Dow Industrials - the next 6 months
Posted: Wed Oct 07, 2015 9:10 pm
Hi Everyone,
I had two people contact me about the UTM Forecaster today, so I took a look to see how things had progressed since the last time I checked the forecast out, and thought I'd post a quick update. Given that the board is now completely open, for those of you who aren't familiar with this tool, it's related to the techniques in the "Big Bertha" course, and uses those tools to generate a rough forecast. This forecast is NOT meant to be a turning point detector (although it works that way too), but is meant to give you an idea when to expect bull and bear markets. As long as you use it in that particular context, it's called every crash since 1900, which is mostly what I use it for, given how long term it can be.
Anyway, here's the chart:
The red line is the forecast line, and this particular solution was originally computed back in 2011, for use in the conference we had in London. The legs up through 2013 and 2014 were part of a larger bull pattern that began after the crash cycle starting in 2011. Notice that the nature of the markets in 2015 has followed along perfectly with what we expected.
Although I mentioned that it was not meant to forecast turning points to the day, it has nevertheless been doing that very well the last few years. More interesting than that is what happens when the points are early or late. In those cases, they tend to be 28 calendar days off the market each time, which is a VERY interesting number, especially to the Bertha crowd. That's because 28 days is actually 1/16th of 448 days, and we know that according to Bertha's rule of alternation, those are where we expect different points to end up when the market has to repeat itself, but doesn't want to repeat in the exact same way. I've marked a couple of those places off on the chart with the bar counter. (FYI - If you can't see the chart well on the board, you can right-click on it and open in a new tab to expand it out).
Anyway, looking forward, the forecast says that the overall pattern we're working in is a bear pattern now, and that we've just moved into the upward correction phase of that pattern. That will happen until Feb 25, 2016 (give or take 28 calendar days!! ), at which point things start looking seriously ugly. I'm not going to go so far as to call for a crash, since this is more broad-brush than anything, but I will say that I will be very surprised if we don't get some nice moves to the downside in 2016. Of course, there could always be a larger cycle at play that modifies this whole thing, in which case we'll see bear moves get converted to flats, which is still correct behavior.
Two anti-bear points to keep in mind:
1) 2016 is also an election year, and those tend to be quite bullish.
2) I'm making a public forecast, which means my odds at being correct go way down compared to if I kept my mouth shut and just traded this.
Anyway, all for now. Early 2016 will be a good time to do some analysis once we've got more data in hand.
Regards,
Earik
I had two people contact me about the UTM Forecaster today, so I took a look to see how things had progressed since the last time I checked the forecast out, and thought I'd post a quick update. Given that the board is now completely open, for those of you who aren't familiar with this tool, it's related to the techniques in the "Big Bertha" course, and uses those tools to generate a rough forecast. This forecast is NOT meant to be a turning point detector (although it works that way too), but is meant to give you an idea when to expect bull and bear markets. As long as you use it in that particular context, it's called every crash since 1900, which is mostly what I use it for, given how long term it can be.
Anyway, here's the chart:
The red line is the forecast line, and this particular solution was originally computed back in 2011, for use in the conference we had in London. The legs up through 2013 and 2014 were part of a larger bull pattern that began after the crash cycle starting in 2011. Notice that the nature of the markets in 2015 has followed along perfectly with what we expected.
Although I mentioned that it was not meant to forecast turning points to the day, it has nevertheless been doing that very well the last few years. More interesting than that is what happens when the points are early or late. In those cases, they tend to be 28 calendar days off the market each time, which is a VERY interesting number, especially to the Bertha crowd. That's because 28 days is actually 1/16th of 448 days, and we know that according to Bertha's rule of alternation, those are where we expect different points to end up when the market has to repeat itself, but doesn't want to repeat in the exact same way. I've marked a couple of those places off on the chart with the bar counter. (FYI - If you can't see the chart well on the board, you can right-click on it and open in a new tab to expand it out).
Anyway, looking forward, the forecast says that the overall pattern we're working in is a bear pattern now, and that we've just moved into the upward correction phase of that pattern. That will happen until Feb 25, 2016 (give or take 28 calendar days!! ), at which point things start looking seriously ugly. I'm not going to go so far as to call for a crash, since this is more broad-brush than anything, but I will say that I will be very surprised if we don't get some nice moves to the downside in 2016. Of course, there could always be a larger cycle at play that modifies this whole thing, in which case we'll see bear moves get converted to flats, which is still correct behavior.
Two anti-bear points to keep in mind:
1) 2016 is also an election year, and those tend to be quite bullish.
2) I'm making a public forecast, which means my odds at being correct go way down compared to if I kept my mouth shut and just traded this.
Anyway, all for now. Early 2016 will be a good time to do some analysis once we've got more data in hand.
Regards,
Earik