On my ride home on metro north the other day I was sitting backward (relative to the train direction) staring at the power lines watching them appear to dance along by virtue of the train's moving (a reasonably decent form of entertainment when toting a dead computer and no book) when I noticed they resembled approximate mirrored images of stock chart patterns. I say mirrored because gravity was pulling these power lines down but the various towers and poles obviously prevented this from happening. Stocks tend to drift higher pulled upward by demographics, globalization, technology, earnings but with occasional corrections similar to the inverse of the tower's impact on power lines.

Naturally the depth, size, and nature of the poles/structures supporting the power lines varied in conjunction with the size, weight, and quantity of the power lines. This made me curious if anyone had any similar thoughts about this relationship mirrored on stocks or if I am too far out in left field. My gut feeling is there may be some way to test the market's resiliency and correction frequency/depth utilizing some combination of market "weight" metrics (NAV, breadth, put/call, AUM of etfs, P/E, etc.). Perhaps viewed in association with the rules of gravity governing objects but altered and reversed to account for the upward motion of markets over the long haul (potentially utilizing the growth factors mentioned above).

The whole thing reminded me a bit of Charles Dow's "Dow Theory" predicated on the ripples/waves/tides evident in bodies of water. Power lines do remain largely taut and parallel to the ground while markets can go parabolic, but it seemed like adequate food for thought for the list. So I would like to subject the concept to the intellectual acumen and experience of the readers of this site should you be willing to pose any thoughts or suggestions?


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