S&P500 Market Breadth Driven Short Term Forecast Starting Nov 14, 2016

By Lawrence

Review of Forecast for Nov 7, 2016

Monday gap up and go as forecasted that a bounce is due on Monday. By Tuesday the up push was more than 1.5% and terminated the down trend. Overnight election results dropped 5% across the major indices and led to a bounce that erased all the losses by Wednesday. This confirmed the equal chance of hard swings both ways as forecasted. The breadth analog model did a great job despite the fact that we had insane volatility last week.

Forecast Starting Nov 14, 2016

Summary of the S&P500 short-term forecast based on my proprietary market breadth analog model as of the close of Nov 11, 2016:
  • More upside expected challenging the year high so far
  • Breadth based slingshot move in the making, more on this in Market Bias Observer Special Update
  • Once 1.5% drop is in place, expect 2.5% or more decline into end of week and potentially 5% into next week

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Short Explanation About The Model

My market breadth based analog model takes into account the short term volatility, daily market breadth readings and a few other intraday breadth data to identify the current market conditions. Using the information, the model then went through the historical data over the past 20 years to generate its statistical analysis. The model has been pretty good at identifying important swing tops and bottoms over the past few years by providing early warnings about potential volatility upticks.

For the technical explanation of the concept, you can read about it here, Market Breadth Primer: Market Breadth Analog Forecasting Method

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