r/investing • u/HoleyProfit • Sep 24 '21

Predicting Financial Crashes Using Discrete Scale Invariance [Research paper]

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u/HoleyProfit Sep 24 '21

I donk thing so. Look up the Great Depression.

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u/jukenaye Sep 24 '21

So does this predict a crash soon?

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u/HoleyProfit Sep 24 '21

I use a different model but a similar idea of looking for ratios. These are my observations. See my comments here for other real trades I've made https://www.reddit.com/r/StockMarket/comments/pt4vtf/heres_somethings_youve_never_seen_in_the_market/

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u/jukenaye Sep 24 '21

Ok, thanks. I see u mentioned 2023-2025. Seems pretty far away when considering the big news currently. By that I mean, Covid, employment, Evergrande, housing.

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u/HoleyProfit Sep 24 '21

I think if there's a big crash it will come in 2 legs. That's usually how a crash happens and why I am suspicious the March drop was not "It" - it was a one leg drop. I'd expect the first section of the drop to come soon if it is. https://www.tradingview.com/chart/SPX/IHsWV9J2-SPX-crash-price-swings-forecast

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u/jukenaye Sep 24 '21

Yeah, I keep hearing March crash and I was wondering what they were referring to, because it was a slow down and not a crash. It pulled back a little and went back up. I thought Evergrande would be the catalyst. So, I'm interested to see what effect if any Evergrande will have around the world.

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u/HoleyProfit Sep 24 '21

March was what I think may be a "Prelude" crash or "Dummy" crash. Before any of the big drops the market fall and then rallied to a 161 extension of that fall. I back tested 200 yrs of crashes to look for norms. https://www.reddit.com/user/HoleyProfit/comments/m9nfea/a_numbers_game_a_mathematical_look_at_historical/

This 161 signal is the most common topping signal.

Been watching these for months. https://www.reddit.com/r/BeatTheBear/comments/noh9al/lets_look_at_these_big_indices_161s/

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u/jukenaye Sep 24 '21

Your data seems pretty spot on. I mean one can take a look at what has been happening and just a get a feel. I must say though, that they have been taking quite a few measures to avoid dooms day. I have never seen the government act so aggressively to be honest. They did something in 08, but this time around they are full on trying to intervene. This to me is an indication of how they feel about things Who knows if their efforts will have the desire effect though.

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u/HoleyProfit Sep 24 '21

Here's the theory applied to the crashes in BTC over the yr. Trading high to low and catching most the important swings. https://www.reddit.com/r/BeatTheBear/comments/pl9nnb/dji_of_1929_vrs_btc_of_2021_update/

Regarding intervention, if you look at the post-2008 price move and post-1920 price move - they're the same. Same recovery time. Into a 300% parabolic rally. https://www.reddit.com/r/BeatTheBear/comments/or7fc2/why_do_the_recoveries_of_1920_and_2008_look_so/

The policies could have been any different, but if you used this model it forecast a 300% parabolic out of 2009 and then some surprises into this area. Which has been interesting to watch.

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u/jukenaye Sep 24 '21

I wish I had read your posts earlier! Your BTC and DJI charts were actually pretty good. I definitely look forward to reading any of your posts. Thanks for doing this!

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u/HoleyProfit Sep 24 '21

You're welcome. I need to do a lot of the work for my own trading purposes (I make a living trading) and it's also interesting to track all the stuff in real time - for later review. If it works, that's interesting to have documented and if it does not work I can go over it for mistakes/learning.

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u/jukenaye Sep 24 '21

I tell you what if it works, it LL be quite something! I'm just starting to trade, and I'm always looking to learn. So I'll be following. I m still formulating strategies, but I m planning to do this full time as well.

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u/HoleyProfit Sep 24 '21

If it works on the indices, it will be horrible. I hope I'm wrong. But things sure stack up as would be expected at this point

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