Bold prediction

Trading and Markets
1

BOLD PREDICTION

S&P 500 will go down there are 4 reason make me to believe that.
My machine learning algorithm kip betting that the market will go down four main reason that I found
after a research is the following.

  1. The S&P 500 volume on yesterday’s historic breakout was 1.91 billion, which was well below the 90 day simple moving average.

  2. the rotation away from aggressive areas is typically very bearish.

  3. VIX has not broken down and that suggests that fear remains.

  4. The bonds tell other story. The bonds tell that we are in hell and the S&P 500 that we are in paradise usually when this to are in disagreement the bond market now better.

My machine learning system take to account all the above reasons and many more. join my at collective2 at the address below.

2

I agree by saying that we are in overvalued territory… since 2 years.
I personally don’t see a reason for immediate danger but mid to long term that looks different.

I don’t believe VIX itself is a market timing indicator, the term structure of VIX futures and/or SPY downside puts and upside calls on the VIX are though. High VIX simply means no one wants to sell vol cheaply at this stage.

3

Yes, and I predict that it will rain.

4

My bold prediction is despite the market being overvalued, it will continue to go up for years to come. There might be the occasional spike lower like we saw in Aug 2015 or Jan 2016, but I don’t think the market will enter any long term bear markets. The key thing bears are missing is the market is no longer a free market. Since 2008 the market has been outright driven higher by unprecedented levels stimulus from various sorts of Fed actions. That is not ending any time soon as the economy (and in particular the government) are now dependent on the interventions. In Japan (the place to watch for what is coming to the US later) it’s reached the point where the Japanese Central Bank owns 50% of the market’s ETFs and almost as much of their bonds. And now that the central bank basically IS the market there they have just started to move to “helicopter money,” which is usually the point where the market starts to move up exponentially higher even as the economy and money implodes. The end game is hyperinflation and some sort of big change to the money system but that’s still years away. Meanwhile if you’re looking for a bear market you’re not likely to find one… at least not in equity prices. JMO.

Note that I don’t trade on these sorts of predictions, I use systematic trading methods which are oblivious to these sorts of long term issues.

1 Like
5

My friend you are confused this is site for treading not for weather predictions :smile:

6

Thank you very much for your post and for the constructive criticism. I don’t believe that the market is in problem right now but the prognostics is not good for the mid term. A clever system detect the problems soon and take positions accordingly.

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My point is that your ‘prediction’ is vacuous. Of course the market will go down at some point. The real question is can your system weather the drawdown in the meantime.

8

I have well understand your point from your first respond and I respond with humor.

The bold prediction I have made is not vogue. I just want to start a conversation about the current market condition and to make a point that there is a clouds in the sky as you mention in your previous post it will rain at same point, but when this is going to happened?

Some of you let prophets and mediums to make a prediction and when something wrong happened you tell to yourselves that it was predicted a sentry ago.

This is not this kind of prediction. This prediction is bold but it is base on quantitative and qualitative data . Every reason I mention in my previous post lead an Artificial Intelligent System to have this view over the data known to the system at the day of the prediction. I made this clarification because an Artificial Intelligent System have no emotions or empathy not support bulls or bears just look at the data and make a decision. Go long, sort, stay flat.

In contrast of the humans the decision made by such systems is not black or white. For example the system in the question will the market stay in this elevated level for long will respond with an answer 80% will pull back in a previews level 20% will continue the up trend for long time . If the market data change the system change an opinion in a fraction of a second. And that is very good thatch why over the 75% of the decisions came form systems and not from humans this days. No emotion just scientific reasoning.

Now its time to come in the particular system I have created. The system make this prediction with time horizon seven months. My system calculate the probability of market crash or for major correction. If the market not make a major correction in the seven months will follow it will crush after seven months(in total 14 months).

I decide to make this prediction public to start a conversation about the current market condition and to learn your opinions.

About drawdown you mention in your post this system not open position when the market reverse to suffer from serious drawdown but when the market break out. Over the year height and the position the system take is small. This system use Monte Carlo simulation in order to have up to 10% drawdown with probability 1% to 99% please check the bet size and the amount reserved.

Finally I not start posting when my system is up but when my system is in DD please check how my system behave in Brexit. Almost unaffected even if the system believe that the brexit will not happened.

Thank you very much for responding to my post happy trading.