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13

Envelopes And Standard Packaging

Nesting Down



20 1» le

FIGURE IHS

7----

Nesting Up

HOW SYNCHRONIZATION IS EXPRESSED

One of the characteristics of the principle of commonality is the manner in which cyclic component highs and lows occur at nearly tlie same time from issue to issue. We can use Standard Packaging again to demonstrate this aspect of ttie cyclic model.

In Figure 11-16, Standard Packaging and the DJIA are plotted in a manner suited for price-turn comparison. The data have been proportionally adjusted in this figure so that the total price variation for each over this time period is identical. The timing of all fluctuations of all durations is seen to be virtually identical. In fact, "where goeth the Dow, there goeth Standard Packaging" would seem to describe the results with considerable accuracy!

In spite of this, the principle of variation is seen at work in the gentle divergence of the two price histories before and after the 65th week on the plot, even while time synchronization is firmly maintained. The commonality of synchronization is more broadly demonstrated in the Appendix.

SUMMING IT ALL UP

• A large percentage of the price inotion of all stocks consists of the sum of a number of periodic-cyclic "waves"

• The waves in each stock have many common characteristics, including duratfon, relative magnitude-duration relationships, and a strong tendency to be time synchronized. This feature can be expressed as a principle of commonality.

• Deviations from cortmionality are minor and can be expressed as a principle of variation.

• Very little of stock price change is random in nature.

• Smooth, underlying trends are caused by fundamental factors related to the growth of the economy and of specific industries and companies.

• Major historical events do not significantly influence the market.

• Relative independence of stock price fluctuations from random and historical events, plus the periodic and common nature of the cyclic components permit timing analysis on a purely "technical" basis.



FIGURE -

DJ 30 INDUSTRIALS

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•i! 1

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4-J

JjJ LL

STANDARD PACKAGING

6-

10 IS

20 ZT io 3*5

5 MAY 1967 - 10 JAN

Commonality And Standard Packaging



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