Saturday, May 9, 2015

2015.05.08 XOI.X Cycle Model Chart

2015.05.08 XOI.X Cycle Model Chart

















The XOI.X cycle model suggests we may have passed a local maximum in the index price, and there is strong long term pressure for lower prices going forward into October 2015.  Looking at a previous iteration of the model shown below and here on the blog, note the divergence between the predicted and actual curve at the last data point. At the time, this suggested some downward pressure on the price index, which in fact occurred.



2015.02.24 XOI.X Cycle Model Chart

Thursday, May 7, 2015

2015.05.07 Silver Cycle Model Chart

2015.05.07 Silver Cycle Model Chart

















I was asked if these models provide trading 'signals.' The most reliable signals within a short time frame relate to the Z-score. With the usual caveat that this is not trading advice, an example of how to use the information from this kind of model can be seen by comparing the chart below, also shown on the blog here, where the Z-score approached 3 in the March 2015 time frame. The large divergence suggested a very high probability of a reversal, which in fact occurred within three weeks. Of course, this does not always occur, but it is a game of chance and risk management.  Currently, the model curve suggests lower prices.


2015.02.23 Silver Cycle Model Chart

Wednesday, May 6, 2015

2015.05.06 VIX Cycle Model Chart

2015.05.06 VIX Cycle Model Chart

















The VIX cycle model continues to suggest an increase in the magnitude of the index. As you can see below, the model has undergone a phase change going forward, nevertheless it is the same model run with updated data. The key point is that if you look at the previous VIX cycle model shown below, you will note that it achieved a Z-score > 3 which for this model strongly suggests a high chance of reversal.  The earlier model run is also presented here.


2015.03.20 VIX Cycle Model Chart