The Stock Market and the Fibonacci Series
Human expectations occur in a ratio that approaches Phi
Changes in stock prices largely reflect human opinions, valuations and
expectations. A study by mathematical psychologist Vladimir Lefebvre demonstrated
that humans exhibit positive and negative evaluations of the opinions they hold in a ratio
that approaches phi, with 61.8% positive and 38.2% negative.
Phi and Fibonacci numbers are used to predict stocks
Phi,
the Golden Mean and Fibonacci numbers have been used with great success to analyze and predict
stock market
moves. Forbes
ASAP recently featured a story on the work of scientist Stephen
Wolfram in cellular automata (underlying rules that determine
seemingly random phenomenon) stating "This seashell may hold the
secret of stock market behavior, computers that think and the future of
science."
Markets may be as geometrically perfect as a spider's web
Ermanometry
Research shows the markets to be perfectly patterned, explaining that
humans, being part of nature, create perfect geometric relationships in
their behaviors, not unlike a spider spinning a geometrically perfect web
with no conscious awareness of its amazing feat. Ermanometry applies
the logarithmic spirals found in sea shells with dynamic ratios in 3D to relate one market move to
others.
Fibonacci numbers define the movements of stocks
Fibonacci numbers were used by W.D Gann and R.N. Elliott. In Elliott
Wave Theory theory, all major market moves are described by a
fivewave series. The classic Elliott Wave series consists of an initial wave up, a
second wave down (often retracing 61.8% of the initial move up), then the third wave
(usually the largest) up again, then another retracement, and finally the fifth wave,
which would exhaust the movement. In addition, each of the major waves (1, 3, and 5) could
themselves be separated into subwaves, and so on, and exhibit other Fibonacci
relationships.
A sample stock price wave analysis could look something like this:
Major, minor and
sub waves are shown in RED, YELLOW and GREEN and the total number
of increases and decreases (2, 5
or 8) is a Fibonacci number. Note too that the
predicted end result is based in the Fibonacci series as well as the end price is 61.8% of
the high and 0.618 is equal 1/Ψ and 0.382 is 1/Ψ^{2}.
