Wednesday, September 28, 2016

2016.09.27 XOI.X Cycle Model Chart

2016.09.27 XOI.X Cycle Model Chart

The XOI.X model shows a continued right phase shift, and a major discordance between the predicted and actual index level. I note that a similar discordance occurred twice before, with Z-score > 6, on 1987.10.19 and 2008.10.15.  Both times the index resolved to the upside within 6 weeks.A previous chart of the model output is shown below and here on the blog.

2016.08.22 XOI.X Cycle Model Chart

1 comment:

Anonymous said...

Hi Paolo,

Great modelling once again, crude prices (WTI) has seen recent daily, weekly and monthly volatility expansions that are indicative of a sustained move to be expected - although the direction is unknown until breakout.

I'm biased towards the long side for numerous technical and fundamental reasons, but I recognise that equally valid reasons exist on the short side. I suspect that on some level, such a situation would create a sustained move in crude prices and XOI as a result, where one side is "convinced" that the statistics, numbers or macro evidence supports their prediction.

Your modelling is another extremely helpful piece of evidence in my overall considerations. I observed that XOI closed above 1,150 this week and has began to "turn" the relatively high Z-score back down. A sustained break of 1,200 should herald a technical breakout and confirmation of your model.

The target of 1,950 is "surprisingly" high but that is probably my psychological conditioning due to sustained low oil prices since $147 per barrel several years ago - especially with the dramatic falls through 2015.

I also personally have "surprisingly" high price targets for WTI that correlate with other analysts, but am sceptical of them even though I'm bullish and recognise the risks of being so. I cognisant that for as many well-evidenced or structured bullish arguments, whether technical or fundamental, there are equally solid bearish cases for being short.

Interesting times ahead!

Mr. Anon

PS: It was me that purchased your XOI chart two weeks ago - great stuff and a useful guide.