Early Warning System

SPCFD:SPX   S&P 500 Index
I've scripted my own early warning indicator. This system has provided very accurate warning signals the last few years as to where potential tops were forming. There are several occasions where it detected changes weeks or even months ahead of trend changes. Occasionally, it's a little too early at providing these signals. I can't reveal all my secrets but I was able to use data provided in TradingView that measures true investor sentiment and implied volatility . It also provides decent confirmational bullish /long signals, but it really depends on the type of market that we're in. Pre-2017, bearish signals were flattened and mostly ignored as the market rocketed higher.. I'll continue tracking this going forward and at least use it to assist my other forecasts - just another tool in my toolbox.

My current view of the market is not good. If you follow my updates, you'll know that I've been warning people about this drop and zone of volatility . Check out my other updates on the markets as well as the vix . I think it's likely to continue the next couple of months. However, take a look at the indicator and how the avg . is slanting upwards (green circle). This could be signaling a bounce in the market...but will it be like Feb of this year where we made a higher high in the market before the death drop? I have some long exposure as a strangle for such an event, but have been net short since end of August. I don't need to explain to you how the market is currently retarded in light of the fundamental picture. I'm not calling for a great depression-like melt-down yet.. We could see a lot of volatility the next few months but it may be just another opportunity to go long the market. I'll be here to provide all of the most accurate data I can for you.
Comment: mid '19 is an example of a whipsaw signal. The data provided gave a long signal before a drop and it also provided a sell/short signal before it rallied. But what's important to me about that signal is the average crossover was at a very low point on the scale.. I can look at the scale and see that it was potentially just a normal sideways consolidation pattern because it already gave a drop signal back in March-April before the May drop.
Comment: This 3x hidden bearish divergence on the vix had a change this week. I was long volatility the last month and eased out in these spikes. The rsi is still a factor to watch but there's a lot of room up here.. Remember, the market can rally while the vix is going up. It's not common but not impossible With the election and stimulus coming up.. The vix and vvix are so important to watch and understand..
Comment: not much has changed- the market has bounced just like I thought it would. I suspect a possible flush down even if the market is in a medium term rally. I'll try to update at least once a week because the changes are minimal and subtle
Comment: 5 waves up since March and now some type of correction.. what do you think? Simple ABC down or a flat correction before just going up up up?
Comment: This is interesting. Notice my stoch/rsi wavetrend indicator at the bottom and the red line, red boxes, red arrows. This is the 'no joke' zone. We've respected that level almost perfectly several times at other 'tops'. Since the last touch, we've had a very strange bearish looking divergence forming that is concerning.
Comment: we've reached the point where the lines will kiss. The question- will they cross or will price turn down hard with this acting as resistance?
Comment: Yesterday (11-16), the lines crossed. This can be a very bullish signal but it can also signal whipsaw/noise before another drop like the previous signals
Comment: is this where we are? I have my doubts but watch for a possible drop soon. I expect that at the very least but do we (a) have another massive blow off top or (b) just crash?


I read it three times, but couldn't find a clear statement about what your assessment is. It could rise, but it could also fall, be careful. This is what I understood. Well, that always applies anyway, doesn't it...
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gghsusa ReallyMe
@ReallyMe you are correct! You just have to look at the little clues to get the edge over the masses. What this indicator can do is find hidden weakness in rolling topping patterns. When market is pressing upward for days, weeks, months, this indicator can cross negative prior to the drop. That tells a really interesting story.. I suspect the market is looking for a bottom. I do have some long exposure and added calls into close on Friday but I’m strangled for a drop. I suspect more volatility over next couple of months with sharp ups and downs. Historical opportunities
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Yes... please keep updating us on this. So much false information out there. Thank you.
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Thanks for your time sir
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gghsusa dchant
@dchant happy to! I enjoy every moment in picking apart smart money’s movements.
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dchant gghsusa
@gghsusa, They play a tough game
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Would you take investment advice from an indicator that did not resolve the question: what precisely does it measure? I think not! By not disclosing the technical parameters of your indicator, you do a great injustice to those who come to TradingView to learn about the markets and make informed decisions. There's nothing wrong with honing your own indicators tuned to your specifications, but do not pretend to offer your gifts to others without fully disclosing all aspects of your idea. The very best trading systems work because they are well understood and practiced by a wide community of users. Cheers.
gghsusa SLOPolarBear
@SLOPolarBear, I'm not comfortable recommending this to the masses for making investment advice. Please ponder this though. How many people do you think use smart phones, computers, cars, airplanes without knowing or caring exactly how they work? You are certainly free to make your own decisions and I'm not here to tell YOU or anyone else what to do with their money. But look at the data in relation to price and think for yourself.
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gghsusa SLOPolarBear
@SLOPolarBear, I actually don't disagree with you. I just want to say this- I've worked for years or some of these tools and will occasionally get excited if I hone in something that's functional or useful. There are some things I haven't shared and that's my business, but I'm a pretty private person and I keep a lot of junk to myself. Perhaps you're right and maybe I'll fully disclose where this data comes from one day. But what I'm providing here is just a "hmmm" tool. Something for you or anyone else to look at the data in relation to price and how something is changing. We little peons must do all we can do survive in this current system.
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@gghsusa, I did not mean to rain on your parade -- it sounds like you have put a lot of work into this project. I'm endlessly fascinated by all of the creative indicators users have produced for TradingView. I'll be posting some of my own soon, and rest assured, you'll have access to the code in its entirety. I think transparency and equal access to knowledge of the markets is key to a highly liquid and appropriately volatile marketplace. :)
+2 Reply
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