Examples of our
discoveries presented on this site will provide you with information about
our methodologies. We believe that the examples illustrate the total
originality and great benefits of our work.
Contents of this section:
On Price, Time, and Volume
Proportions: As Simple as A is to B as B is to C
Rationale for why the following examples have been
Notice: TRADING DAY COUNT -
PROTECTED INTELLECTUAL PROPERTY
Ermanometry Examples - Index of Charts
Understanding the Properties of EZones
Understanding the Properties of Invisible EZones
The charts and explanatory text in this section provide definitive,
irrefutable evidence that market timing is often perfect to the day for
periods covering many decades! This statement is equally correct when
market time is measured in increments of one hour or as small as 15
minutes, and timing is accurate to a single hour or 15 minute period.
These are very strong assertions, or to put it in the vernacular, this is
pretty "scary stuff", but also very exciting! Nevertheless, as
will be demonstrated, the math, the facts, cannot be ignored!
The big "WHY?" do markets conform to such orderly progression
can be answered from a philosophical perspective. If you have read the
article on Log Spirals, on this site or in the February issue of Stocks
& Commodities, you are already aware of Ermanometry's concept
that the markets belong to the natural realm and therefore order is
"natural" for them. However, markets are created by humankind,
and there is no evidence of any conscious plot by market movers and
shakers to create perfect markets. Perhaps the urge to create order is
Consider the spider spinning the geometrically perfect web. As far as
we know, the spider has no conscious knowledge of the wondrous feat he
performs. The eminent psychiatrist Carl Jung postulated that a mass
collective unconscious unites all human beings. Perhaps humankind, like
the spider, is unknowingly creating geometrically perfect markets. There
is a wonderful poem by Theodore Melnechuk that sets forth the idea of
humankind being manipulated by forces totally foreign to its collective
conscious mind. The poem is about puppets speaking to their puppet masters
and the audience, telling them that although they might consider
themselves far superior to mere puppets, "transcendental gods",
they too are puppets and manipulated by "some higher god's inserted
PUNCH AND JUDY TO THEIR AUDIENCE
Our puppets strings are hard to see,
So we perceive ourselves as free,
Convinced that no mere objects could
Behave in terms of bad and good.
To you, we mannequins seem less
than live, because our consciousness
is that of dummies, made to sit
on laps of gods and mouth their wit;
Are you, our transcendental gods,
likewise dangled from your rods,
and need, to show spontaneous charm,
some higher god's inserted arm?
We seem to form a nested set,
With each the next one's marionette,
Who, if you asked him, would insist,
that he's the last ventriloquist.
by Theodore Melnechuk
Could natural law, and humankind's collective unconscious be the
"last ventriloquists" upon whose laps the markets sit?
Think about it.
Price, Time, and Volume are the three market characteristics
most often quantified, massaged, tortured with sharp indicators, and poked
with red hot formulas, until these demonic instruments inflict enough pain
to make the data confess. Obtained under duress, these confessions are
fraudulent. The data will confess to whatever the analyst is looking for.
If the analyst is a random walk adherent, the data will confess that its
market parents are guilty of a disorderly life style. During periods of
extreme volatility the data will accuse the market not only of being
disorderly, but drunk and disorderly. Proponents of order will squeeze the
data until it confesses that crimes of passion occasionally occur when two
androgynous cycles of equal length are found lying next to each other,
albeit toe to head. Prolonged prodding may elicit a confession that the
market is the consummate efficiency expert, able to ingest and interpret
billions of bytes of information and instantaneously display its prowess
in the valuation department. Too many types of data mixed together, too
many indicators, and too many analysts with preconceived agendas, will
produce too many conflicting conclusions. It doesn't have to be
this way. It doesn't have to be this hard!
Time is the single most important market characteristic. Markets
"exist" without price or volume during trading halts, limit
days, lack of interested buyers and sellers, etc., but markets cannot
exist in a vacuum. Time is always present; the one "constant".
You might think think that this is such an obvious fact that it need not
be stated here. Everybody knows that time is a universal constant. That is
precisely the reason that time is more relevant to the markets than price
and volume. Time affects all humanity, and it is humankind that makes the
markets. Price and volume do not affect anybody, except for the temporary
emotional swings of a large profit or loss, due to price movement.
Seminal, traumatic events in a persons life, have a profound effect on
their future life. These events are often referred to as milestones.
Milestone is more appropriate than "yearstone". In fact,
yearstone isn't a word; it doesn't exist. Why not? There is no need for
such a word as long as we think of life as a journey, implying distance or
travel. We use "milestone" to describe important turning points
in the history of not just individuals, but for nations, or
"happenings" such as wars, etc. A milestone is a tangible,
palpable, and usually extremely dense and heavy object, but here it is
used to denote location in intangible time. Perhaps we are
unconsciously acknowledging the possibility that time may exhibit
qualities normally thought of as the province of substantive items, and
time may be more "tangible" and reverberatory than our conscious
minds are willing to consider.
An historical market chart is a canvas upon which the moving finger of
the market hath writ. The market has traveled this terrain and recorded
its milestones, turning points. The topology of this terrain is three
dimensional and the milestones occur at mountaintops and valleys;
traumatic, seminal events. These milestones will affect the future
paths of the market.
Proportions: As Simple as A is to B as B is to C
"Location, location, and location" is the mantra of
real estate professionals when describing the three most important
elements of a property's worth. Proportion, proportion, and proportion
are the three most important elements for decoding market movements. Time,
the duration of the markets movements, and price, the measurable portion
of perceived market value, always bear a definitive proportional
relationship to previous market movements.
As simple as A is to B as B is to C is just another way of
saying "as simple as a three term continuous proportion.,"
but we didn't want to intimidate anyone by using a
"mathematical" expression. But, it is very simple:
"Three" refers to the quantity of terms/elements/items
in the expression: A, B & C. If a 4th term is added, the
expression would be "A is to B as B is to C as C is to D. Now the
expression would be described as a four term continuous proportion.
Let's replace the letters A, B & C with numbers; 20 is to 10 as 10 is
to 5. There are 3 terms, 20, 10 & 5
one number is divided by a second number the answer is called a ratio.
of 20 to 10, or 20 divided by 10, = 2.
The ratio of 10 to 5, or 10 divided by 5, = 2
The important point to remember about the term ratio is that it is
always used to compare quantities by division.
The words "ratio" and "proportion" have become
almost interchangeable in everyday, conversational English, and nobody has
a problem understanding what is meant when they are used. However, in
mathematical terminology, these two words have precise definitions, and
they are different.
Proportion refers to an equality of ratios. "An equality of
ratios" is a fancy way of saying that the same ratio is generated in
more than one place by different sets of numbers. Thus, in the
previous example, since the ratio of 20 divided by 10 is equal to the
ratio of 10 divided by 5, the three terms, 20, 10, 5, constitute a 3
TERM CONTINUOUS PROPORTION. "Continuous" refers to the fact
that any pair of the 3 quantities, in ascending or descending order,
generates two equal ratios.
A DISCONTINUOUS PROPORTION refers to a sequence of quantities
that produce equal ratios, but the sequence is not "continuous".
20 divided by 10 equals 2, and 8 divided by 4 equals 2. In descending
order, 20-10-8-4 does not generate a "continuous" proportion
because 10 divided by 8 is 1.25, not 2.
Therefore, the sequence would be described as a DISCONTINUOUS
4 TERM PROPORTION.
We apologize for this little exercise on definitions. You probably
learned about ratio and proportion in grammar school. If you haven't
thought about it lately, you probably forgot it. Our excuse for this
simplistic lesson is that the words and phrases just defined will be used
in the explanatory text for the examples that follow.
Rationale for why the following examples have been chosen
Ermanometry Research uses many disparate sets of historical data
as tools for decoding past market activity and forecasting the future
critical path of markets: nominal price data refers to data
recorded as the actual price, or value, of the market under study. For
example, the DJIA intraday high of 01/08/99 would be recorded as 9647.7
"Constant dollar" data refers to data that has been
adjusted inflation/deflation. This type of data is sometimes referred to
as "inflation adjusted" data. A benchmark time period, such as
the average for a month or year, or even a specific day, is chosen, and
all prior and subsequent nominal prices are adjusted to the benchmark. The
consumer price index is calculated in this manner. It is relatively
unimportant what benchmark is chosen, because it is the relationships
between the data entries that are of value. These relationships, relative
positions on a chart etc., will be constant, regardless of the benchmark
Nominal and constant dollar data are the only two types of historical
data that will be used for the examples that follow. However, there are
other valuation variations that are used when doing intensive research on
a specific market. The indices, whether constant dollar, or nominal price,
are derived from stock prices denominated in US dollars. A chart of the
DJIA denominated in Swiss Francs, the British Pound, or the new Euro will
show a different picture than one denominated in US dollars, due to
If our market was flat, in US dollars, and the Brazilian currency was
being devalued, it would take more Brazilian currency to "buy"
the DJIA, and thus a chart denominated in Brazilian currency would show
the DJIA moving up. This type of cross market valuation is particularly
valuable when researching commodities such as crude oil, and metals, and
very important for debt instruments. If the viewer is interested in this
type of somewhat esoteric analysis the Topline Encyclopedia of Historical
Charts is literally a gold mine of fascinating information: Topline
Ermanometry Examples - Charts
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