Thread: JTH's Account Talk

Originally Posted by burrocrat

huh?

for us simple folk, could you please just say if the market is going to go up or going to go down?

Originally Posted by burrocrat

yes, all those things are there but it's greek to me.

how much are you going to charge for the premium service?

if i promise to never complain and dance in my shorts can i get a free one year trial?

Ever the student, never the teacher for me. One day I'll be retired, with 4 screens and a decent trading platform to work with, that day could not come soon enough!

Originally Posted by JTH

Using Technical Analysis to estimate price valuation

Nice work Jason.

well crap, rejected.

some days i don't know why i even bother putting my shorts on.

Originally Posted by JTH

Using Technical Analysis to estimate price valuation

Below is an example of how you can use 3 forms of technical analysis to estimate price valuation. When we tie these 3 methods together, we can forecast the potential price range and estimate if we should buy, hold or sell based on where prices fall within the forecast. The 3 methods used are Linear Regression, Fibonacci Levels and Parallel Price Channels.

For these estimates I chose hourly candlesticks over a 1-Month period. While there are roughly 156 hours in a 1-Month chart, I chose to use a 128-Hour Linear Regression Line because it moves a little bit faster within this timeframe and fits well within the TSP perspective. Everyone has there own preferences, the number does not matter as much as using the same numbers consistently when comparing charts with one another. I happen to have a preference for 8, 16, 32, 64, 128, 256 ect so I tend to use the number that best fits within the candlesticks I'm working with.

Using FreeStockCharts.Com I've added the 128 Linear Regression Line to the chart (the thick yellow line) this gives us the overall direction of price within this timeframe. Next, we identify the candlestick furthest away from the linear line. This is where price was most oversold/overbought, we can use this to determine the opposite direction needed for prices to equalize. Once we've identified this candlestick, we draw a yellow line from the the bottom (or top) of the candlestick to the linear line, this is at points A & B on the charts. After line AB is drawn, we then draw a line from B to C. This is the pivot-triangle, giving us 3 points of contact at ABC, creating the foundation from which the Fibonacci levels and Parallel Price Channels are drawn from.

Now that ABC is drawn, we extend out the green BC line with a white line, this gives us the bottom of the channel. Next we copy line BC and place it at point A, creating the AD line. Then we draw Fibonacci levels across the AB range (I've already removed them) and place a copy of the BC lines at the 38.2% & 61.8% levels, then remove the Fibonacci and identify those levels next to the parallel lines.

Wallah, now you have a LRFLPPC (Linear Regression Fibonacci Level Parallel Price Channel.)
- Each new candlestick moves the linear line thereby moving the channel. The shorter the timeframe, the shorter the forecast should be, in this case I've gone out to this Friday.
- The 61.8% to 100% channel is considered overbought or a sell, the closer we get to the top line the harder the sell.
- The 38.2% to 61.8% channel is considered in balance or equalized and is a hold, this is the sweet spot.
- The 0% to 38.2% channel is considered oversold or a buy, the closer we get to the bottom line the harder the buy.


For the S&P 500
- Prices are rising
- We are slightly oversold
- Lowest price forecast is rising from 1796 to 1822
- Highest price forecast is rising from 1854-1880
- A confirmed close below the bottom line changes the trend direction
Attachment 27218


For the Wilshire 4500
- Prices are rising
- We are slightly oversold
- Lowest price forecast is rising from 971-985
- Highest price forecast is rising from 1006-1020
- A confirmed close below the bottom line changes the trend direction
Attachment 27219


For the AGG (I don't like to put TA on AGG but thought I'd give you an example of a downtrend, so here it is)
- Prices are declining
- We are slightly overbought
- Highest price forecast is declining from 107.88-107.75
- Lowest price forecast is declining from 107.33-107.20
- A confirmed close above the top line changes the trend direction
Attachment 27220


To summarize:
- Add Linear Regression Line
- Draw line AB (furthest price distance to Linear Regression Line)
- Draw line BC and extend out (line B to furthest right of Linear Regression Line)
- Copy line BC and place at point A
- Draw Fibonacci Levels
- Copy line BC and place at the 38.2% & 61.8% levels

IF you click on FreeStockCharts.Com link it should take you to the S&P 500 chart I drew, from there you can play with it.

Take care...Jason

Hi Jason, Thank you so much for sharing this technical analysis!! Wow..it's great! Now when price is in the sell area do you choose to get out anywhere in that zone or just get out when it looks like it is turning down within that channel?

Originally Posted by DreamboatAnnie

Hi Jason, Thank you so much for sharing this technical analysis!! Wow..it's great! Now when price is in the sell area do you choose to get out anywhere in that zone or just get out when it looks like it is turning down within that channel?

Thank you. Within the realm of TSP that's a tough question to answer, it is dependent on your entry, your IFT status, where price is within the channel and the point-width of the channel. Let's estimate the current price is 1838 and look at the percentages in relation to the Fib-Channel levels. If you had a bad entry @ 1838, then you're risk is weighted to the downside (the downside potential weighs more than the upside potential.)

1838 to 100% @ 1850 is 1.03%
1838 to 61.8% @ 1832 is -.16%
1838 to 38.2% @ 1818 is -.92%
1838 to 0% @ 1796 is -2.28%

Conversely, if you had a better entry you'd have more room to accept more risk. The trick is to sell just before the buyers are exhausted and to buy just before the sellers are exhausted. This isn't easy to do within the confines of TSP, but if you keep an eye out for spikes in volume, watch for overbought/oversold conditions on the bollinger bands, channels and Fibonacci levels and do this across the major indexes, it can at the very least keep you out of trouble.

Light volume floats markets, here's a 30 minute chart of SPY illustrating the light volume in the markets.

Attachment 27226

A lot of volume may be migrating to the ETF arena.

I've been mentioning the gap fill @ 1844.91

Here is the 1-minute chart showing today we breached and rejected this area 6 times...

Attachment 27232

Originally Posted by JTH

Thank you. Within the realm of TSP that's a tough question to answer, it is dependent on your entry, your IFT status, where price is within the channel and the point-width of the channel. Let's estimate the current price is 1838 and look at the percentages in relation to the Fib-Channel levels. If you had a bad entry @ 1838, then you're risk is weighted to the downside (the downside potential weighs more than the upside potential.)

1838 to 100% @ 1850 is 1.03%
1838 to 61.8% @ 1832 is -.16%
1838 to 38.2% @ 1818 is -.92%
1838 to 0% @ 1796 is -2.28%

Conversely, if you had a better entry you'd have more room to accept more risk. The trick is to sell just before the buyers are exhausted and to buy just before the sellers are exhausted. This isn't easy to do within the confines of TSP, but if you keep an eye out for spikes in volume, watch for overbought/oversold conditions on the bollinger bands, channels and Fibonacci levels and do this across the major indexes, it can at the very least keep you out of trouble.

Thanks...I got in around 1799 but not by much...just 10% on 2/10. So looks like not much at risk per your analysis.

Looking at SPX (link below). Looks like MACD is still positive and RSI not overbought, but full stochastic is looking close to possibly going downward..not enough to know. With only one IFT left, will probably stay in for longer term, but would like to get out of F. Price on SPX is above mid-point on Bollinger bands..and even above 10 day EMA....so looks good so far...but BBs are wide so I should think there could be a little consolidation before they contract..hoping that is to the upside. Wish I'd gone in a but more but risky just coming out of the January lows.

Print SharpCharts from StockCharts.com

Where does the w4500 go from here?
Does it break through that 1009 mark to set a newer limit? Or does it act like the past recently and give back 3/4 of yesterday's gains today? Futures are bad right now... So I am assuming losses are possibly on the way

i also noticed a lot of people going to G fund for safety. Is it fear or the right thing to do? I hate to jump out of this market, as the fear is not being able to jump back in. Already did that a few times this year.

Thank you kindly for Charts 101. Taking the time to tutor us is remarkable.

Thanks again

-Geaux