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Mean Model Rally Wilting
The error between the market and the model shows a nice ending diagonal that is wilting over. The error at today's close was 1.7%. The high of the day generated an error of about 2.2%. The predictor generated an error of 2.5% with the market close. Things are very statistically close to a turn lower.
Short AND Long Term Mean Model Signalling Tops
SELL, SELL, SELL!
Both models are showing changes of less than 1 INDU point. Compare that to the short term model which is signalling a 250 pt drop over the next 15-20 days.
Yahoo Historical Data Truncated
This weekend I went to download the entire historical daily Open Hi Low Close Volume data from Yahoo. This data goes back to the late 1920's. Now the data goes back to January 2000. Data for the NDX 100 goes back to Late 2010. Fortunately data for SPX, RUT, and NDX composite are still complete, so I downloaded all of it. You should too. I had some complete sets of INDU from a month or 2 ago, so I still have enough data for backtesting.
INDU in an Ending Diagonal Since December 28
Still have one more test of 10 day high. Mean Model has flattened. The mean model/market error is 1.67%. Given the wave structure, the model/market error will come very close to the 2.5% error level. If the INDU does rally more than 125 pts, then the ending diagonal is not the correct e-wave count.
http://charts.insidestocks.com/chart.asp?sym=$indu&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
Greek 1 Yr Bonds Yields Break 400%
Yep 20c on the dollar. Just stick a fork in it.
http://www.bloomberg.com/quote/GGGB1YR:IND
INDU Futures - Today was Corrective
The market could go either way at this point; however, any pop will be short lived. Mean Model difference reading for today was 1.4%. A 130 point pop is no out of the question, and would put the reading above 2.5%.
http://charts.insidestocks.com/chart.asp?sym=esh2&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
Mean Model- INDU On Alert
The intraday high triggered a 2.4% difference between the mean model and INDU market price. Turns occur most frequently above 2.5%. The close was 1.8% above the mean. With the projection still pointing lower over the next 20+ days, a market selloff of 500 points is imminent. A larger 750-1000 point selloff is possible over the next 2-3 weeks.
Sell long positions tomorrow. Hope for an up day to get the best price, but any price lower than today's lows would be a signal to go short.
GE is a Great Short Candidate
Off the early October 2011 lows, GE has traced out a flat. wave c of the flat is neatly done. Going below $14 from the $19 area.
http://stockcharts.com/h-sc/ui?s=GE&p=D&yr=0&mn=6&dy=0&id=p23077978160
SPX Futures up slightly.
The SPX futures are test their 4-5 day highs. Tomorrow or Wednesday could yield a sell signal.
Lets give The Wave Trader Some Props Too.
http://www.safehaven.com/article/23906/weekly-analysis
McHUGH's E-wave Count... and MORE!!!
http://static.safehaven.com/pdfs/mchugh_2012_01_08.pdf
INDU Mean Model Projections:
The INDU near term mean model is giving a projection of a top and heading down 250 points over the next 20 days before finding support. The projection model has a backfit correlation of >99% with market. It also has a >99% backfit correlation with the present mean model.
Right now, the market is about 1.2% above the near term mean model. The market mostly makes turns after above 2.5%. Larger turns occur above 5%. Larger market turns will occur slightly before or after the present mean model has turned.
The INDU intermediate term mean model is giving a projection of a slowing rise over the next 6 months, with a hint of a market top forming in July / August this year. The long term mean model also has >99% backfit correlations.
Right now, the market is about 2.1% above the long term mean model. The market mostly makes long term turns above 2.5%. Larger turns occur well above 5%.
What does this all mean?
The mean model is a combination oscillator / statistical indicator. The market trades above and below the model. When the market is at some percent difference from the model, and the model is calling for a turn, buy/sell signals are generated. Catching the big turns are much more likely when near and intermediate mean models are synchronized, much like multiple degrees of e-waves or cycles. Projections will change slightly over time since the market is dynamic. The projection 6 months from now will be different than the 3 month projection 3 months from now. It is a general direction compass point, not a pinpoint laser.
Forecast:
Over the next couple days there should be a pop of 300-400 points, followed by a drop of 1000 points in the market. The move should be a corrective e-wave since the long term mean model has not topped, AND the market is not sufficiently above the mean model. The e-wave pattern I'm looking for over the next 6 months is waves 4 and 5 of an ending diagonal.
Daily near term mean model projections starting Monday January 9.
12082.92582
12077.7306
12072.40577
12066.99416
12061.538
12056.07878
12050.65704
12045.3122
12040.08241
12035.00439
12030.11325
12025.44236
12021.02322
12016.88532
12013.056
12009.56036
12006.42115
12003.65867
12001.29067
11999.33233
11997.79612
11996.69182
11996.02643
11995.80416
End of week intermediate term mean model projections starting Friday January 13.
12081.90362
12090.9535
12099.74756
12108.26785
12116.49679
12124.41724
12132.01258
12139.26672
12146.16421
12152.69024
12158.83073
12164.57233
12169.90254
12174.80967
12179.28292
12183.31243
12186.88927
12190.0055
12192.65418
12194.8294
12196.52631
12197.74111
12198.47108
12198.71458
SPX Intraday Triangle
Yesterday's high into today's finish looks like a classic triangle. That means a sharp rise on Monday. Maybe to/above the 1286 level.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
Market Model a couple days from top.
Today the model for the INDU climbed 0.5 points. It is very, very near a top. The difference between the market and the model is slightly above 1.8% The 5% target I had is doubtful. 2.5 to 3% is more realistic, which is the difference from where the Santa Klaus rally started.
SPX Futures Show Triangle
The intraday SPX Futures chart shows a clear triangle. Chances are good for another advance tomorrow. The forcast is not changed if the triangle pattern morphs into a double zigzag overnight.
http://charts.insidestocks.com/chart.asp?sym=esh2&data=Z05&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
Slight upward bias remains.
The difference between the INDU market and the model (mean) grew to 1.8% with today's pop. I'm looking for a reading of 5.0% to take the pistol out of the holder, followed by a down day in the reading to pull the trigger. The near term mean is still rising, though at a much slower rate. THe long term mean is still rising, but is not about to roll over just yet.
Monthly and near term forecast
My computer models show mean trajectory of slightly down, then flattening in January. The model shows when the error of the mean and market reaches +/-5%, action should be taken. Right now the error is neutral and rising, so a little rally could happen before the move lower. Or it could be interpreted as the mean is falling faster than a falling market.
The model has a longer trajectory that is slightly rising and topping around the middle of the year. This should be a choppy advance into a long term top.
For both time trajectories, the market will peak either before or after, but never in sync, with the mean. The amount the market over and undershoots the trajectory seems to symmetrical, which would help determine target price levels.
For now, play to the downside.
SPX Flat e-wave
Since about noon yesterday to present, the SPX has been tracing out a flat. Presently it is in wave c. Look for retest of yesterday's lows. I'm not sure if the flat is in the wave 2 or 4 position of larger degree.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=spx&time=2&startdate=1%2F4%2F1999&enddate=12%2F29%2F2011&freq=9&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=9&x=37&y=11
US Market Top Is In
The past couple of days I've been trying to automate market projections based on spectral analysis. I've made a major improvement. The recent projection shows the longer period components have topped out, and the market should be heading lower for at least a month. There is only so much that can be done on a spreadsheet, so I'm at a point where it's time to write software.
SPX Ho-Ho-Ho to Uh-Oh-Oh!
The the past 5 days in the SPX have been a nice rally. I count 5 waves up. The trendlines converged, but is not a wedge because there is no overlap of waves. In the past hour, the SPX has moved outside of the lower trend channel line. There is also a small head and shoulders forming. Three technical indicators say the near term top is in. Longer e-waves also warn of a top.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=spx&time=3&startdate=1%2F4%2F1999&enddate=12%2F23%2F2011&freq=9&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=9&x=39&y=11
SPX Double ZigZag Continues
The futures show the Wave c zag is making an extended wave 3. Based on the prospects of Zig = Zag, the target price is 1280. Wave c zag should not truncate with respect to Wave c zig; however, there is still a good chance of Wave C truncating with respect to Wave A at the larger degree.
http://charts.insidestocks.com/chart.asp?sym=esh2&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
SPX Futures - Same E-wave as Open Market
The double zigzag off Monday's close is starting wave 5 of zag. There is a good chance of truncation since wave 1 of zag is larger than wave 3. It also implies a truncation with respect to the corrective advance out of the October 2011 low. Looks like th e200 day moving average was too much resistance.
http://charts.insidestocks.com/chart.asp?sym=esh2&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
SPX: Tell Tale E-wave
The morning headed lower in a triangle. This signals one last move in the trend of larger degree (UP). So far, the rally off Monday's close is looking like a double zigzag, presently more than a half way completed zag. Tomorrow begins a corrective move. I'm not sure of the degree.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
INDU Projections.
Since my projections are based on longer periods, much more than 10 days, the near term top I curve fitted this weekend is surprising me very much today. It called for a potential near term top and longer reversal. With today's advance, the rally out of the October 2011 lows is still in play. The ewave count can be an zigzag or WxY. One more challenge of the 200 day moving average, and a Santa Claus rally would really make for a turning point.
SPX Futures WAY UP
The flat pattern call was accurate. I still don't know if it was wave 2 or wave 4. The rally off yesterday's lows appears to be a nearly completed, double zigzag correction. Since the time and amount (40%) of this correction is short relative the motive selloff, more time is needed to correct.
Looking at the open market trading tells a different story. The wave 2 flat is in it's final stages. A pop and drop is imminent.
http://charts.insidestocks.com/chart.asp?sym=esh2&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
INDU Technical Confluences
The INDU was boxed in by the convergence of the 20, 50 and 200 day moving averages. Pretty impressive.
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=0&mn=6&dy=0&id=p75635173805
SPX Futures UP, however...
The e-waves show a nearly completed flat over the past couple of days. I expect a pop and BIG drop entering several degrees of 3's.
http://finance.yahoo.com/q/bc?s=SPH12.CME+Basic+Chart&t=5d
The same flat e-wave count appears on the DAX charts.
http://finance.yahoo.com/q/bc?s=%5EGDAXI+Basic+Chart&t=5d
Near Term Top Forming
I've updated my 50 day INDU projections based on spectral analysis. The tops and bottoms in the markets occur before turning points in the projection by 5 to 10 days. The last projection indicated a top on Friday the 16th, 5 days after the actual market top. The projection indicates a near term top on Friday the 23rd, so the likelihood of downside next week from the close on Friday the 16th is pretty strong.
E-waves show multiple degrees of 1-2 have completed. Both structural (e-waves) and spectral techniques are singing the same song.
SPX 1-2-1-2 Cascade Waterfall Underway
Unless another wave 1-2 is under way, next downside target is SPX 1140-1150.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
More analysis this weekend.
Beautiful lab, Denmo. Our dogs would get along very well.
A Black Lab.
He's very smart. One evening my girlfriend and I were getting ready for bed. I asked her if the she had taken the dog p-o-t-t-y This was the first time I had ever spelled the word. The dog instantly gets out of his bed and sits directly in front of me. My girlfriend exclaims, "He can spell!"
Maybe I should get investment advice from him. ;)
10 Day Forecast Delayed.
A couple weeks ago I shared a 50 day market projection which called for a turn lower last week. While walking the dog last week, I came up with what might be an improvement to the spectral analysis algorithm. I've been so focused on the improvement that I have not updated the market projection. I plan on updating the projection this weekend when I have some more time.
Goldman Sachs GS E-wave
In the near term GS formed a flat wave from October 2011 lows until last week's highs. Wave c of the flat looks complete. Today's drop below wave c trendline is a good indication the next larger selloff has begun.
http://stockcharts.com/h-sc/ui?s=GS&p=D&yr=0&mn=6&dy=0&id=p00264926114
SPX Futures Manipulation
The following chart shows 5-6 spikes of 17-20 pts on no volume at equal intervals. Nobody is getting on board to sustain the rally. A quick glance at european markets shows a complete zigzag bounce, and the price is now rolling over.
http://finance.yahoo.com/q/bc?s=SPZ11.CME+Basic+Chart&t=5d
SPX Ending Diagonal Complete
This morning's open went below the start of wave 5 of the ED.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
SPX Short Term E-Wave Recount
It looks like the SPX is making an ending diagonal that started from Thursday's lows. This also favors the larger count from October lows a 3-3-5 FLAT correction, not the double zigzag.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
TheWaveTrader E-Wave Count
I found this on SafeHaven.
http://www.safehaven.com/article/23520/weekly-analysis
Oh Crap, Greece
The yield on 1 yr Greek treasuries is 340%, the worst ever in this "crisis". Bonds are selling for 22.6 percent of face value. The bond market believes nothing the European leaders are saying.
SPX in wave 5 off Monday's lows
Pop and Drop today.
SPX in wave 4 off Monday's lows
Maybe even starting wave 5. There should be a lot of consolidation (Wave b of C from October lows) around the 1230-1250 area the next couple of days.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=spx&time=3&startdate=1%2F4%2F1999&enddate=12%2F1%2F2011&freq=9&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=9&x=58&y=6
INDU 2 Month Forecast
A top should be in by the end of next week. Then the market rolls over. With both the 2 month (using daily close) and 12 month (using weekly close) forecasts pointing down, the markets are very likely to make a big move to the downside.
When I backtested the 12 month predictor using spectral techinques, it gave a HUGE buy signal near the 6500 panic bottom in March 2009, AND called for prices to rise above 10,000 within 1 year. Nobody in Mainstream media was making such a bold call.