Forecasting Index Market Tops

Discussion in 'Technical Analysis' started by MrTraderBot, Jul 29, 2020.

  1. Since it's not an easy thing to do, I thought it would be a good discussion to talk about different ways to forecast tops on a 4hr to day timeframe for index markets such as s&p500, nasdaq and dow. Being able to tell the difference between a smaller sell off from a high and a larger consolidation/correction that would last longer.

    You could obviously use some oscillating stats and look at overbought situations but you'll see a lot of false positives. Maybe layer a few indicators look at volume spikes and gain a little more accuracy, still a decent amount of false positives. Looking at some price to oscillator divergence, possibly a little better.

    Could you look at some other sources like skew index, vix, put/call ratios and correlate some patterns with the index that better point to overbought situations ending in a correction.

    Is it too hard so its best to find a good hedge during most overbought situations.

    Does the TA junkie need to venture into some more fundamental metrics or look at news or sentiment to forecast this better.

    What does everyone think?
    murray t turtle likes this.
  2. Or maybe none of the factors mentioned. :)
    Handle123 likes this.
  3. Turveyd


    Not possible, or accurate enough, it'll create a bias which will force bad decisions, abort!!
  4. %%
    Well if you like rube gold berg creations put/call ratio may help 80% of the time.;
    price action helps more than that.
    Easier to figure out a bottom in a bull market/which we are in/200 dma..
    Bottoms in a bear market is like a top area in a bull market;
    they happen every day/LOL/true
    Most sept sells/summer sells off a bit; but I was reading charts, earlier dow, the weakest of dow/spy/qqq,dow did not sell off much off sept/ so watch/record price action/200day moving average...………………………………………………………………………………………………………..
  5. That much I figured... please elaborate

    Was checking out your daily take on s&p just before you posted, good read.
  6. Not possible. Mostly because forecasting a top is guessing when people are going to change their collective minds.

    However, you have a chance of catching a top with TA. Likely you will have to take more than one stab at it.
  7. Handle123


    I have spent most of my life studying chart patterns and have identified over 20 formations that have over 51% chance of reversing. Most would say not high enough probability of trying the effort, but if you found ways to do so without loss or very small negative percentages, certainly it worth the effort. But is it worth retail accounts, costs money to make money, meaning you need more than small account to act upon for correct hedging.

    I had been shorting Indexes for nearly 3 years before virus hit and caught move down on futures and hedged long dividend paying stocks.

    Long term and even shorter swing trading is like fishing, you never know when the catch will be a whale or guppy, just got to be a monkey and keep putting on the trades and hedged.

    All trading is forcasting, we have no cystal ball with exception of having all the answers in place before the questions. And took over 30 stabs at it and, can make some profits when you don't find overall huge trade.

    Have to be patient.
  8. I don't feel like divulging my private research online on a public forum. Especially considering all the douchebags frequenting this site.

    But to give a small hint you might want to consider time and ranges.
    Turveyd likes this.
  9. Turveyd


    Time, what time of day, trade to suite that time defo.

    Ranges. too often break out against you then no way to know when the exit which creates SL movement and HOPE and DOOM!!!

    Small ranges are good mind, still use them.
  10. Thor


    Whats the deal with the 4hr? Usually most people want the daily.
    Reversal dates is old hat, there are guys around who have been doing it for over 10 yrs

    There are a few who do price highs/lows as well but very rare.
    #10     Aug 1, 2020