Nov

15

 Like Bach's contrapuntal motion playing mirror images of a theme, the market seems to be playing rather striking mirrored images of price sequences over two day periods and around the round. Market, like music, seems to like a theme and a key. The intervals are larger now, say 100 points and the notes larger, say 12 points.

Some rules from Wikipedia on musical "rules" for composition follow below. I wonder if any might provide "rules" for the markets. Take the idea of consonance, as the market returns to its round this Friday afternoon. I have actually been studying the various modes in an effort to extend my guitar playing skills and have these ideas in mind. Intervals are very important. The same scale can be played at different levels. Surprise is often a pleasant mode of musical creativity.

(Following quoted from Wikipedia)

Students of species counterpoint usually practice writing counterpoint in all the modes except Locrian (Ionian, Dorian, Phrygian, Lydian, Mixolydian and Aeolian). The following rules apply to melodic writing in each species, for each part:

1. The final must be approached by step. If the final is approached from below, the leading tone must be raised, except in the case of the Phrygian mode. Thus, in the Dorian mode on D, a C# is necessary at the cadence. 2. Permitted melodic intervals are the perfect fourth, fifth, and octave, as well as the major and minor second, major and minor third, and ascending minor sixth. When the ascending minor sixth is used it must be immediately followed by motion downwards. 3. If writing two skips in the same direction—something which must be done only rarely—the second must be smaller than the first, and the interval between the first and the third note may not be dissonant. 4. If writing a skip in one direction, it is best to proceed after the skip with motion in the other direction. 5. The interval of a tritone in three notes is to be avoided (for example, an ascending melodic motion F - A - B natural), as is the interval of a seventh in three notes.

And, in all species, the following rules apply concerning the combination of the parts:

1. The counterpoint must begin and end on a perfect consonance.
2. Contrary motion should predominate.
3. Perfect consonances must be approached by oblique or contrary motion
4. Imperfect consonances may be approached by any type of motion
5. The interval of a tenth should not be exceeded between two
adjacent parts, unless by necessity. 6. Build from the bass, upward.

Finally, in species counterpoint it is important to remember that the interval of the perfect fourth is usually considered a dissonance.

Laurence Glazier replies:

How nice to find this post on Daily Spec, as I am spending two days per week in the studio applying these rules, an activity even more fascinating than trading.

Both pursuits relate strongly to human emotion.

I have come to the conclusion that principles like these are valid in the way other empirical observations are. There are ideological battles over it in which I am involuntarily part of the fray, ultimately the defense rests with the music.

These contrapuntal rules are describing two part counterpoint. It is worth playing through Bach's 371 Chorales, the rules play out over four parts, applied to each pair of voices 12, 13, 14, 23, 24, 34. If pawns are the soul of chess (Philidor, the composer/chess player), then chords are the soul of music.

Arnold Schoenberg goes into these principles in great detail in his book Theory of Harmony. A good read. Even he has difficulty rationalizing the effect of consecutive fifths (as a revealing footnote shows), a principle to be added to the Wikipedia rules. I used to think of those in terms of information theory (a succession of perfect fifths adds no new information), but the same is true of perfect thirds from fa and so, which sound OK.

Interestingly in jazz, whose genius has turned everything on its head, it can be nice to build the chords downwards from the top, in fourths.


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