## Dow Jones: The Hidden Order (Part 1 of 4)

There is a hidden order behind the seeming chaos of the markets. The Random Walk hypothesis that markets are random and cannot be predicted is willful blindness to the overwhelming evidence of order all around us. Within the markets – for our purposes within the Dow Jones Industrial Average (DJIA) – there is a pattern clearly visible once your eyes are opened. The universe is highly mathematical and surely our Creator is the Great Mathematician. He has left clues of His presence everywhere for anyone to see them plainly.

The Hindus tell the story of Vishnu measuring the universe with three steps. In our so-called modern world such things are regarded as legend or mythology, and are often dismissed out of turn. The Trinity, or tripartite nature of God, likewise, is regarded with skepticism and outright derision by some. The number three is considered a sacred number in many cultures and religions while the uniformed scoff that such beliefs are a form of primitive and uninformed numerology. Nothing could be further from the truth. In a sense, without the number three, it would be impossible to see or even conceive of the hidden order that envelopes us.

Martin Armstrong, perhaps more than any person living or dead, has grasped the hidden order of the universe and given it expression through his Economic Confidence Model which is based on a deep understanding of Pi (in his model 8.6 years or 3141 days). Interestingly, our current concept of Pi is based on our decimal or base 10 system. The Sumerians used a base 60 number system and their version of Pi was 25/8 or 3.125. Some view 3.125 as an approximation or even a miscalculation of Pi. This is like saying that when a Guatemalan points at a dog and says it is a “Chucho” that they have somehow misidentified it. 3.125 is the correct number for Pi within a base 60 number system, as is the infinitely long Pi calculated in the context of the decimal system.

In many respects, base 60 and the Sumerian version of Pi, 3.125 are more elegant and more useful than the decimal version of Pi. The Sumerian version of Pi is central to T.H. Murrey’s Murrey Math and most probably Martin Armstrong’s calculations of the turn dates of the Economic Confidence Model. Murrey Math is clearly constructed around 3.125 and you can learn more about how to properly calculate Murrey Math Levels and how his system works here and here. It is Murrey Math, based on the Sumerian version of Pi, combined with a third version of Pi, that provides one of the keys to unlocking the hidden order inherent in markets.

Interestingly, most of what is needed to unlock the hidden order can be found in the number series 6, 7, 8 and 9. Summed these equal 30. Thirty is 10 (base 10) multiplied by three. Ten times six is 60 or base 60. Very simple math based on square roots, squares, addition and division would take you most of the rest of the way to being able to demonstrate for yourself, simply with pen, calculator and paper, that the market’s walk is anything but random.

One of the weaknesses with much analysis, historically, is a linear view of reality. Linear analysis tends to conclude that the events of tomorrow will largely move along the same path as those of today. Sometimes, as with climate analysis, the viewpoint is taken that the trend of today will be multiplied several fold in the future. This linear view is incorrect. Many so-called climate scientists conclude that mankind will destroy its earthly home. The Creator did not create a world, much less a universe, that could be undone by His own creation. The Universe, whether you believe as some Hindus do, that the Creator actively intervenes to achieve balance, or whether this is accomplished through some self-correcting mechanism, seeks a proper balance. Phi, or its shorthand version of 1.618 is one numerical representation of this concept. Dividing one by 1.618 results in 0.618. One minus 0.618 = 0.382. As percentages these are 61.8% and 38.2% respectively.

The same balancing act that results in ice ages and warm periods results in periodic booms and busts in the economy and financial markets. This brings us back around to the Pi Cycles that Martin Armstrong has so expertly used to create his Economic Confidence Model, forecasting both the 1987 Stock Market Crash and the top in the Nikkei Index. Armstrong’s Pi Cycle is 3141 days or 8.6 years. 6 waves of that cycle equal 51.6 years. Six 51.6 year cycles make up 309.6 year cycles. For our purposes, the 51.6 cycle can be used in combination with Phi Ratios of 61.8% and 38.2% (these can be rounded to 62% and 38% for simplicity) to demonstrate the orderliness of the supposedly unpredictable and chaotic financial markets.

Let’s take Armstrong’s 51.6 year cycle and multiply it by the two Phi Ratios rounded – 0.62 and 0.38. So, 51.6 x 0.62 = 31.992 and 51.6 x 0.38 = 19.608. Now, using the 100 Year Historical Dow Jones chart verify for yourself the following **inflation-adjusted numbers** (be sure to turn off the log scale).

Starting from 2017 subtract to get the following years:

19.608 = 1997.392 – March 1997 the DJIA was near 10100 (lower)

31.992 = 1985.008 – January 1985 the DJIA was under 3000 (lower)

From 1985.008:

19.608 = 1965.4 – July 1965 the DJIA was above 6850 (higher)

31.992 = 1953.016 – January 1953 the DJIA was under 2700 (lower)

From 1953.016:

19.608 = 1933.408 – February 1933 the DJIA was a little below 1000 (lower)

31.992 = 1921.024 – March 1921 the DJIA was a little above 1000 (higher)

Projecting forward from 2017:

19.608 = 2036.608 – We would expect the inflation-adjusted DJIA to be lower than the 2017 DJIA

31.992 = 2048.992 – We would expect the inflation-adjusted DJIA to be lower than the 2017 DJIA

These numbers above are not perfect by any means. But, within about a quarter (or three month) time period there is a pattern of inflation-adjusted lows and highs that you would not expect given the very wide time periods – dates between 1921 and 2017. Clearly markets and prices do not move in a linear fashion. Instead, they move up and down in a more or less orderly fashion. Prices do not continue in one direction forever. Prices correct once they have extended to a certain limit.

Not only does the concept of balance apply to prices, but it applies equally to the time within which price movements occur. Refer again to the 100 year chart of the DJIA. The Roaring 20’s bull market lasted approximately 8 years and was followed by a 34 month decline. The late 40’s to mid-60’s bull was around 17 years. The 1980’s to 2000 bull was about 18 years in duration. Bull markets can only endure so long before they must give way to bears. Given the price expansion of the current DJIA we should probably expect the current bull, which began in 2009 (perhaps with a counter-trend bear in-between), to continue on for around 18 or 19 more years – all the way to 2028 or so. More on this later.

In the next part of our series, we’ll take a look at the Dipping Bull and when (or if) we should expect that the current raging bull market will take a breath.