|2015.05.07 Silver Cycle Model Chart|
I was asked if these models provide trading 'signals.' The most reliable signals within a short time frame relate to the Z-score. With the usual caveat that this is not trading advice, an example of how to use the information from this kind of model can be seen by comparing the chart below, also shown on the blog here, where the Z-score approached 3 in the March 2015 time frame. The large divergence suggested a very high probability of a reversal, which in fact occurred within three weeks. Of course, this does not always occur, but it is a game of chance and risk management. Currently, the model curve suggests lower prices.
|2015.02.23 Silver Cycle Model Chart|