the U.S.
Stock Markets, including Mr. Elliott's Fibonacci
work, there are no guarantees in this business,
and we work in probabilities rather than absolute
certainties.
While many of these
complex and advanced methods are well
know to apply to other types of markets, at PTR
we deal ONLY in the analysis of the U.S. Stock Market,
the U.S. Bond Market, and to a few other World Stock
Markets if they have the capacity to materially
influence the U.S. markets, as many do...like the DAX,
AEX, Hang Seng, London Times, and Shanghi.
By the way, for those who
are very new to this and want to know
"just what the heck a Fibonacci is," then
I'll give you some "very condensed
hints;" eventhough, the full explanation gets too drawn
out to be listed here.
click BELOW (
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f)
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Comments
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|
FIBONACCI INTRODUCTION
continued:
2 of 3
from 1 of 3 (at the top of this
page)
1
For the P
RICE-TIME Review
B. Bonfoey and Andrew J. Quiggly
Co-Editors
FOR
those who are very new to this
and want to know "just what the heck a Fibonacci
is," then I'll give you some "very
condensed hints;" eventhough, the full explanation
is far to complex to be listed here.
For those of you who are totally new to it:
("Fib--O--Notch--ee")
1) The Fibonacci "Numbers" are those numbers that
form a "simple Fibonacci Series," or
"Sequence," which are 3-5-8-13-21-34-55-89-144
and so on out to "wherever," or infinity.
Therefore, 8,
13, 144, and 10,946 are all "Fibonacci Numbers."
2) All "Fibonacci Numbers" are separated
from each other by a "ratio" of "about"
1.618 (increasing), or "about" .618 (decreasing
), along the "Fibonacci series." For example,
13/8 (thirteen divided by eight) is "about"
1.618 and 144/89 is "about" 1.618. Also,
8/13 is "about" .618 and 89/144 is "about" .618.
In mathematics,
the Fibonacci ratio of
1.618 is referred to as Phi (not Pi
and sounds like "f-eye" and not p-eye). This
ratio,
Phi, is actually the
mathematical "limit"
(maximum rate of change
of the "slope" of the curve...
"in percentage terms"! ) for the exponential
growth curves that are derived
from the Fibonacci Series, and it's these growth
curves that are, "many times," the underlying long
term "mean" for the geometric price verses time
chart patterns in individual stocks or stock market indices.
While the reason for why
individual stocks or stock market indexes should "gravitate"
toward only a few more common annual rates of return on investment
(CAGR), is a mystery to me, but "I think" it is tied to the
"alternative investments" in 5y, 10y, 20y (Corporate), and 30y
bonds. In addition, I also think that whole number "time
steps" of 4-5y, 8-9y, and 10-13 years tie in with the longwave cycles,
like the 4-Y "Presidential Cycle," and reinforce each other.
In
addition to those traits listed above, one more "minor" trait
of these Fibonacci Numbers is that by adding
any two adjacent numbers along the series you will
get a sum equal to another Fibonacci Number. For
example, 5+8=13, 55+89=144, and 4181+6765=10,946.
While this trait has little to no real world value,
it is "interesting."
3) The reason that the Fibonacci
numbers, ratios, and series are important in stock "trends"
is that they "naturally" model some of the
more common "exponential growth
curves" produced by the long term "compounding"
of "many, but not all, stock market indexes
and many individual stocks.
<Natures Law and the Fibonacci>
That is to say, many
long term stock charts just happen to be the
same, or very close to the same, "growth
curves" generated by the Fibonacci series
when using "integer," whole numbers, for the periodic
time "steps" for "x"-- which is the mathematical
equation, or "function," independent variable for
time -- commonly labeled as (x), like as x= 4 years, 5y, 8y,
9y or whatever "whole number" in years.
Furthermore, the vast majority of "long
term" rates of return on capital for individual
stocks, and/or indexes, can "many times"
be represented by a standard Fibonacci Series IF
the time between steps
(the X, time, variable)
is defined as being both: 1) a real, integer,
and a whole number in years, and 2) having the
same, or nearly the same, time period for each step...i.e.
periodic.
Each individual
stock, or stock market index, will, "eventually,"
determine it's own long term "step" (time
between Fibonacci number lines along the "mean"
center-line of it's long term and semi-log scale chart).
For example, the DOW has established an "approximate" nine
(9) year "step," over the last 110 years (a 5.5% CAGR),
and the S & P 500 (SPX) index has established a "step"
nearer to eight (8) years (a 6.2% CAGR), over the last 79
years...to the "mean," or geometric center line of their long term
trend channels.
Once
this "step" is formed then it's price vs. time
chart (a standard stock chart in linear scale) will eventually
accelerate
because the natural "distance" between each
Fibonacci number (absolute value in price...like $)
becomes larger as time progresses...as long as the
stock is "compounding" capital by "retaining earnings."
Just as an
example, lets say that near it's beginning a "typical"
stock with a time "step" of 5 years will
only increase $13 by going from $21 to $34 (one
Fibonacci number segment) during those five years (a
10.1% CAGR). Later on, after years of "growing" and compounding
retained earnings, this same stock will be, or should
be, crossing somewhere between say $1597 to $2584--without
using SPLITS"--and just as another example. If you check
the list of Fibonacci numbers you will see that crossing from 1597 to
2584 is also just one Fibonacci number segment "crossed" during that
same five year time period (one step).
At that later point
in time, the "distance," or price traveled
during that five year period, would be a whopping
$987 (2584-1597=98) verses the $13 gained during
it's earlier five year period (first step), eventhough, it would
still have the same CAGR of 10.1%. In addition, both 5 year periods
produced the exact same gain " in percentage terms" (61.8%), and had
the same annual return on investment (a 10.1% CAGR).
Now, you know why stock prices
have a "very strong tendency" to accelerate "exponentially,"
and many times even end up going "asymptotic,"
or straight up, into a "FINAL," or nearly final, destructive
bubble top.
However, let me also point out that nearly any individual
stock can be made to accelerate, eventually, IF they are not split
at regular intervals when exceeding $100...or at least after reaching
the apex of phase (I)...in Elliott Wave terminology.
What happens after that destructive
bubble pops, called the "wave (I) final
get out rally," and "usually" a wave three of
five or five of five extended in wave (I), via Elliott Wave
Theory again, is highly complex and varies radically
between stocks, and/or a stock market indexes.
However, based on statistics and probability,
and with the help from some logistics curves, we can "many
times" make some "fair" predictions that will narrow
the future trend down to only a few more likely,
and probable, outcomes.
This subject is discussed
in the subscriber's introduction, but
it is highly mathematically oriented. By
the way, once a stock breaks down from a
"asymptotic" rise it would be very rare for it to "get
back" in line to that prior curve, and, more likely
than not, it will drop down at least one "annual rate level"
(like 61.8% to 27.2% or 10.1% to 8.3% for example) on the long
term, semi-log scale, chart, and typically two or
more rate levels (like 61.8% down to 17.4% or even 61.8%
down to 10.1%...which is a time step of 5 years between any two Fibonacci
number segments).
Overall , it's
my opinion that the Fibonacci numbers and
series were, "most likely," developed many centuries
ago as a kind of short-cut, look up
table, or "slide rule" to calculate the effects
of "compounding interest,"
and/or capital gains. Remember, you only
have to go back 50-60 years to get where finding
exponential growth, or compounding interest,
was a very daunting and time consuming task without
the aid of calculators, computers, or "look up
tables." For example, while I doubt that there
are many of us "Boomers" who actually used a multiplication
table, I do remember the days when we used a look
up table to find the trigonometry functions and squares
of a number, and I'm not even on Social "no-security"
yet!
Regardless
of their origins, the Fibonacci
numbers, series, and retracements have become
a major "force" in the world's stocks
markets, and every trader "must" (or should)
obtain at least a good working concept of where
and when this force is most likely to manifest
itself.
In
our real world
stock trading, since this is no academic exercise
for us, we rank the " Fibonacci Retracements
," of
a prior wave pattern, as the single most important, and
reliable, method of all of those that we use, on
a regular basis, to identify a place in price and/or time
where a change in trend (CIT) is "much more likely than
random" to occur.
That top ranking
is followed by Cyclical
Analysis, Gann
Analysis, and Elliott Wave Theory in our order of importance.
Furthermore, contained within this method we
consider the 61.8% retracement...IN LOG SCALE, of
a prior "wave," as the most important and reliable of the
three "key" retracement (.382x, .618x, .5x).
From our work, it's fairy obvious
why this 61.82% retracement, of a prior wave or
pattern, in semi-log chart scale, is so important, and that
is because a 61.8% retracement on log scale charts, or
a semi-log scale chart, is "about" equal to a 38.2% retracement
on many linear scale charts. Needless to say, that
"fact" must place a lot of professional and amateur traders
on the same page at same time for a CIT...or at least for
awhile anyway.
In summary, the KEY to
remember is: the curve, or "geometric
pattern," for the common Fibonacci Series
(3-5-8-13-etc-etc) is a "perfect" exponential
growth curve, and can be perfectly
modeled by mathematical regression methods
using the "exact" compound interest formula,
or equation: a(1+b)^x. Furthermore,
if the time "step" (x or years) is one year (1y), exactly,
then the "annually compounded rate of return"
is 61.8% per annum...exactly. Say what?
Yep, that's El correct-O, and I'll
bet you have never read that, or even heard that, anywhere
else before...right?
Who says you can't
get something for nothing? You
just got "something" for free that took me years,
and mucho-denero, to find out.
Oh,
one more "thing-ee" here before
we move on: The "Holy Grail" of stock
market trading, which I alluded to in the
headline for this page, is a real world
"secrete"
that it will not be doled out here for free, and not
even for money. I, for one, will never make this
"extremely important information"
easily available to those shallow
individuals who wonder aimlessly about the internet
seeking "instant gratification." The
world is GRAY and COMPLEX...live with it!
THIS so-called "secrete,"
which no-one can actually "hide," is REAL, it
does "clearly" exist, it has always existed,
and it's right in the face of all "would be" stock traders.
Unfortunately for some, and fortunately
for others, the smart money perhaps, I estimate
that about 99% of those looking at it can not "see it" because
they do not possess the knowledge required to do
so.
In our "subscribers
introduction" to the Fibonacci, I take those
with few analytical skills so
close to the actual GRAIL that it would burn
them badly if it was actually hot...which it is not!
However, I DO NOT spell it out in simple (ton)
terms, and only those who "should see it,"
will see it...if you know what that means?
Of course, those with
the patients to read the editorials rather
than just "skim" through the comics section of
the Sunday paper do have at least some analytical
skills, and they will be in a much better position
to actually "see" the Grail, or may have already "seen
it"...and I'll bet you know exactly what that means! IF
NOT, save yourself $14 and go to "black box to easy millions.com"...and
help make THEM millions!
TO
CONTINUE
: WITH THE NON_SUBSCRIBERS INTRODUCTION
TO
THE
-FIBONACCI...part 3 of 3-
OR click below
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below
to Goto other
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THIS PAGE IS ALL ORIGINAL MATERIAL AND
COPYRIGHT (C) by PriceTime
LLC or it's editors:
Andrew J. Quiggly
and B. Bonfoey
"all rights reserved
"
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