Econocasts

Wednesday, May 2, 2012

2012.05.01 Long Term DJIA $ Gold $ Silver $ 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


Visit econocasts.net for free sample trading model downloads.  

Friday, April 20, 2012

2012.04.20 Weekly DJIA $ Gold $ Silver $ 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!



Visit econocasts.net for free sample trading model downloads. 

Sunday, April 15, 2012

2012.04.13 Amex Oil Index




















The AMEX oil index (XOI.X) has been formally backtested so I have removed the "experimental" tag. It appears that while the time series for this cycle model is relatively short. there was enough cycle information so that it retains reasonable predictive value. The link for the prevous chart:  Econocasts business cycle chronicles: 2012.04.04 Experimental Amex Oil Index.


Visit econocasts.net for free sample trading model downloads.