GOLD, GSPC and More Examples


08 Nov
08Nov

Example-1: GOLD 12 Months

Step #1:  loading the price history:

This process also involves price qualification (dividends, splits, alignments etc...)

The following picture shows the GOLD price until Jan 2018.

Our target: We want to check if the gold price will go up or down from here

Legend for the above picture and all other prediction pictures:

 - Blue side (left) is the price history.

 - Pink side (right) is the future prediction (may include out-of-sample price) .

 - Black line or Green/Red candlesticks is the price.

 - Optional Vertical red lines: Significant Dates, added manually.


Step #2: Adding the first layer: the yearly cycle:

We can see the projection line indicates a top on March 2018 and the bottom on August 2018:

Please note that the model does not provide exact price level indications, only timing.

Step #3: Verifying the performance of the yearly model:

In the following picture we added the real price for 9 months after it happened, without changing the forecast. This technique is used to verify that the forecast correlates with the real price, assuring that this is an effective forecasting method.

This example shows the very good correlation between the forecast and the real GOLD price. 

Price moved exactly as was forecasted: top on March 2018 and bottom on August 2018.

Step #4: Adding the 5th layer, the weekly model:

The 5th layer has a finer timing granularity and hence is more volatile (choppy).

The following picture shows GOLD forecast with the additional 5th layer of the  model.

We can see the finer granularity of timing on weekly basis, sometimes almost to the date. 

With this granularity, we can now decide to enter the market in two different dates: early on Mid-February 2018 or wait for additional confirmations and enter at End-March 2018.

The combination of a coarse but smoothed line (1st layer) and fine but volatile line (5th layer) projection lines provide a great tool to both visualizing the general trend and assisting with selection of the best timing for market entry-and-exit points. 

The two vertical date-points lines on the graph (marked in red) mark times when both trend lines, the Yearly and the Daily, change direction. These points indicate high probability dates of major change of direction, which we can forecast months ahead.


How can we benefit using the above forecast?

Loss Protection -  by understanding that the up-trend that was valid till Jan-2018 is going to change soon,  we can protect the investment from potential loses by taking action. 

Additional Gain - In this specific case, going short in the first marked-date and exiting on the second marked-date would have generated a 13.88% gain in less than 6 months. As shown in the picture below:



Why are there 5 layers in the model?

The 1st layer is the yearly cycles and serves as the major trend indicator. The 2nd, 3rd and 4th layers of the model represent Quarterly, Monthly and Bi-weekly trend lines in respect, as shown in the picture below. These additional trend lines provide additional opportunities for market entry-and-exit dates when a combination of lines change direction. 

The following picture shows all layers of the 5-layer model on GOLD. The additional information we can see is that the 2nd and 3rd layer point to a probable sideway move between May to June 2018.    


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Example-2: JD 6 Months


In the following example we can see the forecast for JD created Dec 2018 for 6 following months. The pink side includes price which is out of sample (not included in the calculations) but was added after to show the actual  correlation. 

We can appreciate both the general direction this stock is going to, and also the exact weekly timing we could use to decide on a trade setup.



Here is the same forecast this time with zoom-in. Here we can see every detail of the coming change of trend on weekly and monthly basis and plan ahead.

We can



Example-3: GSPC (S&P500) 8 Months

The forecast as was generated  Jan-2019:



And now with the resulted price:

With this kind of timing forecast at your side you can see where the market is going months ahead and enjoy the volatility and the upcoming crashes to your side.



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Example-4: IBM 6 Months

The forecast as was generated and presented on Jan-2017:

The result including the real price, as presented on July-2017,  6-months later, is shown in the picture below:

How can we benefit using the above forecast?

The forecast shows an up trend till March-8 2017 and then a down trend until July 2017. 

A possible investment option using the forecast:  (24% gain)

   Using the projection lines,  move forward with the following two transactions:

   Transaction-1: (9% gain) Buy on Jan 2017 (price=166), Exit on Mar-8 2017 (Price=182)

   Transaction-2: (15% gain ) Short on March-8 2017 (Price=182), Exit on July (price=154)

   In total, this method should have provided 24% gain

An alternative more conservative  investment: (6%loss)

   buy and hold:  Buy on Jan 2017 (166), sell at Jul-2017 (154) would have resulted 6% loss


Example-5: MU (Micron) 1-Year

The forecast was first published on June 2018 in this website. As we can see, the price follows the projection lines in high accuracy and provides trend change notifications weeks and months ahead.

Conclusion

As we can see from the examples above, that the 5-Layer model provides multiple opportunities for high probability trend changes and is a great decision-assisting tool for market timing.



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Please check the Bitcoin (BTC-USD) results for 7 months here.


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Index - The Indian NIFTY50, 4 Months Forecast


GOLD - 18 Months Forecast


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