Fractal Self-similarity and the Stock Market Crash Wave Pattern

By: Anthony_Cherniawski

In tracking the 2007-2008 decline, I noticed that there was a certain repetition (self-similarity) in the wave structure that may also be playing out today.  One of the few rules in the wave structure is that third waves are never the smallest.  From there, we can use guidelines (not rules) that suggest general wave behavior. 

Third waves are generally the longest and strongest.  Thus, it follows that a third-of-a-third wave may have the potential for the greatest destruction.  For example, wave (iii) of 1 of (A) was 1.488 (1.5) times the size of its wave (i) in the same series, while wave (iii) of 3 of (A) was 1.975 (2.0) times the size of its wave (i).  See the chart below.

Here’s where thing may get interesting…

Wave (iii) of 1 of (C) is 2.73 (2.75) times as large as its corresponding wave (i).  Could it be that wave (iii) of 3 of (C) maintains or even expands that relationship?  If the current wave (iii) of 3 remains at 2.75 time the size of wave (i) of 3, then the target could easily be 795.00 or 800.00.  On the other hand, should the relationship of wave (i) to (iii) become larger, as in wave (A), then wave (iii) of 3 could expand to 3.382 or 3.618 times, which may yield targets of 697.00 (3.382 X) or even 660.00 (3.618 X). 

All of these calculations are hypothetical and should be taken with a grain of salt, or two.  The following is a view into what may happen going into 2012.  No, it won’t be the end of civilization as we know it, but pretty daunting, nonetheless.  I’ll keep this chart to see how close my calculations really are.

This isn’t pie-in-the-sky.  The truth is, it may even be worse – much worse.  I hope that you have prepared for this event.  It may be coming sooner than you think.  The good news is that the cycles suggest the final end to this decline may occur in April 2012.  I’ve said my prayers and suggest you do, too.

Good luck and good trading!

Regards,

Tony

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