This is a long post. Please skip or avoid if you are running short of time, thanks:
Since there is a lot of contention and ambuguity ( not to mention the arguments and conflicts that come about the wise intentions of members trying to use projections into the future to divine the XJO, as evidenced in the "please..please" thread), I tried to use only past historical data and charting to see where we are instead of being overwhelmed by the amount of opposition and contention between fundamental analysis and technical analysis in this forum, or throwing in the towel and avoid posting further charts that have a forecasting element, and so save the peace and avoid being flamed and torched unnecessarily.
Anyway, first the necessary preliminaries:
There is zero fundamental content in this post. Where there is any forecasting component in this chart, it has been plainly stated to avoid flaming. This chart is for entertainment purposes only. Please skip or ignore this post if you are a fundamental investor or long term buy and hold position trader. Please read my disclaimer below my signature line.
Now, on to the discussion:
I have drawn two band envelopes over the price bars of XJO to cover different time frames, the nature of the envelopes illustrating the cycles of highs and lows of the XJO. A projection of the band envelopes has been extrapolated outwards briefly - this projection is subjected to repaint or redraw as more data becomes available as it has to be adjusted to the actual. It is not casted in stone.
Below the price bars, I have plotted the cycles in the form of the Cycle Highlighter that is available in most trading software, so that the two cycles can be monitored in space and time by the intersection of a horizontal line, and so that the tops and bottoms are better represented as the cycle highlighter lines are smoother visually.
Results:
1. Since 2005( the starting of this study ) till current, each price top has consistently topped above the horizontal line, in the fashion as marked above, except ONCE in July 2007 which was a temporary top from which the XJO went on to make a higher top a few months later.
2. The trends of the XJO are as illustrated within the two bands envelope, the shorter time frame envelope band pointing upwards, while the larger encompassing green band envelope projected to top over soon ( once again, this is a projection - not gospel truth as the end point has to be adjusted as data is made available).
3. I have avoided pegging a forecast in space and time on the cycle projected top, so that those interested can do the necessary projection to satisfy themselves.
Questions:
Will the XJO make a cycle top below the horizontal line of the Cycle Highlighter or will it top out as usual above the horizontal line? The location of this top leads to an interesting conclusion - if it is below the horizontal line, it may mean that we will be making a rare top that will be temporary, possibly followed by a higher top if it follows the past single similar event since 2005.
If it is topping in the usual fashion above the horizontal line that may mean there is more time before this topping event, subjected to the usual pullbacks and rebounds.
Considering the balance of probabilities and past statistics, which is favoured to occur?
(20min delay)