Hybrid Timing Model for Analyzing Stocks and Indices
How To Read the Graphical Representations:
There are 2 rows in each graphic for the 5 (or 6) issues listed below. The first row is for the intraday analysis. The days are each separated by thick vertical black lines. The second row shows the daily forecast of the model (unfiltered) for 7 days. It is computed in a way that is analogous to the way the intraday forecasts are generated. Naturally, the color scheme is such that green indicates up and red represents a down trend.
The intraday data is such that there are 3 analyses for one day. The model makes the forecasts for the end of the following daily time markers (10:30, 1:30, and 4:00). The hourly data is not used by itself but instead is coupled with the daily data to generate the current trend. This is important. If you don’t understand this, you may end up misrepresenting the results.
I have decided to transform the presentation of the data in this manner because I need to rationalize what I am doing with regards to the trading I am and will be conducting. From the options perspective, there are six issues that I may trade. They are AAPL, GOOG and AKAM. The other 3 that I would trade are SPY and QQQQ and IWM. I am not covering SPY and QQQQ directly because the 2 indices I am covering are SPX and NDX and they form the base for the 2 ETF’s. SPX is the ‘cash’ index (S&P 500) for SPY. The QQQQ is a surrogate of the Nasdaq 100 which is the index NDX. To get these 2 indices on Yahoo you need to enter ^SPX or ^NDX.
NOTE: There is only one graphic to view for each issue. At the left hand side of the graphic on the intraday row I have added a box with an arrow. This represents the ‘current trend’ based on the coupling of the intraday and daily models. Anticipated reversals are indicated by white arrows on the graphics. To arrive at the current trend we require that the same color in both the intraday and daily align with each other.