Apr

11

Weather, from Jim Sogi

April 11, 2007 |

The weather is important for surfing, sailing, skiing and markets. The weather in Alaska comes in large systems that move across the Pacific, lasting two weeks or more as they spin across the Gulf of Alaska.

These large weather systems have many random eddies. From day to day or hour to hour the sun or rain and snow may vary, but in a weather system more then 80% of the days are rainy, windy or snowy. In good weather, there was a stretch of nine days of sunny calm days up in Valdez. The big satellite pictures give a good sense of the scale of the systems and storms, more than just looking out the window from day to day. Seeing the spin of these large systems allows better prediction over days. A harbinger of a storm is sometimes very calm conditions with little variance in the wind speeds. After a very turbulent storm, there is a period of calm as the pressure and temperature gradients stabilize.

The markets have large systems that spin across the globe, visible as price history structures. Market systems are similar to large weather systems or structures that span the oceans or continents and last a similar period of one or two weeks before spinning out. This last big market storm in March lasted a few weeks, then we had nice sunny weather for a few weeks after. It takes a few days or more for the systems to change, and then they pick up speed, with good or bad days predominating for a week or two.

A period of flat calm may signify the winds of change are coming. About 15 years ago we went camping on Superbowl weekend. That night, the ocean was smoother than a bathtub with nary a ripple, and dead calm. We commented. "How odd!" Then at 3 am the wind started to pick up, and by dawn it was blowing over 60 mph. Eleven boats were blown on to the rocks that night. It was called the Superbowl Storm.

We have had two days of below six point ranges in the S&P500. A period of unusual calm. I wonder if it might portend turbulence.


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