This editing somehow did not get accepted for previous message.
Based on the chart patterns I am seeing, I strongly suspect bios are getting ready to move hard one way or another. Either they are going to break support like in January and thrust toward the lows (and maybe beyond - not as sure on beyond part as mentioned earlier) which is 15%+ down from here OR we break above the chart patterns. Going higher will be tougher as we have all sorts of fibs, previous prices, and chart patterns above. But we may be setting up a cup and handle to do the heavy lifting. In any event, a hard up move will take a little (not much) longer than a hard down move.
Based on my reading of the different quant scenarios I just ran, and based on the setup of the weekly squeeze indicator (still negative but would take immediate collapse to keep it from changing to positive momentum this week - still not a signal yet probably though), I would hazard the move is higher. The 10 week crossover is highly suggestive of ST higher prices this week (70% of the time). When combined with a doji within 4 bars, returns are mixed at 1 week, however, but highly positive thereafter in ALL cases (only 5).
Ok, running a 10 week moving average cross (similar to a 50 day cross but not exact) yields surprisingly positive results (surprising because when the result of the indicator flashing popped up, there were 48 examples in 10 years indicating the crosses do not last long). Average returns at 1 week were 1.6%, 4.1% at 4 weeks, 6% at 8 weeks and 7.3% at 13 weeks, all well above all periods averages. Results in 13, 8 and 4 weeks are all about 3-4% above all periods. 34 of 48 are positive 1 week later. At 13 weeks, only 10 were negative. The two worst were crosses right at the end of 2015 in December and November, both of which yield 28% crashes over 13 weeks. Interestingly, those two crosses yield very strong positive results at 1 week.
This last week was the only strong thrust week to get above the 10 week average.
Dojis are a pretty week signal overall. Results are bifurcated as one would expect but lots of near zero returns at 1 week, indicating mkt indecision not fixed with just one. By 8 weeks, the market has chosen a direction with only 10% (3 of 29) of results between between -7% and 3.8%. At 13 weeks the lowest positive return was 3.2% and the least negative negative return was -5.6%. BTW, the highest return at 1 week post-doji was this past week at 7.2%. Results have not really bifurcated that much by 4 weeks.
10 week moving average cross ups occurring within 4 weeks of a doji yield positive returns 100% of the time at 13, 8 and 4 weeks and are mixed at 1 week. There are only 5 examples. The minimum gain is 4% at 13 weeks, but that example had plus 7% at week 4. Another example had plus 6%. The rest were 10-15%.
Only 1 example occurred of the particular up-thrust candle just experienced within 4 bars of a doji. Returns were mildly negative out to 8 weeks but positive 5% at 13 weeks - 10% rally between week 8 and 13.
Jon |
