timwest

SPY - MONTHLY TREND ANALYSIS BY TIM WEST

BATS:SPY   SPDR S&P 500 ETF
595 3 5
Monthly SPY             SPDR S&P500             ETF

I am showing a rough view of how I determine trend utilizing concepts of "TIME AT A PRICE" and "TREND" in order to judge a market's position in terms of "strength of trend", "time remaining in trend", and "price remaining in projected trend."

For starters, a simple way to define trend is when a market makes a new high (uptrend) every 5 bars. Simple definition. Once a market has failed to make a new high (in an uptrend), then you can start a downtrend from the highest high. At that point in time, there are two trends in place. UPtrend from the low, and DOWNtrend from the high, to restate the obvious.

The trend is "strong" if the market is above the "MOST FREQUENT PRICE" or "mode". So, a move above the mode would put the "uptrend" in dominant position and the downtrend in weak position.

Once an entire bar is ABOVE THE MODE, for the UPtrend in this case, then the market begins it's stopwatch by counting how many bars there are AT the mode. If there are 6 bars at the mode, the 1st bar of the forecasted 6-bar advance is the one where the LOW is above the mode. Simple as that.

PRICE TARGETING: Count up from the low of the chart to the mode and project up 100% of that price. Now you have a TIME and PRICE projection to work with.

WHAT HAPPENS NEXT?

Many possibilities:
1. The market can reach your time and price forecast - either exit or use a close trailing stop.
2. Another mode may have formed and allows for further price gains once the rules are met (rule1: a mode, rule2: a low greater than the mode)
3. The market FAILS to make the target. This is a great outcome because it alerts you to a weak market condition. The market is then vulnerable and a low-risk short sale is possible from this condition. Details on that in later posts.

For now: The S&P500             has only 1 time projection left and that ends in May (see the purple "V" "time ends"). There is one price projection remaining at 198 or 10% above the current 180 level.

Check out the other forecasts in DIA             where I discuss "time at a price" on a "weekly time frame" to decipher the state of the market. For now the market
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Also it would be good to find confluence of trend strength by analyzing swing points and volume (LA Little) find this method simple yet a good way to add more conviction to a trend strength.
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timwest PRO justatrader
2 years ago
What I have found in the last 26 years of plotting charts and trends this way is that the best time frame to be on is when the mode has 20-bars in it. So, the next chart I will publish here, I will move down to the weekly time frame in order to fine-tune the analysis of the trend. This is definitely a general view of how to look at a trend, but at least gives simple definitions to what are often complex topics.
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timwest PRO
2 years ago
The 6th month is April. I'm not sure why I put May as the last month. Small error.
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