Hi friend! Bet you don’t know where the Aussie, Canadian dollar, copper, the market, oil, the pound, silver, the U.S. dollar, and the yen are going? Well, I do, thanks to the Big Dogs. I reveal their hidden secrets in this blog post – Market Forecast Indicator: Market Forecasting Secrets.
So, don’t click away too soon, or you’ll miss their predictions on where prices are headed.
Whether you’re a forex trader or you are into the other asset classes, there’s something in here for you.
This calculation looks at the market’s current price in relation to a multiday trailing average.
A ratio greater than one suggests that the market is likely to go up, and vice versa.
In theory, the prediction is stronger the higher that ratio.
Take today, Monday, February 27/17, for example.
The $SPX S&P 500 Large Cap Index INDX is trading at 2369.81. Its 200-day exponential moving average sits at 2193.21.
The resulting ratio of 1.08 is indicative of a modest bullish signal. This is up from 1.05 December 28/16. Translation:
Market Forecast 2017
* Further Highs *
If you are at all curious about where the market will be one year out, this is a great tool for you to use.
The only proviso is that it does not foretell turns in the market.
(Info via Nir Kaissar, Dec. 28/16, The Globe and Mail)
In terms of market forecast tools, I refer you to my blog post on pivot points:
I also covered them in my last blog post.
Pivot points are incredibly powerful. They are useful in showing you the possible high and low for the next trading day for any market.
Combined with ADR (Average Daily Range), you have a powerful combo to work with. Check out my blog post on ADR here:
Table of Contents:
There is no such thing as a market forecast definition per se. There are lots of pseudo hyped-up theories and prognostications, but none that are consistently reliable.
There are many market forecasting methods out there, but none of the market forecasting models are as accurate as what I am about to reveal to you.
When I first found out about the market forecasts generated by this market forecast indicator many years ago, I darn near fell off my chair. I couldn’t believe what I was seeing.
I now look at this information every week when it comes out. The information is readily available to everybody, but very few people even know it exists and, if they did, they wouldn’t know how to read the data. It’s just raw numbers.
My friend Barrie takes the data and graphs it, so that it is intelligible to people like you and I. His site covers the span of most asset classes, be they currencies, markets, orange juice, wheat, or whatever.
Now, this information is not for day trading purposes, but traders of all persuasions should have access to it, because it alerts them to where their asset class of interest may be headed price-wise in the near future.
The information I am talking about is data in relation to institutional investors who trade thousands of lots worth millions of dollars at a time. Think George Soros.
They can’t afford to be wrong. Too many institutions and people depend on their every move in the markets. There is a lot of money riding on their positions. Ignore them at your peril.
So, let’s begin shall we. I have hand-picked six asset classes to share with you – ones that look like they are setting up for some exciting price action.
The data I am about to share with you is as of Friday, February 24/17, but is good for quite a while out into the future, as the institutional investors (I fondly call them the ‘Big Dogs’) don’t change their positions quickly or often.
Let’s begin with the Aussie and the Canadian dollar, and see the power of this market forecast indicator in action.
Regarding the Canadian dollar, there is no question as to where it is headed, if you look at the graphs below, and also take into consideration oil in the graphs further down.
Canada is a net exporter of oil and, as such, the Canadian dollar is heavily influenced by its trajectory – in this case, DOWN!
You can see that the institutional investors (Big Dogs) are short both asset classes, if you look at the attitude of the orange line and the gray bars below the waterline.
Same story with the Aussie. In the graphs below, it is readily apparent that the Big Dogs are short that currency, both with respect to the orange line in the graph over to the left and the gray bars below the waterline in the graph over to the right.
Translation in both cases: Watch out below!
(Graphs via www.cot-futures.com)
Now, let’s focus on oil and the yen. We have already talked about oil in relation to the Canadian dollar above. So, let’s zero in on the yen.
This is the only one in these examples where the Big Dogs are long. This is reflected by the orange line being at the top of the graph to the left below and the gray bars in the graph over to the right this time being above the waterline.
Please note that the green line in the graphs over to the left reflect what the hedge funds are up to. Their computer systems keep them invested with the prevailing trend, until it changes.
They operate the exact opposite to the Big Dogs, who are trend makes, not trend followers. They project where prices are going to be within the near future. We’re talking months, not days. They are not day traders – more like position or swing traders.
What I like to look for is extreme divergence between both camps, where the hedge funds are at one end of the spectrum and the Big Dogs at the opposite end. You can see that in the case of oil below.
When you see that kind of extremity, you can rest assured that the represented asset class (in this case, oil) is headed for a fall. Ditto for the Canadian dollar, as discussed above. Price is depicted by the red line.
This is a perfect market forecast example.
(Graphs via www.cot-futures.com)
The greenback has swooned 3.3 per cent since January, after its meteoric rise of 6.5 per cent following the November 8 presidential vote, according to the Bloomberg Dollar Spot Index.
Traders have reduced bullish wagers on the dollar. Hedge funds and other large speculators have cut net bullish dollar bets to the least since before the election.
You can see in the COT (commitments of traders) graphs below that the Big Dogs (institutional investors) are extremely short the USD.
The market is obviously waiting for Trump’s promises to come to fruition.
The Federal Reserve may be willing to increase interest rates, based on Trump’s growth and tax plans that the market has been waiting for.
Certainly the VIX is not showing any nervousness over that possibility. It is headed for the lowest yearly average on record. It is just two points above its all-time low.
That said, the COT for VIX (not shown) shows the Big Dogs extremely long the VIX, meaning they may know something we don’t.
Don’t forget… they live in a world of fundamentals far removed from us. They have access to data that we don’t.
It’s their job to be right more often than not. They make informed decisions, based on facts. We can only follow their lead.
The VIX is the Chicago Board of Options Exchange volatility index. It is a gauge of investor anxiety.
For more on how you can use the VIX to predict the future path of interest rates, go to my blog post on that topic:
And now let’s turn our attention to silver. I only include this asset class because of all the hype I hear about silver coins being bandied about on the tube – “Silver is my favourite investment… it’s going to US$200 an ounce.”
I only go by what the Big Dogs are telling me (I am not a market forecaster) and, in the COT graphs below, you can plainly see their positions headed south – the gray bars painting further down, and the orange line pointing down.
In the graph over to the right for silver, you can see the green line (the Big Dogs) pointing down, while price (the red line) is pointing up. This divergence usually portends a shift in the direction of price – in this case, down.
(Graphs via www.cot-futures.com)
To see what I had to say about copper and the pound, please refer to my my last blog post. In it, I also covered oil, and dealt with questions from members.
Hopefully, by now, you can see the power of this market forecast indicator, and why this is one of the best market forecast methods to pay attention to. As we all know, there is no such thing as the Holy Grail in trading. But, this indicator is as good as it gets.
If you still have trouble understanding how it works, please let me know.
A good support and resistance MT4 indicator is available at the Contact link. You can ask for my favourite pivot point calculator at the same link.
A pip value calculator is waiting for you at: http://ca.investing.com/tools/forex-pip-calculator
ProRealTime.com offer forex trading indicators, including a forex support and resistance indicator for forex pivot points.
My favourite book on trendline analysis has got to be Tom DeMark’s ‘New Science of Technical Analysis.’
I hope you have enjoyed this Market Forecast Indicator: Market Forecasting Secrets blog post, and that you can now appreciate how useful COT is for market forecasting.
I have tried to show you the power of the Big Dogs. They are a force to be reckoned with.
If you would like further clarification on anything I have covered in this blog post, please let me know here.
If private consulting lessons on investing or trading would be helpful to you, you can let me know at the same link.
Or, if you need the assistance of a trading adviser, again the same link will do it for you.
Forex wealth management, in the form of forex managed accounts, can be had at Tallinex. Just click on that link to avail yourself of that option.
To get things going, open your live account there first, and then pick the managed account that you prefer.
If and when you have the time, check out my previous blog posts:
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Here’s To Your Success and Quality of Life,
Peter R. Bain
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About Peter R. Bain
Peter R. Bain
I am a speaker, trader, writer, aviator, car nut, Harley enthusiast but, above all else, I am here for you at TradingSmarts, which I founded some 15 years ago.
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