Today was unexpected based on a single day's projections. If we had taken a longer term view - should it have been though? Look at the 34TD cycle. It should incorporate all the movement of cycles less than 34TDs. Counting today it has been down 9 days. At an average of 6.25 points a day that is about 56 points of downside potential. From the prior peak that would put the market around 1236. Based on this a big
down day was baked in (just a matter of when). Of course, we overshot even that. With that overshoot we may be set up for an up day. Question is when? You miss a single data point like this and your projections are apt to miss at some point. At this time we have about 7 points of upside baked in (1236 - 1229) at the open (about 1 point at day's end : 1236 - 6.25 - 1229). So keep this in mind as we proceed forward.
Tomorrow the 34TD cycle is down, the 11.2TD cycle is down. The 22TD cycle is up and the 5.6TD cycle is up. The 2.8TD cycle should bottom before noon and add a point or so to the upside. Based on this tomorrow is projected to be up almost 12 points (which would put us above the 34TD average for 10 days down of -62.5 point to around 1230).
Here is the SPX swing cycles (my interpretation):
GL traders. Do your own analysis.
Based on your posts re VIX and a 47.5% move, have we had and such an extreme move so as to cause a buy signal.
ReplyDeleteTom - we had the DOW down 3 consecutive days in a row, but not all averages. I would call that a "maybe" confirmation of a trend change to down, but would prefer to see 3 consecutive down days on the DOW/SPX/NAZ to declare it confirmed.
ReplyDeleteForget my last post re VIX. I think I have it right in my mind now. I had it backward in my mind. We need a 95% move up from the recent low on the VIX to have a reversal buy signal. A 47.5% move from a top to bottom would constitute a sell signal.
ReplyDeleteThanks. I understand the three day confirmation, I just had the direction backwards. ADD or ADHD kicked in for a while there.
ReplyDeleteOne other indicator may be helpful, although I don't believe it works all of the time, and again is not fool proof. I think the approach set forth by Kevin B. Martin at http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3568637 may have some validity. I myself have found $NYMO with a five day EMA to be sometimes but not always helpful in high volatility times. See my configuration of such a Chart at http://stockcharts.com/h-sc/ui?s=$NYMO&p=D&b=5&g=0&id=p53740897403
ReplyDeleteYeah - the VIX can be confusing since it moves inverse to the averages. Not having a confirmation (3 days in the direction of the trend change) can result in getting (IMO) whipsawed.
ReplyDeleteUsually this is longer term trend signal as the VIX normally can go several weeks (to months) between signals and does not always give a signal at a trend change, but it seems to be very reliable when it does give a signal.
Inlet shouldn't there be half, quarter, and eighth cycles for the 34TD just like the 22TD. If this were factored in wouldn't that suggest the Top of a 17TD and Bottom of a 8.5 day cycle?
ReplyDeleteThe 34TD (33.75 actual) cycle, 22TD (22.5 actual) cycle, 11.2TD (11.25 actual) cycle are based on Gann's 8ths of 90. I use 34, 22, 11.2 to simplify reference to these cycles. That is the basis for these cycles. A half or a fouth of 34 does not fit the pattern of 8ths of 90.
ReplyDeleteIf there is a basis for a 17 or 8.5 TD cycles I am open to considering that possibility if there is research and sound analysis supporting them from knowledgable sources.
Hope this helps explains my rationale.