2012.06.01 Weekly DJIA $ Au $ Ag $ Oil

 

XOI.X is probably oversold by a small margin and may revert if you believe the positive z-score. The DJIA, gold and silver predictive curves suggest more downward pressure. There is no cyclical indication of a bounce which usually occurs after dramatic falls. I hope you are all enjoying the first weekend of June.  This week, Venus does the second transit of its cycle across the solar disk

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2012.06.01 Monthly DJIA $ Gold $ Silver $ Oil

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2012.05.18 Weekly DJIA $ Au $ Ag $ Oil

The long term predictive curves for  the DJIA, Gold, Silver and XOI.X show continued downward pressure. The short term models suggest that towards the end of the May silver should experience an upward correction before gold, and of a higher magnitude  if the models hold. As usual, please note that the long term DJIA model is in limbo at the moment because it called a top 8 months early. Nevertheless, the short term DJIA model which is a child of the long term DJIA  model seems to be holding well.

Please note that there is some good information on volatility here. My long term VIX  model suggests increasing volatility for a period of time.  I am going to enjoy a nice solar eclipse in a couple of days. I hope you all have a great weekend!


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2012.05.11 Weekly DJIA $ Au $ Ag $ Oil

 

The gold and silver models suggest continuing downward pressure on prices for the rest of May, as does the very short term DJIA model.  The long term DJIA model clearly shows the end of the "smooth fractal anomaly" and a more usual pattern in the price curve.  I would not trust the long term model for estimating price magnitude but it may still be useful for timing of major reversals.  It is presented to be complete, and also because it is "parent" to the very short term DJIA model, which seems to be working well. The Amex Oil model is performing well and suggests a small up reversal at the end of May, followed by increased downward pressure.

In the next few weeks, portions of the AI trading models for SPY, VXX, TVIX and UVXY will be available for inspection by readers. Stay tuned and have a great weekend!



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2012.05.04 Weekly DJIA $ Gold $ Silver $ Amex Oil

The long term cycle model for the DJIA continues to underestimate the price of the time series, but the short term cycle model seems to be working reasonably well.  For my comments on the long term model for the DJIA please refer to previous posts. The increase in VIX suggests that maybe, just maybe we might be heading for a major correction in the equity markets.

The other three models are performing well. The short term silver cycle model suggests a small rise in silver prices next week, followed by a resumption of the decline.

Enjoy the very large Full Moon this evening, along with the eta Aquarid meteor shower, and have a great weekend!




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2012.05.01 Long Term DJIA $ Gold $ Silver $ Amex Oil

These cyclic structural models are not designed to be used as trading models. These models perform with less error on the time scale compared to the price scale, and are best interpreted by putting more credence in the turning points rather than actual prices. With that in mind, here is the long term DJIA model, which has been performing poorly as a short term indicator of market movements. When backtested at decadal time scales, the DJIA model still has some validity, so I am showing the chart which must, by necessity,  include the shorter time scale parameters. There is always the possibility of a "6-sigma event" in terms of short-term model divergence, which will become apparent with time if true. The event itself may reflect the concerted effort of Western Central Banks to push forward the "Minsky Moment" by recursively capitalizing banks that have lost assets. Or, it could just be a lousy model.

Both gold and silver models are performing well in the short term, so it is interesting to look at the long term picture. I extended the time range to 2024 to capture the parallel behavior of the gold and DJIA models. To engage in a bit of fantasy - it makes a nice story that somewhere around 2016, instead of being issued as debt, large quantities of money are added to the world economy by concerted monetization of government  held bonds. I could see the rise in gold and DJIA as a reflection of a Von Mises "crack-up boom." Thorsten Polleit has a nice essay on the subject.

I don't have any reasonable ideas regarding the divergence of gold and silver, however, these are just models so reality may intervene!

Previous long term predictions:   2012.03.30 Monthly Long Term Predictions: DJIA $ Gold $ Silver


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2012.04.27 Weekly DJIA $ Gold $ Silver $ Amex Oil

   

Click on the charts to enlarge.

The short time frame  DJIA cycle model suggests continued downward pressure on prices for the upcoming month of May.  The longer term time frame cycle model which is shown on the first chart of this post is most likely broken at least for prediction time frames of less than 9 months.

The gold, silver and Amex Oil Index cycle models all suggest lower prices ahead for both metals and oil.

The weekly update was late this week - occasionally I take a week off!


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2012.04.20 Weekly DJIA $ Gold $ Silver $ Amex Oil

I developed the very short time frame child cycle models to deal with short term anomalies in the time series due to the likely consequences of  daily robot manged trades. I think that the DJIA very short term time frame model had the most benefit - since the last few months have been characterized by non-linear parameters in the DJIA time series that are highly deviant from the usual "degree of randomness" or "predictability."

All three Gold, Silver and Amex Oil cycle models are performing well. Silver may experience a bounce to over $33 in the next week or two before downward price pressure resumes.  If you are under clear skies - enjoy the Lyrid meteor shower over the weekend!



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