“All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.” - Jesse Livermore
Anyone familiar with financial markets is likely very familiar with the different types of chart patterns that are prevalent. Head and shoulders, double tops, triangles, wedges, et cetera. Even if one does not understand or believe in the implications of these patterns he or she is likely aware that they recur constantly.
It is easy to conclude that a chart pattern is nothing more than a coincidence or a self-fulfilling prophecy, however, we prefer a far more nuanced view and remain intrigued by the idea that patterns are a manifestation of collective emotions.
When bears growl and bulls charge, the spirits of these animals permeate into society and affect the way that we think and act; and this is when we can make irrational decisions. Because, finance is not exempt from wild emotional extremes. Contrariwise, it is a reflection of the collective consciousness of all participants.
Irrational exuberance can easily be seen by examining the classic historical bubble case examples of the Tulip Mania, the South Sea Bubble, The Great Depression, The Dot Com Bubble, The Mortgage Crisis.
History doesn't repeat itself, emotions do.
The feelings of greed, fear, ignorance, and hope, feel the same regardless of skin color, nationality, gender, age, or calendar year. When participating in the markets with an expectation of making profit, we feel the same emotions as our ancestors. The patterns we see in today’s financial markets are a representation of these collective emotions and therefore they should remain essentially unchanged throughout space and time.
Head and shoulders patterns occurred in the early 1900s just as they occur now. Furthermore, they are just as prevalent in Japan, China, Germany, and Europe as they are in the United States.
Hyperwave can be characterized as a chart pattern but it is also much more than that. Hyperwave is a social phenomenon and it is an expression of a macroeconomic shift.
Macroeconomic shifts are extremely rare and therefore so are hyperwaves. We are currently experiencing more Hyperwaves than at any other point in recorded history, therefore we are likely undergoing the largest macroeconomic shift that has ever occurred.
Hyperwaves are like snowflakes in the way that they are created. Snowflakes form in a seemingly haphazard way. Two points form over here and one over there. There is no such thing as identical snowflakes however they all form into nearly identical structures. This is exactly how Hyperwaves take shape.
It is important to understand that Hyperwave is not dependent on price whereas most other technical indicators are such as Moving Averages, Stochastic Oscillator, Moving Average Convergence Divergence (MACD), or the TD Sequential. All of those indicators need a price input to provide an output.
Hyperwave tells us exactly what pattern the price will follow before the move even begins. A hyperwave has seven phases and before one forms, this is what it will look like before it ends:
Many technical indicators will help to predict the direction of price movement and others will help to forecast the duration.
Hyperwave is the only technical system that projects the pattern. Hyperwave does not provide a price target for Phase 4 and it does not tell you how long it will take to get there. Limitations can be deduced through studying a large number of Hyperwaves.
The vertices that separate each phase is the variable that distinguishes Hyperwave from parabolic theory. A vertex is a point, it is not an area. It is one point between two lines that determine the next movement of price in such a way that when the vertex occurs price is going to respect the lines that are drawn in between the vertices.
This basic structure will do two things. Firstly, phases 1, 5, and 7 will be ceilings, above which price refuses to rise. Secondly, phases 2, 3, 4 and 6 are floors, below which price refuses to fall.
The structure is predetermined before the price begins to rise. It is only after we draw the Third and Fourth Phases will we know the angle/shape which a particular Hyperwave (snowflake) will form.
A first-dimensional object has length only, no width or depth, and this provides the essence of a Hyperwave. It is similar to a first-dimensional object in that it is a series of lines that have been drawn to connect the most important points within the system. It has only shape and is independent of price or time.
Hyperwave is a specific type of bubble. This book will explore how to capitalize on the abundant amount of Hyperwaves that are currently active and it will delve into the underlying fundamentals that are their driving force. We will also begin to explore the ramifications of breaking down Phase 4 and entering into the prolonged bear market which is expected to retrace back to Phase 1.
Our goal is to teach readers how to trade Hyperwaves but we also want to begin a discourse about how to minimize the fallout as it relates to the overall economy. Hyperwaves are like rogue waves in that they form due to a culmination of an underlying storm, can cause massive destruction, and they completely disappear shortly thereafter. The only way to defend ourselves is through education, dialogue, and an open mind.
The current environment is not unique. There was another time, about 90 years ago when an inordinate amount of Hyperwaves swelled simultaneously. They collectively broke down Phase 4 during the same period in 1929 and this resulted in the Great Depression. We do not point out this corollary to scare readers into thinking that the sky is falling. Instead, we hope to use historical examples to shed light onto our current macroeconomic environment as a way to prepare for, and potentially mitigate, the fallout that we believe is coming in the next few decades.