When water boils, it hits 100 C, but doesn't immediately turn to steam and change state to the higher energy level. Instead it requires additional energy at 100 C staying at the same temperature, until finally it breaks out into a boil. The various convective currents within the pot swirl around in interesting patterns during that time.

In the market system, how does heat in the form of capital get transferred? On the tick level of course there are individual transactions. The overall energy level of the system is the price. There are holders of capital at various prices. The inside price is like the convection as it comes down to various levels and stirs up the holders at the lower levels with energy to spur capital transfer.

On 5/17, the boundary layer at the top, above 1420, required more energy than was available to change phase. Perhaps more convective action is needed, and more stirring to transfer capital. The convective current swirled around the top but that did not seem to gather enough energy or tip the balance. Nuclear engineers study such currents when transferring energy to water to create steam for power.

Vincent Andres adds: 

Imagine a set of nodes. Each node may have some value. Those nodes are interconnected via constraints, e.g., node1+node5+node25 < 5, etc.

Let's call alpha the ratio: number of constraint per variable. When alpha varies, there is a phase transition phenomenon quite analogous to the water phase's transitions.

Alpha small = system with many solutions, may stabilize easily

Alpha too big = no solutions, erratic system

Alpha near the alpha limit = maybe/maybe no solutions, let's be : node1 = bonds, node2 = stocks, node3= real estate, etc., and we are not too far from "markets dynamically related".





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