I keep a unique price calculation which shows me what the mood of any market is and it is flashing now that we have 85% of the decline needed to create a major bottom in the stock market. But what is fascinating is that normally a drop of this indicator by the amount that it has dropped would normally happen if the market dropped 9%-15% and yet it has only dropped 3% from its peak reading. What does that mean? It means the price action in the market is making people scared. The market drops violently off of the highs which makes investors watching the market fear that it is the "top". Traders, advisors, watchers, commentators get the same feeling too from watching the market each day. The news is negative: Falling earnings, a weak economy, the Fed can't get the economy going, the darn election, the terrible candidates, the bankruptcies, the world tensions, the rising price of oil, the huge budget deficits.... and so on.
Major market bottoms happen when the indicator "RgMov" drops 20 points in the DIA and the drop into September 2015 was -29.4 points (followed by a bounce of 19%) and the drop into February 2016 was 21.9 points (followed by a bounce of 19%).
I am not forecasting what the catalyst will be to a rally in prices here, but the obvious candidates are "earnings" and "election results".
Check out my other market forecasts in the SPX500, SPY, and DIA and see what comments you have. I do my best to provide unique insights that stem from extremes in sentiment as measured by the VIX index and a pattern that I have found that is reliable in that indicator, and from looking at the whole universe of supply and demand factors. I have also studied what happens when a new Fed Chairman steps in. Oddly enough, the market follows a similar pattern each time. I also consider margin debt since that has correlated to the market average price quite closely. I also look at EARNINGS RELEASES and find that the market clusters around those prices since that is the level where news hit the tape.
Time will tell.
Wishing you all well and success in trading-investing.
Tim
11:54AM EST 10/19/2016
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I find it interesting that AAII (Amer Assoc Of Indiv Investors) came out and reported that SENTIMENT IS AT ITS LOWEST IN YEARS when the same evidence was showing up in this indicator. This is the power of PRICE ACTION to generate the mood of the market. Reading a chart to understand psychology is what "pattern analysis" or "technical analysis" is all about. A good "RE-BRAND" of technical analysis could certainly be "PATTERN Analysis" (Just as "Behavioral Finance" is a "RE-BRAND" of Psychology).
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RuhailKhan
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"RgMov" mean??
CoffeeHero
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You can see it in practice in the chatroom "Key hidden levels". I highly recommend it. :)
RuhailKhan
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thanks
IvanLabrie
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Range Movement, it's the name of his proprietary trend analysis/sentiment indicator.
RuhailKhan
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Thanks.
timwest
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It's a unique look at price action which gives a different view of "how people feel" each day when watching and trading the stock. I derived it from my understanding of how people watch price action each day and how they set support and resistance. Just as "Money Flow" gives you a different look at what is going on under the surface of a stock or a market, this unique calculation "RgMov" looks at the trading "range movement" for the session compared to the previous session.
RuhailKhan
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how does it work and how can we use it Range Movement?
IvanLabrie
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It's part of an indicator pack, send a pm to Tim or me for more information.
timwest
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The way I use the indicator is in two-ways: 1. As a bottom indicator for the overall market. 2. As a trend indicator for any tradable. I look for 44-period highs to define an uptrend and I look for 44-period lows to define a downtrend. I think you could do this with any "non-range-bound" indicator, like money-flow, for example. I then look for corrections from the trend on an 11-period basis to enter trades with the larger trend. I think this is a sound way to trade overall and one that meshes with my psyschology and experience.