03 February 2011

Structural Integration and Forex Optimization

What is the strength of the economy of the United States of America ? In terms of the analytics of Hardanalytics.com, it is the fractal elements, namely the companies. They are the structure of the economic powerhouse of the world, the economy which time and again has re-generated itself to new heights of productive power and is I believe in the process of doing this again.

There are tantalizing hints that it may be doing this as the beginnings of a growth cycle expressed in technical analysis as a new Elliott Wave from the long term chart of Dow Jones Industrial Average. The capacity of companies to remake and re-form is the liquidity of the US economy. But it is more than this, it is the momentum for the economy to re-generate. This shows in the Dow, but does it show in forex.

Why would one expect that the resurgence of USD versus JPY would indicate that the US economy is truly growing again ? The strength of balance sheets is based on, in my belief, an actual computational structure, a balance sheet that can interface well with the Dow.

This creates the company's ability to grow over time, in such a way as investors will pump money into its shares, boosting the equity in a process which creates money in the economy. This is a strong structure for the Dow itself to grow.

We have noted that forex has a structuring from the Dow, it creates moments of structure that traders jump into, so the question is, does the quality of that structure make for a different kind of forex structure.

My feeling is yes, that it creates more tradable moments. The counter-example to this is the crisis when all structure from the Dow collapsed in an epic time of vast money flows. The forex was highly un-tradable, except in certain moments of structure collapse.

This I believe gave the powerful effective divergence signals during the crisis. They were so good, they seemed too good to be true. This was structure destruction. It seemed to build in phases with a reformation happening in the intervals. By divergence signals I mean RSI in particular, as this indicator is highly oriented to structural changes in forex.

The problem was they needed one to believe that the market was a different market from the stabilized market before the crisis, stabilized by interest rate differentials and assets incorrectly valued (based on money flow bootstrapping).

One can conjecture that the market now is a different market, it certainly seems that interest rate differentials do not seem effective at all. But this seems to have given a freedom of momentum to growth process, happening with majestic strength in the new economic heartland of the American republic, notably Massachusetts and California.

I believe as well that QE2 is helping this, in the way money flow works to create growth structures or stabilize them, differing from money flow out of structures, as they disintegrated during the crisis, a separation of money flow and growth processes. So we are seeing perhaps in USD, the process of jump starting the re-integration of money flow and growth processes again.

Hardanalytics.com noted the way companies did show effects of the crisis in their share prices. That change in the slope noted in some very great companies may reflect that disintegration of money flow and growth processes.

One can expect the reintegration may in fact be more optimal, and it may be that this increase in optimization may be necessary for a new Dow Elliott Wave which will of course lift asset value way above previous levels (this is what always happens). Where does optimization come from, forex. Thus that process of re-integration may be within forex itself.

© 2011 Guy Barry - All Rights Reserved.