The Contracting Fibonacci Spiral

Capturing Human Psychology

Are the markets trapped? Find out about contracting Fibonacci spirals and their implications for the financial markets going forward.

Currently, the broad market indexes are trapped in a contracting Fibonacci spiral (CFS), with the implications of the CFS between December 2012 and 2020. Figure 1 illustrates the importance that a currency has within a society. The method by which a currency is backed, be it by a gold standard or fiat declaration, affects mass psychology. Patterns of mass psychology form various cycles, which are linked to progression through longer-term durations. The stock market is the ultimate method of capturing human psychology ranging from greed to fear, and every combination in between.

FIGURE 1: ITEMS AFFECTED BY HIGHER-ORDER LEVELS OF IMPORTANCE. The method by which a currency is backed affects mass psychology.

In the 1930s, commodity-backed monetary policy tended to make people more honest, which was a direct reflection of this policy. As time went by, the economy became increasingly unstable, bringing high-order events closer and closer in the economy and markets. Every cycle has booms and busts, but the CFS has numerous tops that have occurred within 5% of set time posts, followed by corrections of at least 40% to 50%.

FIBONACCI SPIRAL LINKED TO THE MARKET
The universe is linked to phi (61.8%), also called the golden ratio. This ratio is based upon a numerical sequence deduced by the mathematician Fibonacci in the late 12th century, and which has the subsequent sum of a sequence totaling the last two numbers.