Everyone's aware of the financial markets crash of 2008 so how did it look under the Chaos four lines (hounds) analysis? Reviewing that helps shed light on the current picture because in the markets everything repeats all the patterns over and over again in all time-frames sort of like waves on a beach they come on the sand and retreat over and over again.
So below chart, as early as 2007 the chaos white line crosses under the purple and constitutes a sell short signal Again, to repeat, the need to be short signal delivered a year early AND the signal remained bearish, with white continued being below the purple all the way down, and crossed up over the purple pretty much on the dot in the bottom - in 2009. The white line subsequently crosses below the purple again in 2010 So let's calculate the profits with this-
If traded per the Chaos four hounds signals, a S&P ES short held (and rolled over each contract period) would garner the following points:
Short 08/01/2007 ES 1340, Cover 03/12/2009 ES 570 = 770 PTS
Long 03/12/2009 ES 570, Sell 06/29/2010 ES 889 = 319 PTS
This is why it makes very good sense to pay close attention to the chaos lines cross overs in higher time-frames trading the rewards are huge, signals extremely early and precise, and while these chaos lines are computed algorithms, they are humanly easy to analyze representations of the market
So is this the holy grail for long term trading? Not quite because though it would be profitable overall when carefully traded, it can be wrong too but in an instructive way The problem is sometimes the cross-overs do not signal a true reversal but rather a major correction only.
The cross-over pattern suggests something like the famous Elliot Waves that everyone knows they are on to something important but leaves a bit to the imagination with voodoo wave 1, 2, 3 who knows what wave it is now? Well perhaps the Elliot theorists are noticing these chaos lines white-purple crosses, consider the period prior to 2008 and looks like 2 fake crossovers - wave 1 and wave 2 in the Elliot Wave theory and then finally end Wave 3 is the real reversal? Many patterns are evident in these charts not merely the white-purple lines cross over is the tip of the ice-berg really there are other lines drawn there too that reveal market structures along with the chaos levels on the main - top - portion of these images
The present picture as of 06-28-2015 looking like the end of "Wave 3" is imminent implying a S&P decline-
So below chart, as early as 2007 the chaos white line crosses under the purple and constitutes a sell short signal Again, to repeat, the need to be short signal delivered a year early AND the signal remained bearish, with white continued being below the purple all the way down, and crossed up over the purple pretty much on the dot in the bottom - in 2009. The white line subsequently crosses below the purple again in 2010 So let's calculate the profits with this-
If traded per the Chaos four hounds signals, a S&P ES short held (and rolled over each contract period) would garner the following points:
Short 08/01/2007 ES 1340, Cover 03/12/2009 ES 570 = 770 PTS
Long 03/12/2009 ES 570, Sell 06/29/2010 ES 889 = 319 PTS
This is why it makes very good sense to pay close attention to the chaos lines cross overs in higher time-frames trading the rewards are huge, signals extremely early and precise, and while these chaos lines are computed algorithms, they are humanly easy to analyze representations of the market
So is this the holy grail for long term trading? Not quite because though it would be profitable overall when carefully traded, it can be wrong too but in an instructive way The problem is sometimes the cross-overs do not signal a true reversal but rather a major correction only.
The cross-over pattern suggests something like the famous Elliot Waves that everyone knows they are on to something important but leaves a bit to the imagination with voodoo wave 1, 2, 3 who knows what wave it is now? Well perhaps the Elliot theorists are noticing these chaos lines white-purple crosses, consider the period prior to 2008 and looks like 2 fake crossovers - wave 1 and wave 2 in the Elliot Wave theory and then finally end Wave 3 is the real reversal? Many patterns are evident in these charts not merely the white-purple lines cross over is the tip of the ice-berg really there are other lines drawn there too that reveal market structures along with the chaos levels on the main - top - portion of these images
The present picture as of 06-28-2015 looking like the end of "Wave 3" is imminent implying a S&P decline-
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