|  JAN 1983

Using Fourier by JACK K. HUTSON

Using Fourier by JACK K. HUTSON Joseph Fourier (1768-1830) (pronounced ""fooryay'') was a French mathematician and inventor of Fourier analysis. His work helped show the way to expressing periodic curves or functions by a sum of sines and cosines. These simple functions are easy for our computer to evaluate and project into the future. Many natural physical phenomena are oscillatory, that is repeating over and over again, much like the Markets. The Markets are not a function in the mathematical sense, but do seem to go up and down over and over again. During the late 1960's a number of Fast Fourier Transforms methods were divised to 'transform' time dependent data, such as the daily market close, to frequency. The frequency Vs. amplitude squared is referred to as the 'Power or Transformation Spectrum'. A typical plot of a 'Transformation Spectrum' is shown in Figure 1. The plot shows which frequency has the most relative impact on daily (weekly, monthly) closes.

by Jack K. Hutson