AI
Saturday, May 18, 2013 1:07:48 PM
SPY: 4.5yr cycle projects top near here.
Tops are notoriously hard to call, and obvious in retrospect. One of the best methods, IMHO, is the change in direction of the moving average with length equal to half of the cycle period. This change occurs at a point where price had moved halfway from one extreme to the other, and this fact allows projection of the ultimate extreme.
I have posted various targets, which have been surpassed, and have moved on to the longest cycle which I use/watch. Also, a modification of the procedure looks rational: since the volatility at tops is less than at blowoff bottoms, I am using a projection based on the centered 7 week MA as a way to eliminate the "noise" from the short term movement. To this projected high, one must add back an amount for reasonable "noise" at the top. The Detrended MA (65) daily graphic shows the historical noise and allows an estimate for current use.
The low of the 7 week CMA was approx SPY 70, and the sign change for the 2.25yr cycle (in weeks) occurred with the CMA(7) at approx 118. The difference of 48, plus 118, gives a target of 166. The graphic for DPO(65) indicates 1-2 points is reasonable, although the max was approx 4. Target becomes 167-170 SPY.
I initiated shorts with a short term horizon based on the high RSI, but the longer term potential is definitely there.
Oddlot
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Tops are notoriously hard to call, and obvious in retrospect. One of the best methods, IMHO, is the change in direction of the moving average with length equal to half of the cycle period. This change occurs at a point where price had moved halfway from one extreme to the other, and this fact allows projection of the ultimate extreme.
I have posted various targets, which have been surpassed, and have moved on to the longest cycle which I use/watch. Also, a modification of the procedure looks rational: since the volatility at tops is less than at blowoff bottoms, I am using a projection based on the centered 7 week MA as a way to eliminate the "noise" from the short term movement. To this projected high, one must add back an amount for reasonable "noise" at the top. The Detrended MA (65) daily graphic shows the historical noise and allows an estimate for current use.
The low of the 7 week CMA was approx SPY 70, and the sign change for the 2.25yr cycle (in weeks) occurred with the CMA(7) at approx 118. The difference of 48, plus 118, gives a target of 166. The graphic for DPO(65) indicates 1-2 points is reasonable, although the max was approx 4. Target becomes 167-170 SPY.
I initiated shorts with a short term horizon based on the high RSI, but the longer term potential is definitely there.
Oddlot
********************************************************
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