Alevin, thanks! Greatly appreciate the time put into the explanation. Looking back at the chart, some significant gains could have been made holding in from the march low. Will keep this in my hip pocket, thanks again.
Hi Whipsaw-
This is same chart posted the other day, for ease of adding some interp and discussion per Whipsaw's request.
So this chart shows the movement of the SP500 (black line=the market index our C fund tracks), over the past 3 years. that's what the right side chart numbers represent.
The green line measures movement of the 10day moving average relative to the 20day moving average, each day. It is not a simple metric that one can easily run for themselves in a spreadsheet or charting software, userque tried awhile back to figure out the formula that creates the green line from the moving averages. Even he failed, because somehow it measures 10 and 20 day moving averages of each and every individual company in the SP500 and integrates them into the green line that you see.
The level of the green line is essentially a measure of volatility and risk from what I can understand, based on statistical movement above and below the mean of the 10day moveing average relative to the 20day moving average. the left hand side of the chart measures the ratio of the 2 moving averages. 1 would be the value when the 10 and 20day moving averages are the same value. that is the mean/average of the averages.
When the 10day moving average drops below the 20day moving average, you move down below 1, but the green line formula is such that the line doesn't drop until there is a measurable/meaningful statistical difference (-1 standard deviation) in the ratio of the 2 moving averages (e.g. .99), relative to their mean, in statistical terms.
The farther one gets from the mean of 1.0, +/- 1sd, +/- 2sd), the bigger the risk of a snapback to the mean or drop below the mean of the moving averages, ie, when you see a pop up of the green line to the 1sd or more rarely the 2sd level (November 2014, November 2015), the greater the probability that a drop is coming in not too distant future. It's not perfect on timing, just probability that it's in the air.
On the down side, when I see a -1sd is a probably decent entry point if out. -2sd level is even better, but as you can see from the drops last August and in January, it would appear to be best to wade in a chunk at a time, in case an aftershock drop is coming.
the charts I've posted previously have often showed the 5day moving average/10 day moving average chart as well as the 10x20day moving average chart. the shorter timeframe tends to give faster exit/entry signals both directions with the 1sd and -1sd pops and drops, but there also seem to be more whipsaw action in those charts so I've started focusing mainly on the bigger, slower signals for myself, since they tend to be longer lasting trend indicators. which fits the 2x/month move limits a bit better, in my mind.
Alevin, thanks! Greatly appreciate the time put into the explanation. Looking back at the chart, some significant gains could have been made holding in from the march low. Will keep this in my hip pocket, thanks again.
50% S, 50% C 06 Mar, was 100% G; 80% S 20% C COB 08 Jan '24; 100% G COB 14 Nov; was 100% C COB 31 Oct (Boo!); was 100% G COB 12 Oct; was 50% C, 50% S COB 22 Jun; Life is good!
You're most welcome! hope it makes a difference. I've missed the boat on those grand opportunities myself so far. waiting for the next boat to catch and take a ride. there will be other boats come along, that much we know.
Nice chart and explanation alevin!!
FS
FogSailing
Try to learn something about everything and everything about something.
When in risk of sinking, it's better to either get the bailing bucket working, or else offload onto the lifeboat (G), Cactus.
My first choice is to limit losses by making use of the lifeboat, it may take awhile before that next bigger boat comes along, and you've regained most of the losses in the meantime but very slowly, in the meantime, you're only hurt a little, if you make use of the lifeboat quickly enough.
others would prefer to use the bailing bucket (alternative methods for recouping losses-like hold bigger losses until market comes back up to meet them where they're holding pricewise), or do incremental new investment into the fund that lost ground.
Alevin, looks as though that early warning chart is no longer available, the Northman site is a mess. Just as you find something that makes allot of sense... I saw something about Northman taking his posts of twitter recently...
50% S, 50% C 06 Mar, was 100% G; 80% S 20% C COB 08 Jan '24; 100% G COB 14 Nov; was 100% C COB 31 Oct (Boo!); was 100% G COB 12 Oct; was 50% C, 50% S COB 22 Jun; Life is good!
Hi whip. northman site? Not sure what you are looking at. the site with the charts I've been posting has the website embedded at top right of the chart. Indexindicators.com. have no fear, charts are here-and they are indeed giving early warning on the 5 x 10 ma chart, I guess I should post charts a little more frequently. will work on posting when there is meaningful move. the 5 x 10 chart moved a bit last week but hasn't hurt anyone much yet. more to come tho, I'm thinking. We shall see, even with these indicators, whipsaws do show up, which is why I went to the 10 x20 ma chart to avoid whipsaws to extent possible.sp500 3y 5-10ma 8-3-16.png
The 10 x 20 ma chart is still hanging up there in midair at the first standard deviation, hasn't mean-reverted yet, like the 5 x 10 ma chart did last week. I'm waiting for the drop to at least the -1 standard deviation on the 10-20. Patiently. sorta. It may come in August just like it did last year.
Here's what the 10-20 chart looks like as of today-still. S&P 500 vs S&P 500 Relative to its 10-Day Moving Average (S&P 500 R10) | Stock Market Indicators
sp500 3y 10-20ma 8-10-16.png
most recent significant move in the indexindicators.com chart I watch closely. Waiting for a drop that will take it down at least to the -1SD marker before I even think about wading in.
Not posting any charts, things are still riding along the Mean at this point, still waiting for the drop below the mean. Meanwhile, tonight I'm watching a movie that's been out awhile, never watched it before tho had opportunities. The Queen, with Helen Mirin. She's a great actress, no question, but it's the subject matter that finally has my attention.
Movie revolves around how the british royal family dealt with public relations and internal emotions after Diana got killed in the car crash, back when I was in grad school-some 20+ years ago. Tony Blair was the PM. I learned something absolutely fascinating about QEII tonight that I never knew before. A one-liner that made the whole movie for me, and made me think wow, what a woman that Queen was/is. Showed a side of her I would never ever have known otherwise.
Scene-she (70-ish)goes off into the countryside in 4wheel drive on a dirt track by herself, a place she obviously knows well. Shortly after Diana died, while Elizabeth is trying to focus on family private grief and trying to help her grandchildren who had just traumatically lost their mother. The dirt track takes her to a ford across a river (where you have to drive through the water to get across). She proceeds to drive through and rams the transmission into a small log right before she gets the other side, vehicle breaks down, shallow water, not dangerous.
She calmly gets out, wades around to the front end and looks under to see what brought her to a dead stop. Then with mild irritation, pulls out her cell phone to call for help, tells person on the other end that the vehicle is broke down and what is broken. Male person on the end questions whether she knows what she's talking about. Elizabeth responds, "Of course I do! I was a mechanic during THE WAR, you know!" (WWII she means, emphasis added by me, not her). Wow, a woman of many talents! She did her part to win the war in more ways than one. What an insight into her character. I bet she knew how to pee off the back end of a pickup out in the sticks like a good country girl, too. I can picture it, having done the same a time or two, with male coworker on the front end doing the same.
Last edited by alevin; 08-28-2016 at 10:27 PM.
It's been a long long wait, but finally got signal I've been waiting for for toe-in-the-water entry point. Because these charts have more than once shown second lower dip after the signal, I'll only be going in partway, in the am, with second entry possible down the road a bit. will decide in the am how much of my foot I want to get wet on this first entry.
sp500 3y 10-20ma 9-20-16.png
toe in. 15C, 10I. enough to hold, not enough to hurt too much, meaningful amount to throw in later if a bigger drop comes.
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