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Clock work timing

This article will show also our long term Time patterns model, suited for longer term investors. A very interesting pattern is at work.
Furthermore we will evaluate our shorter term models and indicators, show results of our option time model on real historic CBOE option data and introduce a newly found acceleration pattern for traders.
DeLorean Opening prediction
Again an excellent result on all markets. DAX January + 151, February + 109 and March +182 points. SPX January + 63, February + 33, March + 26 points. The recovery and high volatility in January explains the extra points gained.
Back to the future- based on DeLorean indicator monthly
Predictions in last article (Time’s up) made the following predictions. Take a seat in DeLorean and we will travel to the future and back. Every day and week there will be trends up and down, small and large. Look at indicator going up or down at the predicted date.

Long term Time patterns-Another correction coming
Actually this analysis is a must for longer term investors to have some idea of what the future will bring. Back in 2014 we have already wrote an article about some of characteristics. Meanwhile we have developed a pattern recognition that finds matching patterns in the past and future.  Next step is to compare trends and performance for this pattern as found in the past. Right now a very specific long term pattern has been forecasted from our time cycles, see the top indicator represented as a green line. Using this approach we can look into the future when a time pattern will be there and how it looks. Since history repeats itself, patterns do as well and thereby give a good approximation of what markets will do in the future if the time pattern has the same effect on markets.
The pattern displayed here from half of 2018 till beginning of 2020 highly resembles the pattern at work in from 2001 till 2003, which is why it got our attention. Back then it was part of a bear market, including the 9/11 terrorist event, resulting in a decline overall of around 30%.

The performance of the best matching patterns are displayed in the chart below. When performance is alike markets could witness another strong correction in 2019. Since this is a long term pattern, it needs a larger time band width of around 3 months.
Typically during the 1st green wave up, also in 2001-3, the correction starts with a sharp decline, when the indicator at the bottom of the chart (black line) below starts to decline from its maximum above 2. The red line indicator is a volatility indicator, above 1 and rising means high volatility.
When the green indicator is in the middle of its high above 1, historic performance shows that normally a decline will happen, therefore pointing to the period June- September. History also shows that if the indicator on the bottom has a reading above 2, making several tops, that the occurrence of a larger bear market is more likely, pointing to a level in the Dow of around 21000-22000 points.

Historic performance with same pattern displayed in chart above. Time pattern circled in RED, that coincides with corrections. Green line is Pattern and direction, red line is volatility when rising and nearing 1, black line is strong correction when above 2. The colored lines in the chart itself are historic perfomances when sam pattern active.


UPDATE Trading system using options.
A mentioned in our previous article , we have developed a directional tradings system for options using DeLorean Monthly. This means that we follow the direction of the indicator to trade long or short using options. Additionally mention that we use SPX options because of liquidity, diversification, pricing and expiration every 2 days. Short term options are most advantageous.
Now we have extended our research and simulated the results of our trading strategy using DeLorean indicator with historic real time 15 minute option prices of CBOE. Our software automatically selects out of the money options for writing calls or puts at a 0.5% (this can be changed to any %) out of the money excercise price compared to spx at the moment of trading. Stop level is at 0.9%, reducing this to 0.6% still gives around 80% hitratio.
Consequently there is always a leaway of 1 % for the position in case the market does not follow the DeLorean indicator immediately.

Trading is based upon the swings in the indicator from top to bottom and vice versa. So a short trade (red arrow)-writing calls- will appear when the indicator starts to decline. A long trade (green arrow)-writing puts- when indicator rises again from a bottom. The strike price is 1% above the SPX price when writing calls and 1% below the market price when writing puts. This way a trade will still have full profit as long as it stays within this bandwidth. If not the trade is stopped out.
With a capital of 150k 3 years trading options resulted in a profit of 144k, almost 100% with a max drawdown of ca. 5,5%.

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Time’s Up

Last quarter of 2018 crisis was predicted in advance using the DeLorean indicator. A larger correction was overdue for a long time and time was running out. So inevitably at some point there would be a breaking point where our indicators turn RED. Finally we have witnessed again extreme turbulence in the stock markets which has upset the financial world. Investors and traders were not accustomed anymore to wild markets, not counting the February 2018 flash crash, nor a bear market.  A decline in the SPX index (as well as many other indices) of 20% was indicated by the time patterns and triggers of DeLorean, before it happened.

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Once Upon a Time

History repeats itself time and time again makes it possible to discover hidden order in the apparent chaos in financial markets. So what happened once upon a time will happen again when intertwined time cycles indicate the same energy to cause panics or bull markets. People respond to energy whatever the source is.

History repeats itself

The research we have complete in the last decennium was only possible because nowadays we have available a vast amount of price data as well as the fact that computers are fast enough to process this data using complex algorithms. In addition, programming software has evolved to such a good quality that programming complex models and its maintenance is possible today. Also science and mathematics have made big steps in understanding and modeling complex interrelationships using big data.

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In the Nick of Time

One year ago, on March 19th of 2017, the story of DeLorean had a beginning, after many years of research. Using time waves predictions had been made for the first time to forecast the opening of future trading days- for ALL trading days at once- from March 20th until the beginning of May with regard to DAX and SPX.

The trend for a trading day Could be UP, DOWN or neutral (=not available). Obviously to take advantage of this prediction traders had to buy or sell the day before. This has been documented and sent to a selective group of traders.

Beginning of April 2017 we contacted Tradersworld to sent research along with predictions and wrote the first article for Tradersworld.

Beginning of May it seemed that the outcome was very significant with a hit ratio of around 75-80%, healthy profits and no drawdown on a monthly basis. Still, it could have been a only good period. Now, after one year of predictions, it is clear that our time waves and cycles, which are fractal in nature do work quite well. Below the results for DeLorean predicting the opening trend of the next day one month ahead:

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Just in Time Trading

Referring to our last article in TW #66, we will show more of our time cycles systems and focus on the SPX expecially. (All predictions have been sent to Tradersworld in advance and support our results.) Also we will review August 2017 and point out some periods to come in September, which will now a lot of volatility. Please take join the ride and just try it, you will be surprised (see special offer for Tradersworld)

We are of the opinion that TIME is the most important variable in trading, especially if combined with trend forecasts. For this purpose fractal Time cycles have been discovered after years of research.

If a trader has a high percentage chance to forecast when a trend will begin, his hit ratio and win/loss ratio will already rise dramatically.

Should this trader also have a reliable prediction of the trend, therefore knowing when and in what direction it will happen, then the odds are even more in his favor.

That is exactly what DeLorean (time waves and patterns on a small scale) predictions do, forecasting when a trend will start and in what direction. DeLorean does this with on average an uncanny precision, although there are and will be shorter periods that forecasts are less precise.

The only way to be able to profit from DeLorean predictions or any Time cycle is by applying the method consistently and use a fully quantitative approach. This is where our Time Patterns and waves are different from Elliott Wave, because the latter is – although quantified and systematic- in the end an interpretation of teh count. Even worse, if the correct pattern has been found, a trader does not know what the next wave will be or when it will start. Using DeLorean this is much more clear and effective.

Continue reading “Just in Time Trading”
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