Hybrid Timing Model for Analyzing Stocks and Indices
A New Beginning
I wrote the following text on Saturday, Jan. 5, 2008. I want it to be handy as I demonstrate that winning in the markets is possible. I also want it to be available when B. Obama becomes President.
Ouch! Friday (Jan. 4, 2008) was painful. Let me start with a recap. The model had reversed to the upside at the close on Thursday (the 3rd). And then came Friday. So what happened? While it must be understood that nothing is always right, there is something positive that came out of this experience. As a matter of fact, I consider it to be ‘very significant’. Let me tell you a story before we go into details.
In late January 1986, the Space Shuttle (SS) was to be launched on a cold winter day. Remember, I am an engineering professor with specializations in heat transfer and fluid mechanics. I am a keen enthusiast of NASA and the SS. NASA and Morton T. (the contractor) knew the solid boaster rockets had a ‘design flaw’. They were working on finding a solution to the problem. They knew they had O-ring seals that became too rigid in the cold weather and under some circumstances caused the leakage of hot combustion gases. That in itself would be OK. However, should a stream of hot gases be directed onto the main rocket containing oxygen and hydrogen – that might in an exceptional case cause a ‘problem’. Well, I think most of us (at least the older crowd) know what happened to the Challenger SS. As a result, the SS fleet was grounded for 3 years. The O-ring problem was fixed – it was relatively simple to do. They implemented 2 O-rings so that if one leaks, the second should contain the leak. Thus, one O-ring was checking on the other. In addition, NASA implemented a set of emergency ‘evacuation’ procedures.
Why do I bring this up at this time? Because Friday was the equivalent of the ‘SS incident’. I knew I had a problem that needed fixing. I needed an incident to wake me up. Such is human nature – we need an incident to wake us up. As it happens I had the solution. I had not implemented it because I did not know how. But Friday’s rude awakening coupled with the approach of confirming a move as advocated by http://www.americanbulls.com has allowed me to come up with the ‘fix’. Those who may have read what I’ve written in the past know that I run 2 models. One is daily and the other is half-hour (HH). I knew I should be using both but I didn’t quite know how. And then with Friday’s action I got some insight (to go along with my loss). I realized how to couple the 2 models. And wouldn’t you know it – all 7 issues remained in a down trend going into Friday waiting for the HH model to validate (or if you like confirm) the reversal.
As we know, that confirmation never came on Friday. So the rude awakening is that all 7 issues are still in down trends (let’s take things one day at a time). They can reverse as early as Monday but they need the HH model to validate the reversal that was signaled by the daily model. Thus, all 7 issues are showing that a reversal is possible on Monday – however, let’s not second guess this new and improved hybrid model. Let’s wait until the close on Monday to see. However, when I look at the HH data, the likelihood of reversing on Monday is not likely – but not impossible, of course. Come back on Monday to find out more. On a personal note, I closed out my futures position on Friday and took a $2K loss. That really opened my eyes and with some lucky insight, I realized how to mesh the 2 models. The loss is behind me. I am looking to the future.
With this new model configuration, I feel comfortable that I am about to say “This it it!”. At this point, I am about to start documenting the actual moves for the 7 issues as they are generated by the new, combined model. I now believe I am at the point where we can now compile a record for all to see. It will be exciting. I know that mistakes will be made even by this new model, but Friday’s should not have happened if I had the combined model. That is water under the bridge. Let’s start with a new slate. I have put a link to a new page (Link #6 below the graphics) where I will post the moves (for all 7 issues) as they are generated by the model. Given that all seven issues are still in down trends, I will start the posting with the upcoming reversal to the up side. As I write this it is Saturday, Jan. 5’08. To paraphrase B. Obama – this is a new beginning. I agree with him – it is a new beginning for him – he will be the next President. And, this marks a new beginning for me. As NASA recovered from the Challenger disaster (even with another disaster in 2003), we too will recover and move to the forefront.
As I sign off, I realize that many were traumatized on Friday. Get a grip of yourself – get over it – life will go on. We will survive. Let’s get prepared for the next move. Good luck.