Ucla Physicist Predicts Major Declines 2003-2004

[SusanJBear]

And this UCLA physicist STRONGLY disagrees with Alan Bubblehead Greenscum who says bubbles are hard to spot.

 

Time and time again I have seen that the people who pioneer in a field and push it forward are often professionals in a different field - who can offer some new perspective. Maybe this guy is one of them.

 

By studying various crashes, he has come to recognize the "statistical signature" of a bubble and immiment crash.

 

(By the way, Sornette has been very much in touch with the EW guys for several years. In Prechter's book "Market Analysis for the New Millennium", Prechter's chapter on manias talks about a recognizable 'fingerprint' of a mania, so to speak, which distinguishes them from healthy bull markets.)

 

Enjoy!

 

Science News Daily article

[Pretzel Logic]

Interesting article. He sees the SPX falling to 700 by "the first half of 2004." If the SPX hasn't fallen farther and faster than that, I'll be completely shocked.

[richmtn]

Thanks Susan very interesting. A number of years ago I read a very good article on fractals and the stock market. Seems the E-Wavers are trying to tap into that. Doc's cycles are another way.

[Yoshaviah]

He is wrong. They are not predictable. THEY ARE PLANNED!

[SusanJBear]

Interesting article. He sees the SPX falling to 700 by "the first half of 2004." If the SPX hasn't fallen farther and faster than that, I'll be completely shocked.

I was wondering about that too. It may be a case where we must progress through part of the prediction to be able to better fine-tune the part that remains in the future.

[EasyAl]

The article was published in Quant. Fin., 2, 468-81 (2002). For people who are really interested in reading the original article. Here is the link for PDF document.

 

 

The title and abstract of the paper are :

 

The US 2000-2002 market descent: how much longer and deeper?

Didier Sornette1,2,3 and Wei-Xing Zhou1

1 Institute of Geophysics and Planetary Physics, University of

California, Los Angeles, CA 90095, USA

2 Department of Earth and Space Sciences, University of California, Los

Angeles, CA 90095, USA

3 Laboratoire de Physique de la Mati?re Condens?e, CNRS UMR 6622 and

Universit? de Nice-Sophia Antipolis, 06108 Nice Cedex 2, France

Received 4 September 2002

Published 2 December 2002

 

Abstract. A remarkable similarity in the behaviour of the US S&P500

index from 1996 to August 2002 and of the Japanese Nikkei index from

1985 to 1992 (11 year shift) is presented, with particular emphasis on

the structure of the bearish phases. Extending a previous analysis of

Johansen and Sornette on the Nikkei index `antibubble' based on a theory

of cooperative herding and imitation working both in bullish as well as

in bearish regimes, we demonstrate the existence of a clear signature of

herding in the decay of the S&P500 index since August 2000 with high

statistical significance, in the form of strong log-periodic components.

In the next two years, we predict an overall continuation of the bearish

phase, punctuated by local rallies; we predict an overall increasing

market until the end of the year 2002 or until the first quarter of

2003; we predict a severe following descent (with maybe one or two

severe ups and downs in the middle) which stops during the first

semester of 2004. Beyond this, we cannot be very certain due to the

possible effect of additional nonlinear collective effects and of a real

departure from the antibubble regime. The similarities between the two

stock market indices may reflect deeper similarities between the

fundamentals of the two economies which both went through over-valuation

with strong speculative phases preceding the transition to bearish

phases characterized by a surprising number of bad surprises (bad loans

for Japan and accounting frauds for the US) sapping investors'

confidence.

 

[plantigrade]

Somehow I knew the markets were going down severely.

 

(BTW, "sornettes" in French, means "tall stories", or what is sometimes technically

referred to on bear boards as "bull-sh**" :wink2: )

 

From Sornette & al.'s predictive model, at

http://www.ess.ucla.edu/faculty/sornette/p....asp#prediction

 

Apparently he extrapolates a growing instability, from the megaphone pattern

observed on the DOW at the end of its topping diamond.

A sophisticated way to say this irrational market is unstable, as history teaches.

 

[SusanJBear]

Somehow I knew the markets were going down severely.  <_<

 

Do I too get a diploma in  Physique de la Mati?re Condens?e or something ?  

Plantigrade, I really REALLY dig your "group portrait"!

 

:grin:

 

Yes, a number of us using TA (and some FA) have been certain the markets are headed into the toilet. But it sure is nice to see somebody out there independently developing a mathematical bubble proof; it lends more credibility to TA, IMHO. Almost all economists are very derisive of TA.

 

Cheers.

[Drano]

Somehow I knew the markets were going down severely.

 

Do I too get a diploma in Physique de la Mati?re Condens?e or something ?

 

(BTW, "sornettes" in French, means "tall stories", or what is sometimes technically referred to on bear boards as "bull-sh**" :wink2: )

Mais non, vous etes Diplomate de l'Institute de Merde.

 

Hey, does anyone know how to get the circonflex sur "e"?

[DogBoy]

I went to the site and looked around.

 

His chart is so far off that my dog could have drawn a better SP chart with his pecker lifted up against a wall.

 

Notice that 1000 plus rally going well into 2003.

 

Think that's gonna happen ? If so lets get together for nice game of poker. My place or yours.

 

Yada yada yada.....

 

Another smart whipper-snapper who thinks he knows the market.

 

I think I'll go back to my nap now.

 

Zzzzzzzzzzzzzzzz.......................

[getsoutalive]

Noticed that he doesn't actually use his theory himself.