I believe freely traded
markets are like chaotic systems and , just like the weather, they are not
predictable with a high degree of accuracy, more than 3 or 4 days in the
future.
Obviously there are economic
cycles with generally fixed periods that influence market direction however
the relevant periods are best measured in weeks or months with error
distributions that make them poor trade decision tools, at least from my
perspective.
When I offer an opinion on
this forum it is based on tools with reliability ratings based on hundreds if
not thousands of cases over extended periods of time. Forecasts based on small
sample sets are , in my mind, just guesses and not advised for trading
decisions. Calculations showing correlation of events are meaningless unless
backed up by a statically significant sample size. Fibonacci calculations, for
example, have been shown to be unreliable when considering large sample
sets.
Also, there should be a
stated methodology behind the calculations that explains why they are
relevant.
All that being said, I offer
the following about the coming week.
After three days of trend
change warnings and a Near Impulse Date of 10/14 for all, the stock indexes
reversed on Friday although only the NASDAQ and Russell closed below Thursday
lows, confirming the reversal. Generally we can expect a three - four day
persistence in trend following the reversal. For Monday I generated 36
sell signals for the NAZ 100 and only 6 buy signals supporting expectations of
a lower low.My next Near Impulse date shared by all indexes is 10/27
so we may expect a downward continuation until then. We shall
see.
Jim White
Pivot Research
& Trading Co.
PivotTrader.com