Happy October everyone!
Anyone else super excited?
I know I am. I already have a bunch of haunted events booked for this weekend and have been looking very forward to it!
October always makes me feel like I am 12 again.
Intro:
Anyway, to the point, what a week! And what a month really. Now, I was going to wait till Monday to update because as of Monday my math indicators will provide revised monthly and weekly targets based on opening price action, which it compares to historic data. These are the most accurate price targets, with either the bullish or bearish targets being hit 85% of the time, vs when I prospectively try to predict before this opening data, the accuracy drops to around 64%. So what I will do, is I will add to this idea on Monday with the revised targets.
But there is still a lot to talk about, having just finished the previous month and SPY having done some WACKY (Yet predictable) things AND there is a lot we already know about what next month should look like (based on math and technicals) so there is enough to know what to look for next month that we should discuss.
As well, I have done some further analysis into timelines and targets using TradingView's regression tool as a basis to isolate data in SPSS (for you newcomers, SPSS and SAS is the statistics software I use to map out my trades and provide you with these analyses). This, theoretically, should improve accuracy in timelines (emphasis added to THEORETICALLY haha).
So basically, probably will be a long post per ush, but I promise you, you will come out with useful trading information that should help you this month. Hopefully.
Recap:
So, this past week was quite volatile. Really difficult week to time entries, if you are a day trader.
This week made up for my last week, my last week ended green but it was stops front right and centre on my day trades, only for them to have been profitable trades to begin with had I just waited. This week would have actually been similar, however I decided to just trust the math targets here and it really paid off. A trade would massively go against me only to completely reverse and put me up 2 to 3% (on leveraged shares, the huge volatility makes day trading options not enjoyable right now) and hit the math target of the day. Very annoying but unfortunately there is a lot of FUD causing this volatility.
But let's get into what happened.
Weekly Recap:
So if you read the idea posted on Thursday, I found it very peculiar that SPY had not touched any of the weekly targets. Like I Said at the beginning of this idea, SPY hits these targets 85% of the time. So for this to be a 15% week.... possible but SUPER annoying.
Anyway, as expected, SPY finished the week with a BANG and went right for the bear targets just before close. And I caught it. So I am content.
We can also see in the chart, SPY is in a falling wedge type pattern and on Friday when it went for the bear targets, it actually started to lose this support and break down.
But, I am not overly concerned about this. The reason being these patterns have been super unreliable the last couple of months. Like I said going into next week, SPY was not double bottoming. It was fake, we would break right passed it and we did. This is what it does. So even if we do break down from this wedge type pattern, its not going to be a reliable indicator to go short, because its just going to find its way right back into this wedge. The reason for this is the heightened volatility. It makes technical entries extremely difficult to execute accurately because people are jumping in and out of positions not necessarily based on technicals, but based on fear of the greater economic and political circumstances of the world. When we are in these acutely volatile and uncertain times, it really throws off short term stock behaviour.
Monthly Recap:
So for the month of September, SPY clearly rejected tracing up to the bull targets. So it was a clear short down to the bear targets.
We actually ended up surpassing the bear targets, owning to the HUGELY negative news that came out this month. It was a month full of horrendous news.
Eventually, once it broke down below the bear targets, those bear targets then became resistance.
You can see that SPY attempted to reclaim the low trading range of the month, but those targets were strong in keeping SPY down and we ultimately formed this falling wedge as a result.
Looking at the daily chart, SPY remains in this megaphone pattern and we are heading for a test of the lower end of the megaphone, which is currently in the 320s.
If you remember an idea I posted a long time ago (which I can barely remember), 320s were actually a very long down the road price target based on time series. I can't remember the timelines time series said at the time, I will try to track down this idea and review, but yeah, that is likely where we are heading (but we will get into this later).
Right now, the predominate pattern that we are dealing with is this falling wedge. This is going to lead to our open of October and dictate the next steps for SPY in the short term.
Analysis, what to expect?
Let's break it down to what to expect on the weekly and the monthly timelines.
Weekly:
So, I am expecting a bounce at some point in the coming week. SPY can go a bit lower, all the way down to 352 ish before bouncing, but a bounce should be starting very soon and likely into the next week.
Probability and math targets favour a test of the 365 range which corresponds well with the top of this falling wedge.
Monthly:
Monthly is super interesting. I love the data for this month because it seems (key word, SEEMS) pretty straight forward.
So if we look at the monthly technicals (as my math models have calculated them, not necessarily how they appear on TradingView), we have the following:
RSI: 56.54
Stochastics: 0.19 (this is really rare on the monthly!!!)
Vol Ratio: 0.64
Z Score: -1.58
So what does that mean?
Well, first of all, in all of SPY's history, we have only ever seen a stochastic this low 1 other time!
And what happened that time?
Well, the one point in history when SPY had a monthly stochastic this low, SPY bounced aggressively, hitting the first high math high targets and then continued to sell.
Pulling out this info from the mode, the month this happened was February 2009. So let's look at that chart:
You see the setup is quite different, but essentially the month started bullish on a bounce and then ended with a continued sell off.
RSI, Vol and Z-Score all support both targets being hit. Which makes me think that we see a bounce and then continuation of selling into the month close down towards the lower megaphone support.
Modified Time Series:
So, what I decided to do, which is something I have done before, is do a modified time series. Essentially, to do this, I find a strong regression trend on Tradingview's chart using its regression tool, then I isolate for those days in my SPY math model to do a formal regression model. That way, I can have the math model actually calculate price targets and timelines using Tradingview's linear regression charting tool.
It may sound complicated, but I will show you the outputs so you can understand maybe a bit easier. This is what I charted on Tradingview:
And this is what the output looks like when I isolate in the math model:
So now that we have the identical setup, we can use this to calculate price targets and timelines.
So based on this regression analysis, next week SPY should be trading in the 360s to 370s.
SPY should be spending more time in the 350s in approximately 23 trading days. In 23 days of trading (remember approximation), SPY should technically be circling back to the 250s.
Very tight timelines and also kind of broad targets, but it is helpful to gauge behaviour.
Essentially what to take away from this, is if we bounce back to the 370s, know it won't be a long time spent up there and we will be circling back.
we also have a huge bearish catalyst mid month, being CPI! So keep that in mind.
Summary
Jeeze, I threw a lot at you.
So here is the summary:
- I will post real time targets on Monday as an addendum to this idea.
- Look for a technical bounce in the coming week.
- Remain short biased overall, but short term long biased.
- Immediate targets are a bounce to 365
- October events are fun!
That's it, thanks for reading the long wordy post and as always let me know your questions, comments and critiques!
Anyone else super excited?
I know I am. I already have a bunch of haunted events booked for this weekend and have been looking very forward to it!
October always makes me feel like I am 12 again.
Intro:
Anyway, to the point, what a week! And what a month really. Now, I was going to wait till Monday to update because as of Monday my math indicators will provide revised monthly and weekly targets based on opening price action, which it compares to historic data. These are the most accurate price targets, with either the bullish or bearish targets being hit 85% of the time, vs when I prospectively try to predict before this opening data, the accuracy drops to around 64%. So what I will do, is I will add to this idea on Monday with the revised targets.
But there is still a lot to talk about, having just finished the previous month and SPY having done some WACKY (Yet predictable) things AND there is a lot we already know about what next month should look like (based on math and technicals) so there is enough to know what to look for next month that we should discuss.
As well, I have done some further analysis into timelines and targets using TradingView's regression tool as a basis to isolate data in SPSS (for you newcomers, SPSS and SAS is the statistics software I use to map out my trades and provide you with these analyses). This, theoretically, should improve accuracy in timelines (emphasis added to THEORETICALLY haha).
So basically, probably will be a long post per ush, but I promise you, you will come out with useful trading information that should help you this month. Hopefully.
Recap:
So, this past week was quite volatile. Really difficult week to time entries, if you are a day trader.
This week made up for my last week, my last week ended green but it was stops front right and centre on my day trades, only for them to have been profitable trades to begin with had I just waited. This week would have actually been similar, however I decided to just trust the math targets here and it really paid off. A trade would massively go against me only to completely reverse and put me up 2 to 3% (on leveraged shares, the huge volatility makes day trading options not enjoyable right now) and hit the math target of the day. Very annoying but unfortunately there is a lot of FUD causing this volatility.
But let's get into what happened.
Weekly Recap:
So if you read the idea posted on Thursday, I found it very peculiar that SPY had not touched any of the weekly targets. Like I Said at the beginning of this idea, SPY hits these targets 85% of the time. So for this to be a 15% week.... possible but SUPER annoying.
Anyway, as expected, SPY finished the week with a BANG and went right for the bear targets just before close. And I caught it. So I am content.
We can also see in the chart, SPY is in a falling wedge type pattern and on Friday when it went for the bear targets, it actually started to lose this support and break down.
But, I am not overly concerned about this. The reason being these patterns have been super unreliable the last couple of months. Like I said going into next week, SPY was not double bottoming. It was fake, we would break right passed it and we did. This is what it does. So even if we do break down from this wedge type pattern, its not going to be a reliable indicator to go short, because its just going to find its way right back into this wedge. The reason for this is the heightened volatility. It makes technical entries extremely difficult to execute accurately because people are jumping in and out of positions not necessarily based on technicals, but based on fear of the greater economic and political circumstances of the world. When we are in these acutely volatile and uncertain times, it really throws off short term stock behaviour.
Monthly Recap:
So for the month of September, SPY clearly rejected tracing up to the bull targets. So it was a clear short down to the bear targets.
We actually ended up surpassing the bear targets, owning to the HUGELY negative news that came out this month. It was a month full of horrendous news.
Eventually, once it broke down below the bear targets, those bear targets then became resistance.
You can see that SPY attempted to reclaim the low trading range of the month, but those targets were strong in keeping SPY down and we ultimately formed this falling wedge as a result.
Looking at the daily chart, SPY remains in this megaphone pattern and we are heading for a test of the lower end of the megaphone, which is currently in the 320s.
If you remember an idea I posted a long time ago (which I can barely remember), 320s were actually a very long down the road price target based on time series. I can't remember the timelines time series said at the time, I will try to track down this idea and review, but yeah, that is likely where we are heading (but we will get into this later).
Right now, the predominate pattern that we are dealing with is this falling wedge. This is going to lead to our open of October and dictate the next steps for SPY in the short term.
Analysis, what to expect?
Let's break it down to what to expect on the weekly and the monthly timelines.
Weekly:
So, I am expecting a bounce at some point in the coming week. SPY can go a bit lower, all the way down to 352 ish before bouncing, but a bounce should be starting very soon and likely into the next week.
Probability and math targets favour a test of the 365 range which corresponds well with the top of this falling wedge.
Monthly:
Monthly is super interesting. I love the data for this month because it seems (key word, SEEMS) pretty straight forward.
So if we look at the monthly technicals (as my math models have calculated them, not necessarily how they appear on TradingView), we have the following:
RSI: 56.54
Stochastics: 0.19 (this is really rare on the monthly!!!)
Vol Ratio: 0.64
Z Score: -1.58
So what does that mean?
Well, first of all, in all of SPY's history, we have only ever seen a stochastic this low 1 other time!
And what happened that time?
Well, the one point in history when SPY had a monthly stochastic this low, SPY bounced aggressively, hitting the first high math high targets and then continued to sell.
Pulling out this info from the mode, the month this happened was February 2009. So let's look at that chart:
You see the setup is quite different, but essentially the month started bullish on a bounce and then ended with a continued sell off.
RSI, Vol and Z-Score all support both targets being hit. Which makes me think that we see a bounce and then continuation of selling into the month close down towards the lower megaphone support.
Modified Time Series:
So, what I decided to do, which is something I have done before, is do a modified time series. Essentially, to do this, I find a strong regression trend on Tradingview's chart using its regression tool, then I isolate for those days in my SPY math model to do a formal regression model. That way, I can have the math model actually calculate price targets and timelines using Tradingview's linear regression charting tool.
It may sound complicated, but I will show you the outputs so you can understand maybe a bit easier. This is what I charted on Tradingview:
And this is what the output looks like when I isolate in the math model:
So now that we have the identical setup, we can use this to calculate price targets and timelines.
So based on this regression analysis, next week SPY should be trading in the 360s to 370s.
SPY should be spending more time in the 350s in approximately 23 trading days. In 23 days of trading (remember approximation), SPY should technically be circling back to the 250s.
Very tight timelines and also kind of broad targets, but it is helpful to gauge behaviour.
Essentially what to take away from this, is if we bounce back to the 370s, know it won't be a long time spent up there and we will be circling back.
we also have a huge bearish catalyst mid month, being CPI! So keep that in mind.
Summary
Jeeze, I threw a lot at you.
So here is the summary:
- I will post real time targets on Monday as an addendum to this idea.
- Look for a technical bounce in the coming week.
- Remain short biased overall, but short term long biased.
- Immediate targets are a bounce to 365
- October events are fun!
That's it, thanks for reading the long wordy post and as always let me know your questions, comments and critiques!
評論:
Seems like 365 came sooner than expected.
Anyway, as promised, here are the targets:
Weekly
Monthly
Anyway, as promised, here are the targets:
Weekly
Monthly
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'In 23 days of trading (remember approximation), SPY should technically be circling back to the 250s.'
I meant 350s.
Sorry! To provide these wordy, in-depth posts involves sifting through charts, SPSS and SAS output data and Excel spreadsheets and looking at pages upon pages of numbers. Sometimes my hands and brain get confused when trying to write this contextually! I apologize!