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SP500 SMA's Easy Exercise

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scanit

Posted : Friday, December 2, 2011 1:37:36 AM

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Joined: 10/25/2005
Posts: 145

Positive seasonality remains high (3) through DEC 6th; on a scale of 0 to 4, with 4 = strongest / bullish. (see Jason Goepfert @ Sentimentrader.com)

Cycle strikes occur on DEC 8, 13, and 19, so a trend change is likely within this approximate time period. I'm anticipating the period 8th to 13th as most favorable.

On an SP500 long-term monthly chart using the TSV indicator, we find on the first day of DEC, that it's poised just above a critical "sell" line. We haven't been this low since JUL / AUG 2009 when we were coming up out of the lows from MAR 2009. Perhaps the most recent example of our current situation would be that of JAN / FEB 2008 when we also were heading down and poised just above the "sell" line.

CONVERGENCE AND DIVERGENCE
A basic exercise of reviewing the SP500's 25, 50, 200, and 500-day simple moving averages.
Tools: Worden SP500 daily chart with color-coded SMA's and vertical lines denoting the dates 25, 50, 200, and 500 days ago overlayed on the chart.
Simple moving averages are used in this instance as it's easy to advance the vertical lines one mark, following each day's close.

As of WED NOV 30 close:
SP500 = 1246.96
25-day SMA = 1232.79      25 days ago = 10-26-11 @ 1242
50-day SMA = 1206.41      50 days ago = 9-21-11 @ 1166.76
200-day SMA = 1265.89   200 days ago = 2-16-11 @ 1336.32
500-day SMA = 1230.45   500 days ago = 12-9-09 @ 1095.95

The SMA's are within 59.48 points of each other, and continue to converge.
If you're looking at the SP500 daily chart (described above) you will note the following:
1) the 500-day SMA will continue to slowly rise over the next several months. That's s-l-o-w-l-y !
2) the 200-day SMA is likely to continue declining over the coming 4 to 5 months. It peaked last on AUG 5th.
3) the 50-day SMA is likely to continue rising over the next approx. 11 trading days.
4) the 25-day SMA is likely to move laterally / slight decline over the next approx. 8 trading days.

As the 50-day SMA stands as the lowest (1206.41) of the 4 averages, and it is rising, the convergence process continues. So, the current spread between the 4 averages will decrease from the current 59.48 points. And inevitably, the divergence process will soon cease and a divergence will begin. If we review some previous examples of this process perhaps we'll have a better idea in understanding if the divergence will be one of rising SMA's or declining SMA's.

8-23-11 Spread between the 4 averages = 57.24, and the 200SMA was declining after AUG 5 peak.
10-4-10 Spread = 51.82, and the 200SMA was rising
6-18-08 Spread = 44.65, and the 200SMA was declining
1-16-08 Spread = 45.11, and the 200SMA was declining
12-21-07 Spread = 46.01, and the 200SMA would peak on 1-3-08
8-21-06 Spread = 26.49, and the 200SMA was rising
7-18-06 Spread = 22.76, and the 200SMA was rising
So, with the 200-day SMA currently sit atop the other 3, and declining, and projected to continue declining over the coming months, I will anticipate an SP500 which moves lower and accelerates downward once the divergence process begins. Time always reveals the answer.

fpetry

Posted : Saturday, December 3, 2011 6:30:41 AM

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Joined: 12/2/2004
Posts: 1,775

I like your commentaries on SP500, whether this most recent and very easy post of yours to follow and profit from, or your other enlightening commentaries with the Mars planetary formula and the Fulcrum Hypothesis method. Do you think combining all three into a method would be best for profiting from the market?

Are you familiar with the TAO 4 method? It seems to dovetail with your overall method. Highlights (teasers) of the method at shulzonmarketcycles.com:

“…technical aspect oscillator, (100% mathematical and astronomical by nature, astrological in its implications) and correlates with the SP 500…to greater than 1:10,000 against chance. The TAO 4 is theorized to be a Global Psychological Indicator. “

Also is the Planetary Motion Ratio method plugged into Fibonacci numbers. For example the Venus/Earth Planetary Motion Ratio is = 224.7 divided by 365.256 which is: 0.6151.

scanit

Posted : Monday, December 5, 2011 12:37:14 AM

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Joined: 10/25/2005
Posts: 145

fpetry: Every time you leave a comment like the one above (unsolicited, negative, mocking, etc.), you are only demonstrating for everyone your true nature, which is that of an uneducated, ill-mannered, unsuccesful trader who is frustrated to the point of attacking anyone whose ideas he doesn't comprehend or agree with. After you gave a semi-apology before, I told you I didn't have a problem with you, but you couldn't control yourself and had to start with the attacks again.

Once again, it's apparent that you are at best semi-literate, as I have previously stated that none of my posts have anything to do with "planetary" or "astronomical" concepts. Obviously, you're trying to sway opinion and mislead others by using these childish tactics. Your method of trying to dominate and control the conversation does not work, and people see you for the small and petty individual that you are. After you first attacked my comments regarding the Fulcrum Hypothesis, unprovoked by anything I posted, I responded in the language that you understand. And, I must say, you continue to exhibit sociopathic traits.

Unfortunately, you may very well dissuade others with good ideas from sharing, because they don't wish to deal with people like you.

Your negative criticism of Dr. Alexander Elder was yet again another demonstration of your tendency to attack others who you don't understand. I got a chuckle from that one. Dr. Elder was a guest of the Worden organization and you showed disrespect. Unbeknownst to you, there is a right way and a wrong way to disagree with someone without being offensive. You won't understand this, but, as a sociopath your brain is wired abnormally. See definition:

Sociopath noun Psychiatry .

a person, as a psychopathic personality, whose behavior is antisocial and who lacks a sense of moral responsibility or social conscience.

Now, as I stated previously, some may fault me for responding in-kind to your attacks, but anyone who has read the Fulcrum Hypothesis postings will see that you and jas0501 began the attacks. Anyone who knows me, knows I'm a peaceful, generally mellow person, but if you "throw the first punch" unprovoked, then I will finish the fight. My advice to you is, whenever you see a comment from me, just do everyone a favor and go on to the next one.

thekubiaks

Posted : Monday, December 5, 2011 3:09:29 PM

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Joined: 2/13/2005
Posts: 368

You guys crack me up

Bill Baker

Posted : Tuesday, December 6, 2011 7:37:58 PM

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Joined: 6/13/2011
Posts: 88

Sure Scanit. If this works for you that is fantastic.

In my observation the problem is that a 200MA or any Moving Average rises when it does, and declines when it does as well. They are averages, and therefore they don't predict anything.
There is no anticipation if you have to wait. We can all wait, but by the time you get the answer then is too late.

A MA will never diverge or converge unless it is shifted in time - you may want to keep that in mind, and assess what you see as what it is.

On a different note if you want to anticipate the market with more accuracy you should be looking at the following:
1 - TED spread
2 - Difference between the yields on the 10 yr US bond and the High Yield Bond
3- and finally the spread for CDS's

Until then good luck to you.

fpetry

Posted : Wednesday, December 7, 2011 6:12:23 PM

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Joined: 12/2/2004
Posts: 1,775

QUOTE (thekubiaks)

You guys crack me up

Plan Nine from Outer Space.

scanit

Posted : Friday, December 9, 2011 12:29:48 AM

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Joined: 10/25/2005
Posts: 145

Let's follow-up from the original post of FRI DEC 2nd above:

1) "Positive seasonality remains high (3) through DEC 6th" = ok, nothing wrong here, the SP500 actually held up through WED DEC 7th, so the seasonality guide worked.
2) "Cycle strikes occur on DEC 8, 13, and 19, so a trend change is likely within this approximate time period. I'm anticipating the period 8th to 13th as most favorable." = wow, here we are on DEC 8th and the SP500 has closed down (-2.11%), so let the trend change commence!
3) "On an SP500 long-term monthly chart using the TSV indicator, we find on the first day of DEC, that it's poised just above a critical "sell" line. We haven't been this low since JUL / AUG 2009 when we were coming up out of the lows from MAR 2009. Perhaps the most recent example of our current situation would be that of JAN / FEB 2008 when we also were heading down and poised just above the "sell" line." = this wasn't really predictive, more of an observation, but to update, we have now crossed below the critical sell line on this chart.
4) And on to the SP500's 25, 50, 200 and 500-day SMA's
The SMA's are within 59.48 points of each other, and continue to converge.
If you're looking at the SP500 daily chart (described above) you will note the following:
1) the 500-day SMA will continue to slowly rise over the next several months. That's s-l-o-w-l-y !
2) the 200-day SMA is likely to continue declining over the coming 4 to 5 months. It peaked last on AUG 5th.
3) the 50-day SMA is likely to continue rising over the next approx. 11 trading days.
4) the 25-day SMA is likely to move laterally / slight decline over the next approx. 8 trading days.

"As the 50-day SMA stands as the lowest (1206.41) of the 4 averages, and it is rising, the convergence process continues. So, the current spread between the 4 averages will decrease from the current 59.48 points. And inevitably, the convergence process will soon cease and a divergence will begin." = so, is there anything inaccurate in these statements either? Granted, we're just coming up on 1 week, but as originally stated, we're on-track. The SP500's 4 moving averages continue to converge with the spread now down to 45.683 points. Using the prior examples which were given, you can anticipate when the convergence process will end and the moving averages begin diverging away from each other.

"So, with the 200-day SMA currently sitting atop the other 3, and declining, and projected to continue declining over the coming months, I will anticipate an SP500 which moves lower and accelerates downward once the divergence process begins." = this statement shall stand as it was given.

thekubiaks = so glad this little squabble could bring some levity to your day! I was afraid we were boring everyone else to death. thanks

Bill Baker = "In my observation the problem is that a 200MA or any Moving Average rises when it does, and declines when it does as well. They are averages, and therefore they don't predict anything." Mr. Baker, I fear that you missed my point, so I guess I didn't explain it well enough in this limited format. If I understand your statement (above), then I disagree, as I do believe there is predictive value in looking at the SMA's as I originally posted. If you have the time and inclination to follow the steps on a chart, you will hopefully discover that by looking backwards you can uncover clues to your future.

A basic exercise of reviewing the SP500's 25, 50, 200, and 500-day simple moving averages.
Tools: Worden SP500 daily chart with color-coded SMA's and vertical lines denoting the dates 25, 50, 200, and 500 days ago overlayed on the chart.
Simple moving averages are used in this instance as it's easy to advance the vertical lines one mark, following each day's close.
As of WED NOV 30 close:
SP500 = 1246.96
25-day SMA = 1232.79      25 days ago = 10-26-11 @ 1242
50-day SMA = 1206.41      50 days ago = 9-21-11 @ 1166.76
200-day SMA = 1265.89   200 days ago = 2-16-11 @ 1336.32
500-day SMA = 1230.45   500 days ago = 12-9-09 @ 1095.95

Here's an analogy for you to ponder: Assuming that you commute a distance of several miles by car between your home and office, and you're thoroughly familiar with the route traversed, if your front windshield was made opaque and you had to drive using only your rearview mirrors, would you be able to make it home? We'll assume that the roads are clear of traffic, your car is fully insured, and you have unlimited time. I believe that you could do it. Thank you for your comments. Good luck to everyone.

scanit

Posted : Tuesday, December 20, 2011 1:10:39 AM

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Joined: 10/25/2005
Posts: 145

On the slight chance that anyone was following along from the original post:

You will note that MON DEC 19 was the third of the 3 cycle strike dates, and we were once again moving lower. With these 3 strikes falling within days of each other, anticipation of a significant trend change remains intact.
As to the SP500's 4 SMA's (25, 50, 200, 500-day) you will see that the spread between them got down to (34.89) on the DEC 15 close, and we are now likely in the beginning stage of the SMA's divergence. Reviewing the previous examples originally given

8-23-11 Spread between the 4 averages = 57.24, and the 200SMA was declining after AUG 5 peak.
10-4-10 Spread = 51.82, and the 200SMA was rising
6-18-08 Spread = 44.65, and the 200SMA was declining
1-16-08 Spread = 45.11, and the 200SMA was declining
12-21-07 Spread = 46.01, and the 200SMA would peak on 1-3-08
8-21-06 Spread = 26.49, and the 200SMA was rising
7-18-06 Spread = 22.76, and the 200SMA was rising

you will see that one must go back to 2006 to find a tighter spread.
So, with the 200-day SMA still sitting atop the other 3 MA's, and still declining, and projected to continue declining over the coming months, it remains most likely that the SP500 will be trending downward over the coming months.

diceman

Posted : Tuesday, December 20, 2011 2:19:39 AM

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Joined: 1/28/2005
Posts: 6,049

QUOTE (scanit)

You will note that MON DEC 19 was the third of the 3 cycle strike dates, and we were once again moving lower. With these 3 strikes falling within days of each other, anticipation of a significant trend change remains intact.

it remains most likely that the SP500 will be trending downward over the coming months.

How does: “trending downward over the coming months” mix with “ anticipation of a significant trend change?”

I would think if the SP500 is due to trend “downward over coming months” that would be a continuation of the late April early May top?

Is the “anticipation” the end of this downward move?

Thanks
diceman

scanit

Posted : Wednesday, December 21, 2011 2:27:44 AM

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Joined: 10/25/2005
Posts: 145

diceman: good question, semantics are always key to "the meaning" so sorry for the confusion. The "3 cycle strike dates" are taken from an SP500 daily chart, running independent cycles. Over the past few years, the appearance of concurrent strike dates (or within a few days of each other) has typically, but not always, resulted in the existing trend reversing within a couple of days. The trend had been upward in the days immediately prior to the period DEC 8--19, as well as from the early OCT low, thus my expectation for a return back downward. It's all a matter of timeframe isn't it, as everyone has there own definition of short, intermediate, and long-term.
The point with the moving averages was an attempt to demonstrate that you can gain insight to the future by incorporating the past. I did not think this would be a controversial topic.

How does: “trending downward over the coming months” mix with “ anticipation of a significant trend change?” As the SP500 has been trending upward from the early OCT low, and my anticipation that the cycle strikes will signify a reversal in trend, and the SMA examples I believe favor a move in the direction of the 200-day SMA (down)......my use of "significant" (there's that semantic thing again) refers to the expectation in the short-term for the SP500 to turn downward and continue the longer-term movement down from the early MAY high (which you noted).

Now, "who's on first ? " (old Abbott & Costello comedy)

sieandme

Posted : Sunday, December 25, 2011 2:05:23 AM

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Joined: 2/1/2005
Posts: 36

[and projected to continue declining over the coming months, I will anticipate an SP500 which moves lower and accelerates downward once the divergence process begins. Time always reveals the answer.[/QUOTE]

The Sp500 closed today above its 200 dma and will likely continue to "melt up" and retest the Oct high of 1285 maybe as high as 1300 before turning sharply lower 1Q2012 possibly even busting Octs low of 1074 late Jan/Feb. At this point, for me anyway, the risk is greater being long resistence of Octobers high than short. That is at 1285ish, there is less risk being short than long.

Looking at the Mar Spy quarterlies 120 puts.

sieandme

Posted : Sunday, December 25, 2011 2:07:36 AM

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Joined: 2/1/2005
Posts: 36

OOPS, "That is there is more risk being long than short."

scanit

Posted : Wednesday, December 28, 2011 12:31:49 AM

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Joined: 10/25/2005
Posts: 145

sieandme: thanks for the comments
[and projected to continue declining over the coming months].......to be clear, this was in reference to the SP500 200-day SMA line which peaked on AUG 5th, and I believe will continue trending lower, based on the SP500's price movement since.
So far I've been wrong on the concurrent cycle strike dates indicating a turn lower, as the SP500 has continued to hold up. Indeed, the SP500's four SMA's appear to have not completed their convergence process just yet.

Here's an interesting pattern:
If you closely follow the SP500, you will have noted there have been three times YTD when the SP500 closed on a round number (Example = DEC 22 close was 1254.00). In the two trading days immediately following these instances, you would also have observed consecutive closes of less than 1 point difference. This was then followed by a reversal of the existing short-term trend, and the SP500 moved approx. 100--135 points in a period of 14 to 20 trading days.

DEC 22 SP500 closed @ 1254.00 = round number close
DEC 23 SP500 closed @ 1265.33
DEC 27 SP500 closed @ 1265.43 = within 1 point of previous day
So, is the SP500 signaling an imminent reversal downward of 100 points or more as the previous dates, or is this simply an interesting anomaly? When reviewing the SP500 chart, one may also wish to keep in mind the possibility of fractal patterns in play. Good luck to all.

traderm30

Posted : Thursday, December 29, 2011 10:07:29 AM

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Joined: 1/12/2009
Posts: 235

Bill, do you even know how to profit from trading? Or the better question, do you actually make any money trading?

fpetry

Posted : Friday, December 30, 2011 6:28:22 AM

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Joined: 12/2/2004
Posts: 1,775

QUOTE (traderm30)

Bill, do you even know how to profit from trading? Or the better question, do you actually make any money trading?

Bingo.

fpetry

Posted : Friday, December 30, 2011 6:29:47 AM

Registered User
Joined: 12/2/2004
Posts: 1,775

QUOTE (fpetry)

QUOTE (traderm30)

Bill, do you even know how to profit from trading? Or the better question, do you actually make any money trading?

Bingo.

Opps, wrong reply, thought on different thread, sorry.

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