Macro nodes and trendline for $SPX, using 10/10/02, 3/5/04, and 10/11/07 as seed dates.

Comment

Comment by BullBearGirl on October 22, 2009 at 6:12pm

Thanks Mark - I didn't expect you'd have to go to such detail and it is all appreciated.

Comment by Mark Lytle on October 22, 2009 at 1:53am

Hello Vincent and BullBearGirl,
For any set of three seed dates and their associated price levels it is possible to project time periods based on a two step math formula forward in time, where the X-axis is the exponent of the equation in question. These values are printed at the bottom of the chart. The most important exponents are .250,.500 and 1.000. In addition, the equations require a seed, and there are three of these, 1.272. 1.382 and a number unfamiliar to most, 1.317. Now the probabilities that trend changes occur near these, are similar to Fibonacci time projections, and in fact, these really are Fibonacci time projections which are corrected for 'seeming' time distortions occurring in the minds of the traders. Clearly the probability of a trend change at or near a 'node' is not anywhere near 100%, it is probabably around 30-35%, but much higher than random dates. Better odds occur when more than one index is at or near one of these time points. Currently both the $SPX and the $NDX are both close to the .500 exponent or nodes and are pressing against trendlines also related to this system. So the odds of a major trend change is reasonably high. Now given the long time periods in the analysis, these particular windows are also somewhat wide, that can't be helped, so this does not in any way minimize the value of conventional technical analysis, it merely adds another probability factor in favor of a change, in the same sense that declining volume is a warning in a rally, or a MACD crossover on weekly charts is a warning (which appears about to happen, by the way).

The three seed dates and their associated price levels are the data the equations need to produced the nodes and the trendlines. Ideally, you look for clean Elliott-style A-B-C patterns as your 'model' to pick the important three seed points for the analysis.

The short answer to your question then, is we are in a window for a trend change, again, as we were over a month ago. The window will last a bit longer. For moves over smaller time periods, the window is much smaller, and truthfully, probably more useful...

I have another blog, I have maintained for quite sometime now, which can be found by Googling the phrase 'Market Patterns and Charts' More explanations are there, and I let my hair down more over there. Here I'm a guest, so I'm a bit more restrained :}

Comment by Steven Vincent on October 21, 2009 at 9:40pm

What is the significance of the .500 node?

Comment by BullBearGirl on October 21, 2009 at 5:58pm

Hello Mark. Could you please let us know what meaning could be attached to this?

Thank you,
BBG