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Beyond Technical Analysis

Sometimes the market bring us amazing opportunitiesDollar Tree NASDAQ:DLTR is bringing us an historical buy opportunity. The $60 zone has been a major support since 2016 and now we have tested it twice. When this happens there are 2 scenarios: 1. A very big rally demonstrating that this support level is still strong (+40% minimum opportunity) . 2. A fast break downwards facing a very bad situation and a continuation of the bearish situation. How to Trade in this situation? There is a simple strategy to handle the risk in this situation where a win is almost sure. If you simply expect 100% of the position to return a 40%, you can be stuck here for a while and also lose your 5% as a Stop Loss. Try this: All positions have a 5% stop loss. 50% take profits at 5% 50% take profits at 40% This way, with a very very high probability your 1st half will make enough money (5%) to cover the Stop of the live position. So, you are in a risk free trade probably in just some days. Worst case? You keep losing a 5%! Want more trades with great risk return? Feel free to follow for daily trades! If you are still reading, thank you :)
NASDAQ:DLTRLong
by TopChartPatterns
So, what happens next? I am not sure if everyone is wondering the same as me, but after the election results and seeing the PA reaction, I wondered “So…. What now?”. A challenging and interesting question that I don’t think I or anyone can answer with the upmost confidence. But I wanted to take the time to write out a post that combines some statistics, a recap of my YTD ideas on SPY and where we are now, and what the future could look like. I also hope to provide some perspective into the PA. I know for many of you, trading is new and a new exposure. For me, who has been trading since 2018, this year has felt like the most bullish year I have ever traded. But when I look at the objective data, it actually spells a different story. So make yourself comfortable, its probably going to be a long post! Forging into another era of Trump I will save any political opinions for elsewhere. But its interesting that Trump has been re-elected as my nascence in trading arrived under the Trump’s presidency. And interestingly enough, my indoctrination into trading a Trump market was trading a bear market! I started trading during the 2018 bear correction when the market saw an initial flash crash that was pretty quick. It rallied back up to make another ATH and then did a longer bear correction where it actually corrected below the 500 day mean: As well, this was a mean reversion on the log linear scale: As a personal anecdote, I am still very much a permabear, despite always shilling long more or less in the current climate, and I feel like this permabear mentality arrived from the first market I traded being a bear market. From 2016 to 2020, the market had about 4 crashes, 1 bear market/correction and the rest was all bull market. No real difference from any other 4 year period. The only major difference during 2016 – 2020 period were the crashes were a bit shallower than other crashes traditionally, with the average being about 11% vs overall average being about 13% for SPY’s nascence. What this means going forward? We will likely see a few crashes and at least one bear correction in the coming years. However, perhaps the extent of the crashes and corrections will be muted, if, under the new presidency, USA is able to raise its GDP and boost economic production, which happened during the 2016 – 2020 term. What about the Statistics? Taking fundamentals and politics out of the equation and simply looking at what the market can tell us about itself, we can see some other interesting tidbits. Either before continuing or after reading, I suggest you check out a previous post I did about the outlook for the S&P based on historical behaviour, it turned out to be spot on: Let’s look at standardized returns on SPY: SPY’s current annual return is 0.27. We are not, by any stretch of the imagination, at historically high return levels. But, close.. ish. As you can see from the information in the chart above, the historically high return happened during the tech bubble and was 0.38, or 38%. SPY currently rests at 27%. If we take the average returns in general, no filtering for bearish or bullish years, we get 0.10 (rounded), or 10%. The average return of only bullish years is 18%. If SPY were to close at the average this year, we would see SPY retrace back to 557. The median is 19%, which would be a retrace to 561. Other Statistics applicable One thing that I have used a bit this year is a Monte Carlo simulation. Monte Carlo simulations take the normal distribution and randomly assign values from the normal distribution over x number of simulations. The simulation I have used consists of 200 simulations, using 2023 data, and plotting the average of the central tendencies: If we zoom in a bit closer, we can see where the simulations all agree of dips (red) and rallies (green): If we want to take the simulation in totality, it shows that SPY could, theoretically, see a high this year of 621 to 650: If you remember my earlier post, the annual ARIMA for SPY put the 80% confidence level at 591, and the 95% confidence level at 621. So 621 could indeed be a target observed into EOY. Probability and more probability! Let’s talk about probability for a second. To ascertain a more accurate assessment of probability, I am going to use data for SPX. Keep in mind, SPX and SPY track the same thing, so the returns will be identical. Because we are standardizing returns, they will also be the same value. Just to put your mind at ease, SPY’s approximate returns YTD are: 0.2634936. SPX’s are 0.2669222. The difference is statistically insignificant. So using SPX data, which we have since 1878 ish, let’s calculate the probability of closing at or above where we are now (>= 26%). The probability of SPX closing with 26% returns is 15%.The probability of SPX closing at 18% is around 26%. What this means is, we can’t say that it is likely that SPY will maintain these levels into EOY. Its not impossible, 15% probability is actually pretty big, a bit bigger than I expected. But the odds favour more a more reasonable close in the 18% area. If we want to take it a step further, and calculate what is the probability that SPX/SPY closes on a High. The probability that SPX will close on a high is 16%. Again, I am a little shook by this high percent! But obviously its not as likely as if it were to be 50% or 80%. Forecasts Don’t worry, we are nearing the end of this post. If you are reading to this point, thanks! I appreciate your interest in my random tangents of applying stats to markets! I want to briefly touch on Forecasts and outlooks. The market is naturally bullish. The U.S. has a new president that tends to have an emphasis on a strong economy. What is the most likely forecast? This is a complex question. I can accomplish a general forecast through using algorithms, but it doesn’t really take into account the economic influence that may be at play if we do see a strong economy into 2025. Remember I indicated that during 2016 – 2020, we did have crashes and bear market corrections, but they were shallower than average, likely mitigated by the strong economic policy during that presidency. Using a basic, machine learning algorithm to forecast the end result. So what I am going to do is use SPX again, because again more history, and run a forecast based on this period here: And I am forecasting it over the next 252 days, or 1 trading year from Friday (November 8th, 2024). The result actually puts us back into 2022, with this being the scaled plot of the forecast: And lastly, Targets! So, let’s quickly talk targets. Remember, our ARIMA 95% level on the year is 621. That means, 95% of closes should fall below 621. In addition, we also have a high probability modelled target at 564. This is hit > 85% of the time. And lastly, based on a seasonality assessment, our most similar year is 2021. This puts our scaled annual high at approximately 601. The targets we should absolutely see into EOY are: 564 and 601. The sequence of events remain up for debate. Conclusion: So, this is a long post, let me just give you the cliff notes of what to take away from it: Cap on the year should be 621. Retracement target should be around 564. High of the year should be around 601. There is about a 15% chance we close the year at this position or higher. There is about a 26% chance we close below this level but at or above 557. Overall assessment reveals a possible correction/crash. Its unlikely we see much lower than 564, even getting to 564 seems rather impossible at this point, but crashes come swift and unexpected I will be honest, I am not sure we see too much downside before EOY. The market is on a cocaine fueled rocket that shows no signs of slowing. I “feel” that its just going to go up until there is a reality check into the following year. But this is not based on the objective data, just my own “feelings” which are not all that reliable, haha. That’s it everyone! Thanks for reading, safe trades and happy rest of the trading year!
AMEX:SPY
by Steversteves
5
$BTCUSD Weighing in for it's Golden Bull RunBack in 2020 I posted the following chart : where I was looking for potential targets on BITSTAMP:BTCUSD during its bull run. The following lines are for specific weights of $XAUUSD. Yellow = 1 Troy Ounce of Gold Orange = 1 Troy Pound of Gold Dark Orange = 1 Troy Kilo of Gold I have added the next weight of OANDA:XAUUSD to the chart for future reference as backtesting the weights of gold seem to give some interesting clues as to where BITSTAMP:BTCUSD may end up in each Bull cycle. Pink = 1 Troy Stone of Gold
BITSTAMP:BTCUSDLong
by forclout
Darvas Box Strategy - Break out Stock - Swing TradeDisclaimer: I am Not SEBI Registered adviser, please take advise from your financial adviser before investing in any stocks. Idea here shared is for education purpose only. Stock has given break out. Buy above high. Keep this stock in watch list. Buy above the High and do not forget to keep stop loss, best suitable for swing trading. Target and Stop loss Shown on Chart. Risk to Reward Ratio/ Target Ratio 1:1 & 2 Stop loss can be Trail when it make new box / Swing. Be Discipline, because discipline is the key to Success in Stock Market. Trade what you See Not what you Think.
NSE:DCMSHRIRAM
by AnsariTV
Darvas Box Strategy - Break out Stock - Swing TradeDisclaimer: I am Not SEBI Registered adviser, please take advise from your financial adviser before investing in any stocks. Idea here shared is for education purpose only. Stock has given break out. Buy above high. Keep this stock in watch list. Buy above the High and do not forget to keep stop loss, best suitable for swing trading. Target and Stop loss Shown on Chart. Risk to Reward Ratio/ Target Ratio 1:2 Stop loss can be Trail when it make new box / Swing. Be Discipline, because discipline is the key to Success in Stock Market. Trade what you See Not what you Think.
NSE:CLSEL
by AnsariTV
ETH CME Futures Gap Filled Ethereum's CME futures gap, which had been present for around 90 days, has finally been filled. Typically, CME futures gaps tend to act as magnet levels, drawing the price back to fill these gaps over time. This time, ETH took about three months of consolidation before returning to fill the gap at the $3000 level. Filling this gap can signal renewed momentum. As history has shown, once a futures gap is filled, price can either continue the trend or establish a new support/resistance area around the gap level. Regards Hexa
CME:ETH1!
by HexaTrades
PIVX Long-Term Double-Bottom (A New Form Of Money)PIVXBTC is now producing a double-bottom sequence by activating the same support level from which it went bullish back in May 2022. Incidentally, this is the same range from where trading started back in 2016 for this pair. We are looking at a major long-term support. In 2022, in a period of just four months, PIVXBTC grew by a nice 880%. This was during a general bear-market but this time was also a recovery wave. At this same time many pairs produced a bounce only to continue lower after several months. If PIVXBTC can grow 9X within a bear-market, how much can it grow if the market is bullish with positive conditions? In those days, negativity was taking over Crypto and the sentiment was pretty bad, things are different now. Cryptocurrency is now mainstream and global adoption continues to expand. Cryptocurrencies are no longer something dark or scary, they are being recognized for what they are, a great piece of technology that people can use in many ways, and we use it and it works and it's great. Needless to say, we love Crypto so let's see what the chart has to say. We were talking about a double-bottom and the All-Time Low was hit mid-August, 2024. Just as new ATLs can be hit during bearish cycles, new All-Time Highs can be hit during bullish cycles. The biggest assumption we are making is that these pairs, the projects, are not going to be ultra, mega strong but instead that they will be capped or limited in some way, this can be a mistake. The future is unpredictable, life is unpredictable and patterns repeat until they stop repeating just as it happened with Bitcoin. Yes, we had clear and classic dynamics in the past but that was when the Altcoins market was in the dark. What will happen to the Altcoins market when the breaks are removed? What happens when we see the light? We will have to wait to see of course but we've seen literally hundreds and hundreds of pairs growing 20X, 30X, 50X or more. This isn't something rare this is actually the norm. Crypto is bought using fiat and fiat printing in the coming years is about to go out of control. How will this affect our market? How would this new form of money be affected if it becomes the main medium of exchange all around the world? There are billions of us and we are ready; oh yes! We are ready for change, we are ready for freedom, we are ready for abundance, for happiness for growth. We are ready for enlightenment and we want to see people do whatever they want. Life has been getting better and better for decades; no, centuries; life has been getting better for centuries and with technology, innovation and information, it is only going to get even better, so how humanity will look like in 3-4 decades we don't know. We just know that there is more prosperity now, there is more freedom now, there are more choices now than anything we can imagine a few hundred years ago. In the past it was only a few that had access to everything, now everybody can enjoy so much because of how fast we continue to evolve. The Internet is part of this evolution and Cryptocurrency is the latest development in a trend that is leading toward the unfoldment of the human soul. Imagine; free, sound, independent money; something never seen before. You can create your own money now... Amazing isn't it? Money used to be something owed by the few, now money is owned by the whole world. Namaste.
Long
by AlanSantana