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David Knox Barker
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David Knox Barker is the founder of Market Cycle Dynamics, LLC, and the publisher and editor of The International Market Cycle Dynamics Letter. Barker is one of the world's foremost experts on market cycles and the global economic long wave. He is the author of The K Wave; Profiting from the... More
My company:
Market Cycle Dynamics, LLC
My blog:
MCD Weekly Briefing Blog
My book:
The K Wave; Profiting from the Cyclical Booms and Busts in the Global Economy - eBook
  • Prepare for the Global Long Wave Extinction Event 0 comments
    Aug 19, 2011 10:08 PM

    Don’t get me wrong. The fiat currencies of governments are here to stay, but DGC will keep the politicians and therefore the fiat money in check after this long wave extinction event that will serve to terminate failed ideas and remove their funding by taxpayers. DGC will force politicians to do their job and manage limited government efficiently. DGC will provide investors and businesses a way of escape from the politicians that seek to destroy the money world with their thirst for collective power over individual productive purpose. The relentless demand from the politicians for more sacrifice and more revenues through taxes, fees, bribery and grand theft will be exchanged for a new global economy of empowered human purpose in action. In the words of Ayn Rand, “It only stands to reason that where there’s sacrifice, there’s someone collecting the sacrificial offerings. Where there’s service, there is someone being served. The man who speaks to you of sacrifice is speaking of slaves and masters, and intends to be the master.”

    Regarding gold, Rand said, “Gold requires no government sanction.” Out of this long wave extinction event, DGC will be fundamental to the recreation of international free market capitalism. Politicians that can balance a checkbook and provide limited government that allows the unleashing of the potential of their citizen’s individual purpose will find their fiat currencies rewarded with inflows from DGC. When government fails to empower individual purpose and manage its budget, their fiat currency will be punished, with outflows into DGC. Politicians that do not get out of the way and let the private sector solve the world’s problems will be shown the door. The politicians and their crony capitalist comrades that do not understand limited government and productive human purpose are fast approaching the long wave extinction event. They should go peacefully.

    The primary interest a market analyst has in studying the ebb and flow of political folly is the impact it has on financial market cycles. Forget the damage our political leaders have managed to inflict on us for a moment, and consider what the cycles are telling us about the future. The current business cycle is the final business cycle of this long wave. Based on recent economic data, this final business cycle of the long wave is rolling over into the double-dip recession that was fully expected.

    The late great WD Gann and PQ Wall are renowned for their market cycle research and discoveries. The number 144 was central for both these market masters, but they used it in different ways. Few realize that PQ Wall made one of the greatest discoveries in the history of market cycle research. Using his cycle analysis methods, which involved dividing cycles by four and three, PQ Wall discovered that the 20-week trader’s cycle is effectively a long wave divided by 144, and is a miniature long wave.

    WD Gann recognized the importance of the 3.5-year cycle more so that PQ, and applied it to much of his cycle research. When the 3.5-year “ideal” business cycle is combined with PQ Wall’s cycle division method, the result is powerful analytical cycle tools. If you divide the business cycle by nine, which is what PQ suggested you should do, but not recognizing the ideal length, you arrive at an approximate 20-week cycle. Using the “ideal” 3.5-year cycle you will find that the 20-week cycle is actually an “ideal” 141.9-days. In my 1995 book, The K Wave, the 20-week cycle was rechristened the Wall cycle, in honor of PQ Wall.

    They say a picture is worth a thousand words, so how about two pictures. The S&P 500 and the German DAX charts are presented below. The new Market Cycle Dynamics (NYSE:MCD) software, now available to the public, was the tool used to create these charts. The software is a quant busting security analysis tool, uncovering the important market turns generated by the computer programs run by the big banks, hedge funds and high frequency traders.

    The Level 1 lows and highs are the most important long-term highs and lows identified in an index or security. They are the starting point for quant programming. Coming out of that March 16, 2011 low, the target bottom for a Wall cycle expected to run 141.9-days was August 4, 2011. The scale of the decline into the first week of August triggered overshoot, a term used by WD Gann, as key Fibonacci support targets were taken out. Specifically, the Level 1 76.4% target caved. These targets provide entry, exit and stop loss targets for investors and traders. The market then collapsed to lower support levels.

    SPX

    The decline in the German DAX into early August is particularly interesting and important. After falling through the 76.4% target, the DAX collapsed directly to the Level 1 golden ratio of 61.8% at 5542. After bouncing, that target is being tested again. This critical target needs to hold. The DAX closed just below this target on 8/19. It needs to get back above it next week. We all know Europe is in trouble, but they are due for a bounce. A further drop below this Level 1 golden ratio target signals the final leg of the global long wave field collapse is accelerating.

    DAX

    That June low in sentiment briefly obscured cycle analysis and remains troubling. Now we have a situation where the ideal target from the June low and the golden ratio of a Wall cycle from the August 9 low in the S&P 500 points to November 4, 2011. Put that target date on your calendar. It may be an important date in the current Wall cycle collapse, or some other cluster target in the natural laws that govern fields of human action. That date is a time window in human action that warrants watching. Play it safe.

    It is important that investors and traders recognize that the above charts demonstrate human action field collapse in a relatively small Wall cycle. A long wave event is a much larger scale cycle than the Wall cycle. A long wave scales 144 times larger than a Wall cycle. Global markets are now entering Wall #6 of the final business cycle of the long wave. PQ Wall had a market cycle rule called third, last and weakest. What he proposed is that Wall #3, #6 and #9 are the weakest cycles. They will decline the hardest and the furthest. The decline into early August was the end of Wall #5. The current Wall #6 may well produce the greatest global market crash of this long wave cycle.

    In short, Wall cycle #6 will usher in the final phase of this long wave collapse. Massive long wave change is coming to the global economy and financial markets. The old political and financial order is crumbling. The Great Republic will dawn as a new long wave spring season begins on the other side of this long wave disaster and extinction event of the failed ideas of socialism.

    Speaking of market cycle forecasting, is it just me, or does anyone else find Chairman Bernanke’s forecast of zero rates into mid-2013 more than a little interesting? No Fed Chairman has ever made such a delayed forecast, with such profound global implications. The new Market Cycle Dynamics (MCD) software searches for market target clusters in the future that may be key market turning points.

    Cycle projections by MCD are based on Fibonacci degrees of freedom in ideal cycles that are natural fields of human action. MCD is natural law for cycles. The next target in the long wave degrees of freedom radar is 7/28/2013, projected from the 1949 long wave start date. The long wave is the largest arc flying in from stage left. Maybe a market cycles analyst at the Fed downloaded a trial version of the Market Cycle Dynamics (MCD) software and gave it a spin. The chart below presents the mid-2013 cycle target cluster in time.

    Summer 2013 Cycle Cluster

    The final phase of the global long wave collapse will radically change the global financial and political system forever. It will be change for the better. The worst years of this long wave winter season, which lie directly ahead, will provide the impetus and opportunity for global change on a scale heretofore unimagined.

    The global Jubilee long wave debt collapse has arrived. The international financial system is going to be purged of bad debts, overproduction, bad ideas and bad political apples in this long wave extinction event. Bid adieu to socialism.

    The crisis the world is sailing into will trigger a new golden age and the next global long wave boom out of the coming long wave bottom. This is an ironic twist of events that few see coming. If the current crop of world leaders does not get government out of the way of the coming real and genuine international free market capitalism, the next ones will. It is not your typical post apocalyptic storyline, but out of this long wave extinction event for socialism, The Great Republic will dawn. You have a front row seat.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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