possibile outcomes in cycle analysis for cvi., page-82

We know that buying a stock at the bottom means we are buying at an area of low risk. This area of low risk also should coincide with a cycle bottom if we perform cycle analysis. Some traders are "turned off" with cycles, waves and swings and fourier transforms, fractals and spectral analysis. So let's look at what I call a Risk Management chart of CVI at today's close to see what level of risk we are at with CVI. Have we reached a level of low risk to be wildly happy with CVI or are we soon coming to such a level of risk?

Adopting 12 parameters of risk measurement eg. macd, rsi, stochastics, momentum, CCI, Williams %R and other zero lag indicators, the Risk Management chart of CVI is plotted in Amibroker.

The bottom ribbon shows two colours - the green to indicate low risk and the red to indicate high risk.

There are risk bars of different colours, with their shades indicating the levels of risk. For example, a light green colour risk bar means the risk is diminishing and we are at the initial stage of a "go" - risk is low. We can also know whether any dip in price when the risk is low is a temporary pullback with a resultant continuation uptrend or represents a major correction or pullback as well. ( See my notes on the chart).



As of today's close, we have not gotten a light coloured green risk bar( initial area of low risk), and also we have not sighted a green colour ribbon as well. The best periods will be when we have a solid green risk bar and a solid green ribbon- that's when our risks are lowest!

It must be noted there is NO forecasting here- we are merely trying to uncover the tracks of the market, and to get in as soon as we have a confirmed signal of low risk.

Hope this alternative of identifying risk in lieu of cycle analysis is of use to some of us, cheers!