What is the Stock Market Doing?

TL;DR: The Fed is putting so much money into the economy because it already had a goal to inflate it so that the market could go to all-time highs. It has always had this goal. It doesn’t care how much inflation goes up by now because we are going into a depression with the potential to totally crash the US economy forever. It believes the only way to save the market from going to zero or negative values is to inflate it so much that it cannot possibly crash that low. Even if the market does not get that bad, inflation serves the interest of powerful people. We will crash eventually.

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The Federal Reserve has caused some serious consternation with their release of ridiculous amounts of money in an attempt to buoy the economy. It does not seem to have any rationale or logic behind it other than keeping the economy afloat long enough for individuals to profit financially and politically. However, there is an underlying basis to what is going on which is important to understand in order to profit from it financially.

The market is a price probing system. It is constantly undergoing a price-discovery process. In a fiat system, money is an illusory and a fundamentally synthetic instrument with no intrinsic value. Markets are composed of indices (pl. of index). Indices are non-trading market instruments which are essentially summaries of business values which comprise them. They are continuously recalculated throughout a trading day, and sometimes indicated as Exchange Traded Funds or Futures. Indices are weighted by market capitalizations of various businesses.

Essentially, when a market fails to take out a new low in a given range, it will have an objective to take out the high. When a market fails to take out a new high, it has an objective to make a new low. This is why price-time charts go up and down, as it does this on a second-by-second, minute-by-minute, day-by-day, and even century-by-century basis. Therefore, market indices will always return to some type of bull market as, once a true low is formed, the market will have a price objective to take out a new high outside of its’ given range – which is an all-time high. INSTRUMENTS CAN ONLY FALL TO ZERO, BUT THEY CAN GROW INFINITELY.

So, why inflate the economy so much?

Deflation is disastrous for central banks and markets as it raises the possibility of producing an overall price objective of zero or negative values. THE PURPOSE OF THE DOLLAR IS TO DEPRECIATE.

Central banks have a goal of continued inflated fiat values. They contain it at less than ten percent (10%) per annum in order for the psyche of the general populace to slowly adjust price increases. As such, THE MARKETS ARE FUNDAMENTALLY DETACHED FROM HUMAN LOGIC. Economic policy is the maintenance of human egos. GDP growth is well-known not to be a measure of actual growth or output. It is a measure of increase in dollars processed. Banks seek to produce raising numbers which make society feel like it is growing economically, making people optimistic. To do so, the currency is inflated, though inflation itself does not actually increase growth. When society is optimistic, it spends and engages in business – resulting in actual growth. It also encourages people to take on credit and debts, creating more fictional fiat.

Inflation is neccesary for markets to continue to reach new heights, generating positive emotional responses from the populace, encouraging spending, encouraging debt intake, further inflating the currency, and increasing the sale of government bonds. THE FIAT SYSTEM CAN ONLY SURVIVE BY CREATING MORE IMAGINARY MONEY ON A REGULAR BASIS.

We profit from this by realizing: investors as a whole always stand to profit from the market so long as: it is managed by a central bank and does not collapse entirely. If those elements are filled, it has an unending price objective to raise to new heights. It also allows us to realize that this response indicates that the higher-ups believe that the economy could crash in entirety, and it may be wise to have multiple well-thought-out exit strategies.

SPY 220p 11/20

This will likely be a multi-part series. It should be noted that I am no expert by any means, I’m actually quite new to this, it is just an elementary analysis of patterns in price and time. I am not a financial advisor, and this is not advice for a person to enter trades upon.

The fundamental divide in trading revolves around the question of market structure. Many feel that the market operates totally randomly and its’ behavior cannot be predicted. For the purposes of this DD, we will assume that the market has a structure, but that that structure is not perfect. That market structure naturally generates chart patterns as the market records prices in time. We will analyze an instrument, an exchange traded fund, which represents an index, as opposed to a particular stock. The price patterns of the various stocks in an index are effectively smoothed out. In doing so, a more technical picture arises. Perhaps the most popular of these is the SPDR S&P Standard and Poor 500 Exchange Traded Fund ($SPY).

In trading, little to no concern is given about value of underlying asset. We concerned primarily about liquidity and trading ranges, which are the amount of value fluctuating on a short-term basis, as measured by volatility-implied trading ranges. Fundamental analysis plays a role, however markets often do not react to real-world factors in a logical fashion. Therefore, fundamental analysis is more appropriate for long-term investing.

The fundamental derivatives of a chart are time (x-axis) and price (y-axis). The primary technical indicator is price, as everything else is lagging in the past. Price represents current asking price and incorrectly implementing positions based on price is one of the biggest trading errors.

Markets ordinarily have noise, their tendency to back-and-fill, which must be filtered out for true pattern recognition. That noise does have a utility, however, in allowing traders second chances to enter favorable positions at slightly less favorable entry points. When you have any market with enough liquidity for historical data to record a pattern, then a structure can be divined. The market probes prices as part of an ongoing price-discovery process. Market technicians must sometimes look outside of the technical realm and use visual inspection to ascertain the relevance of certain patterns, using a qualitative eye that recognizes the underlying quantitative nature

Markets rise slower than they correct, however they rise much more than they fall. In the same vein, instruments can only fall to having no worth, whereas they could theoretically grow infinitely and have continued to grow over time. Money in a fiat system is illusory. It is a fundamentally synthetic instrument which has no intrinsic value. Hence, the recent seemingly illogical fluctuations in the market.

According to trade theory, the unending purpose of a market is to create and break price ranges according to the laws of supply and demand. We must determine when to trade based on each market inflection point as defined in price and in time as opposed to abandoning the trend (as the contrarian trading in this sub often does). Time and Price symmetry must be used to be in accordance with the trend. When coupled with a favorable risk to reward ratio, the ability to stay in the market for most of the defined time period, and adherence to risk management rules; the trader has a solid methodology for achieving considerable gains.

We will engage in a longer term market-oriented analysis to avoid any time-focused pressure. The market is technically open 24-hours a day, so trading may be done when the individual is ready, without any pressing need to be constantly alert. Let alone, we can safely project months in advance with relatively high accuracy.

Some important terms to keep in mind:

§ Discrete – terminal points at the extremes of ranges

§ Secondary Discrete – quantified retracement or correction between two discrete

§ Longs (asset appreciation) and shorts (asset depreciation)

• Technical Indicators

– Technical indicators are often considered self-fulfilling prophecies due to mass-market psychology gravitating towards certain common numbers yielded from them. That means a trader must be especially aware of these numbers as they can prognosticate market movements. Often, they are meaningless in the larger picture of things.

§ Volume – derived from the market itself, it is mostly irrelevant. The major problem with volume is that the US market open causes tremendous volume surges eradicating any intrinsic volume analysis. At major highs and lows, the market is typically anemic. Most traders are not active at terminal discretes because of levels of fear. Allows us confidence in time and price symmetry market inflection points, if we observe low volume at a foretold range of values. We can rationalize that an absolute discrete is usually only discovered and anticipated by very few traders. As the general market realizes it, a herd mentality will push the market in the direction favorable to defending it. Volume is also useful for swing trading, as chances for swing’s validity increases if an increase in volume is seen on and after the swing’s activation.

Therefore, due to the relatively high volume on the 23rd of March, we can safely determine that a low WAS NOT reached.

§ VIX – Volatility Index, this technical indicator indicates level of fear by the amount of options-based “insurance” in portfolios. A low VIX environment, less than 20 for the S&P index, indicates a stable market with a possible uptrend. A high VIX, over 20, indicates a possible downtrend. However, it is equally important to see how VIX is changing over time, if it is decreasing or increasing, as that indicates increasing or decreasing fear. Low volatility allows high leverage without risk or rest. Occasionally, markets do rise with high VIX.

As VIX is unusually high, in the forties, we can be confident that a downtrend is imminent.

• Trend Definition Analysis

– Trend definition is highly powerful, cannot be understated. Knowledge of trend logic is enough to be a profitable trader, yet defining a trend is an arduous process. Multiple trends coexist across multiple time frames and across multiple market sectors. Like time structure, it makes the underlying price of the instrument irrelevant. Trend definitions cannot determine the validity of newly formed discretes. Trend becomes apparent when trades based in counter-trend inflection points continue to fail.

Downtrends are defined as an instrument making lower lows and lower highs that are recurrent, additive, qualified swing setups. Downtrends for all instruments are similar, except forex. They are fast and complete much quicker than uptrends. An average downtrend is 18 months, something which we will return to. An uptrend inception occurs when an instrument reaches a point where it fails to make a new low, then that low will be tested. After that, the instrument will either have a deep range retracement or it may take out the low slightly, resulting in a double-bottom. A swing must eventually form.

A simple way to roughly determine trend is to attempt to draw a line from three tops going upwards (uptrend) or a line from three bottoms going downwards (downtrend). It is not possible to correctly draw an uptrend line on the SPY chart, but it is possible to correctly draw a downtrend – indicating that the overall trend is downwards.

• Time Symmetry

Now that we have determined that the overall trend is downwards, the next issue is the question of when SPY will bottom out.

Time is the movement from the past through the present into the future. It is a measurement in quantified intervals. In many ways, our perception of it is a human construct. It is more powerful than price as time may be utilized for a trade regardless of the market inflection point’s price. Were it possible to perfectly understand time, price would be totally irrelevant due to the predictive certainty time affords. Time structure is easier to learn than price, but much more difficult to apply with any accuracy. It is the hardest aspect of trading to learn, but also the most rewarding.

Humans do not have the ability to recognize every time window, however the ability to define market inflection points in terms of time is the single most powerful trading edge. Regardless, price should not be abandoned for time alone. Time structure analysis It is inherently flawed, as such the markets have a fail-safe, which is Price Structure. Even though Time is much more powerful, Price Structure should never be completely ignored. Time is the qualifier for Price and vice versa. Time can fail by tricking traders into counter-trend trading.

Time is a predestined trade quantifier, a filter to slow trades down, as it allows a trader to specifically focus on specific time windows and rest at others. It allows for quantitative measurements to reach deterministic values and is the primary qualifier for trends. Time structure should be utilized before price structure, and it is the primary trade criterion which requires support from price. We can see price structure on a chart, as areas of mathematical support or resistance, but we cannot see time structure.

Time may be used to tell us an exact point in the future where the market will inflect, after Price Theory has been fulfilled. In the present, price objectives based on price theory added to possible future times for market inflection points give us the exact time of market inflection points and price.

Time Structure is repetitions of time or inherent cycles of time, occurring in a methodical way to provide time windows which may be utilized for inflection points. They are not easily recognized and not easily defined by a price chart as measuring and observing time is very exact. Time structure is not a science, yet it does require precise measurements. Nothing is certain or definite. The critical question must be if a particular approach to time structure is currently lucrative or not.

We will complete our analysis of time by measuring it in intervals of 180 bars. Our goal is to determine time windows, when the market will react and when we should pay the most attention. By using time repetitions, the fact that market inflection points occurred at some point in the past and should, therefore, reoccur at some point in the future, we should obtain confidence as to when SPY will reach a market inflection point. Time repetitions are essentially the market’s memory. However, simply measuring the time between two points then trying to extrapolate into the future does not work. Measuring time is not the same as defining time repetitions. We will evaluate past sessions for market inflection points, whether discretes, qualified swings, or intra-range. Then records the times that the market has made highs or lows in a comparable time period to the future one seeks to trade in.

What follows is a time Histogram – A grouping of times which appear close together, then segregated based on that closeness. Time is aligned into combined histogram of repetitions and cycles, however cycles are irrelevant on a daily basis. If trading on an hourly basis, do not use hours.

Yearly Lows: 12/31/2000, 9/21/2001, 10/9/2002, 3/11/2003, 8/2/2004, 4/15/2005, 6/12/2006, 3/5/2007, 11/17/2008, 3/9/2009, 7/2/10, 10/3/11, 1/1/12, 1/1/13, 2/3/14, 9/28/15, 2/8/16, 1/3/17, 12/24/18, 6/3/19

Months: 1, 1, 1, 2, 2, 3, 3, 3, 4, 6, 6, 7, 8, 9, 9, 10, 10, 11, 12, 12

Days: 1, 1, 2, 2, 3, 3, 3, 3, 5, 8, 9, 9, 11, 12, 15, 17, 21, 24, 28, 31

Monthly Lows: 3/23, 2/28, 1/27, 12/3, 11/1, 10/2, 9/3, 8/5, 7/1, 6/3, 5/31, 4/1

Days: 1, 1, 1, 2, 3, 3, 3, 5, 23, 27, 27, 31

Weighted Times are repetitions which appears multiple times within the same list, observed and accentuated once divided into relevant sections of the histogram. They are important in the presently defined trading time period and are similar to a mathematical mode with respect to a series. Phased times are essentially periodical patterns in histograms, though they do not guarantee inflection points*.*

We see that SPY tends to have its lows between three major month clusters: 1-4, primarily March (which has actually occurred already this year), 6-9, averaged out to July, and 10-12, averaged out to November. Following the same methodology, we get the third and tenth days of the month as the likeliest days. However, evaluating the monthly lows for the past year, the end of the month has replaced the average of the tenth. Therefore, we have four primary dates for our histogram.

7/3/20, 7/27/20, and 11/3/20, 11/27/20 .

How do we narrow this group down with any accuracy? Let us average the days together to work with two dates – 7/15/20 and 11/15/20.

The 8.6-Year Armstrong-Princeton Global Economic Confidence model – states that 2.15 year intervals occur between corrections, relevant highs and lows. 2.15 years from the all-time peak discrete is April 14th of 2022. However, we can time-shift to other peaks and troughs to determine a date for this year. If we consider 1/28/2018 as a localized high and apply this model, we get 3/23/20 as a low – strikingly accurate. I have chosen the next localized high, 9/21/2018 to apply the model to. We achieve a date of 11/14/2020.

The average bear market is eighteen months long, giving us a date of August 19th, 2021 for the end of the bear market – roughly speaking.

Therefore, our timeline looks like:

• 11/14/20 – yearly low (selected from histogram averages, 11/15/20, and the 8.6 Year Confidence model)
• 7/28/21 – End of bear market (18 month average of 8/9, averaged with histogram date of 7/15)
• 4/14/22 – lesser correction.

As we move forward in time, our predictions may be less accurate. It is important to keep in mind that this analysis will likely change and become more accurate as we factor in Terry Laundry’s T-Theory, the Bradley Cycle, a more sophisticated analysis of Bull and Bear Market Cycles, the Fundamental Investor Cyclic Approach, and Seasons and Half-Seasons.

I have also assumed that the audience believes in these models, which is not necessary. Anyone with free time may construct histograms and view these time models, determining for themselves what is accurate and what is not. Take a look at 1/28/2008, that localized high, and 2.15 years (1/4th of the sinusoidal wave of the model) later.

The question now is, what prices will SPY reach on 11/14? Where will we be at 7/28? What will happen on 4/14/22?

Edit: We did not inflect at the 61.8%P, so it looks like we are going to at least 286, probably going to continue rising until at least the 22nd of April. If, on the 22nd, it looks like there is any kind of downturn, that could possibly be the peak – taking into consideration time symmetry.

TL;DR –

Time and price symmetry are analysis of general market structure. Coupled with TA, it indicates that we will bottom out for this year on or around November 14th. The price of SPY when we bottom out for this year should be 220.09 or less.

SPY 220p 11/20

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Unfortunately, my last post seemed to be a bit too drawn out to capture the attention of the autists. As such, this one will be more succinct. The last post was on Time Symmetry. This post will describe price symmetry, which is a quantitative measurement of a deterministic value for price. Basically, we want to determine at what price the market will reach an inflection point based on reactive “price clusters”, derived from laws of supply and demand.

The basis of our discussion will rest on the following premise: if an instrument fails to achieve a new high in a range, it must achieve a new low in said range. If an instrument fails to achieve a new low in a range, it must achieve a new high in said range.

o Price Theory – market seeks to yield to one of two price objectives, therefore it is not random. Efficiency occurs at some price level, however price theory does not tell us the exact efficient price, simply the direction of the probable efficient price. When coupled with time structure, gives near certainty to call market inflection points.

· The price that an instrument or market reaches efficiency is unknown, but the price objective is certainty which indicates that a future price is the present price objective.

§ Price Patterns – price structure components is based on the market’s movements which conform to price objectives.

· Price Pattern Objectives – a possible area of mathematical support or resistance that may serve as a market inflection point. opposed to price theory objectives which are certain.

§ Inflection point – a level at which the market finds support or resistance and reverses from a value, commonly misconstrued with pivot points.

§ Projection Range – Predefined by mathematical calculations to determine possible terminal points for continued price action.

§ Mathematical Cluster – average of multiple mathematical support or resistance numbers occurring around the same approximate value.

§ Retracement levels – each level has own nuances and tendencies. Not every retracement bounce leads to successful trades which replace discretes. Must be used with tight stop-losses in order to validate large risk-to-reward ratios.

· Retracement memory – markets tendency to continue having retracements of future ranges equal to retracements of prior ranges which have been expanded

SPY has currently retraced 38.2% of the ABC swing which began this bear market. The 38.2%R is the second most magnetizing retracement, markets will often find price action occurring at this level regardless of whether or not it holds. Most instruments have a reaction at this level.

· Projections – quantifiable mathematical support or resistance calculation, different projection levels exist for different price patterns. Allow us to anticipate when to take profits or anticipate mathematical support/resistance.

o Projection Levels – PPN(A, B, C) = (PB – PA) * PN + PC

o PN – projection Percentages (61.8%, 100%, 127.2%, 161.8%, 200%, and 261.8)

o A, B, C being the swing points

When you plug the numbers into the formula, you will get a variety of projections for SPY. Anyways, SPY right now sits at 275.63. The closest projection is the 61.8%, also the most well known projection. This projection is only really useful to determine a shallow projection point indicating a later deeper retracement point.

Interestingly enough, this sits at the same value as another swing point on 11/1/2018.

However, we could have more confidence in a 100%P – the most important of all the projection percentages, instrument will typically encounter some type of support or resistance when reaching it. It could yield either a temporary pullback or a true market inflection point, so price action must be focused on at this level. It is a price pattern objective for all swings. It is a potential target once any swing activates, but only time will reveal if it is a true terminal point.

This level may be the conclusion of a corrective swing. If 50% holds an instrument, leading to swing activation, then there is a higher probability that 100% will be a true market inflection point. This projection allows us a clue as to whether we are witnessing a true trend change or if a correction inside the previous trend is simply being completed.

Therefore, SPY will either try to reach 100%P, which is 286.25, when break downwards, or, it is possible that the previous swing point coupled with the 61.8%P we have already reached, being in the 38.2%R, could cause us to turn downwards. If the latter is the case, we should see a large downturn tomorrow. Otherwise, I expect we will eventually reach 286.25 over the course of a month or so, then downturn.

So, where will SPY reach mid-November?

Price theory tells us that the goal is for the market to take out either its high or its low within a range. The negative 100%P for SPY is 220.09. Therefore, considering that this is less than half of the possible projections (261.8%P being the max, uncharted territory for the range), it is extremely likely that SPY will not only reach this value but also go significantly lower. Once it reaches 220.09, the trader should take partial profits and begin monitoring it intensely for further action.

Therefore, a wise trader could take puts from the current value on down to 220 with an 11/4 expiry date, selling along the way and capitalizing.

It should be noted that I am no expert by any means, I’m actually quite new to this, it is just an elementary analysis of patterns in price and time. I am not a financial advisor, and this is not advice for a person to enter trades upon.