Similar 1978 October Massacre Averted from Fed's $38B Pumping
The feds may have averted a repeat of the October 1978 chart pattern, where the S&P dropped 15%, the $38B pumping last week seems to have broken the unhealthy pattern, at-least for now.
The 1978 october chart pattern is no longer on the radar -- you may recall it from last time. The two month chart is at 61% probability of an uptrend, up from the bearish 53% last time. The general short term health of the market has also improved.
From observing the similar chart patterns, it seems oil, Dow, and the S&P 500 will trend up, while gold will trend down. The analysis is broken down by oil, gold, Dow, and S&P 500. Their probability of an uptrend is recorded under the time frame (1 month, 3 month, and 6 month) column. The stocks were randomly picked.
| oil | 1 Month | 3 Month | 6 Month |
| cvx | 71% | 76% | 84% |
| xom | 78% | 61% | 84% |
| bp | 69% | 69% | 84% |
| gold | 1 Month | 3 Month | 6 Month |
| bvn | 69% | 61% | 36% |
| gss | 69% | 72% | 60% |
| tgb | 30% | 23% | 30% |
| dow | 1 Month | 3 Month | 6 Month |
| ^djia | 69% | 92% | 69% |
| S&P 500 | 1 Month | 3 Month | 6 Month |
| ^gspc | 50% | 76% | 84% |
Chart Patterns 101
With the assitance of machine vision, undocumented chart patterns are discovered effortlessly -- in seconds, and expressed in plain language -- in one sentence.
The patent pending process, finds similar historical price charts, and differentiates their prices for assessing trend consistency. If 75% or more trend in unison, it's a significant statistic. As an example, within the figures below, a one month prognosis of the Dow is performed.
The service is available for analysis on companies with a financial market history of 5 years or more. Don't use it on companies or indices whose market history are less than this, the signals will not be optimum.
The first step is to provide the security and forecast range (e.g. 1 month, 2 month, etc.), to which, a current price chart is displayed, whose time frame is based on the forecast range. Fig 1. Displays the chart being searched for, symbol, and forecast range.
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Fig 1. The Dow symbol and its current chart -- chart searching for, whose time frame is based on the forecast range
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Association Mode, charts similar to the red chart are displayed in green, sorted by most to least similar from left to right. Notice in Fig 2. the similar appearance to the red chart. The date stamp can be cross referenced to historical news for fundamental analysis.
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Fig 2. Association mode, the most visually similar monthly price chart
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Causation mode, price projection, whose time frame is based on the forecast range. The price causation is correlated in this mode. Notice in Fig 3. the chart date stamp, which immediately proceeds the similar chart in similarity mode.
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Fig 3. Causation mode, the outcome, the month proceeding the similar price chart
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A price probability projection for the red chart above. A result lower than 60% is an extremely weak signal -- bearish, while 75% or above is a firm signal -- bullish.
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Fig 4. The results are posted succintly as a summary in the following, which reports the probability of price movement in today's chart
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Tremendous insight is realized when discrete signals are synthesized exposing scenarios that are usually hidden. I will give an example of this, next time.