Amanita Market Forecasting

Bradley Siderograph since 2009

(18.11.2010)

to the archive 2003-2006                to the archive 2007 - 2010

11/18/10 

Bradley siderograph 2011

This is the siderograph standard model (original formula of Donald Bradley) from December 2010 through January 2012:

In 2011 there are 3 major turning points:

• Feb 17, 2011
• July 29/30, 2011
• December 28, 2011

The other Bradley dates are:

• 1/16/2011
• 2/3/2011
• 6/15/2011, 6/22/2011
• 8/20/2011, 8/30/2011
• 9/26/2011
• 10/12/2011
• 10/28/2011
• 11/22-23/2011

Strictly speaking the siderograph dates are potential turning dates, bifurcation points in the language of chaos theory. In addition to the standard model there are 3 other models in the premium area. The 3 other models are different than the standard model discussed. All Bradley analyses in the free area since 2007 can be found here.

The standard model was - at least in the traditional interpretation - not very useful in 2010 (the Amanita premium area offers additional insights). In 2011 it should be even less useful:

• (1) The first reason is that from February through June 2011 there are no reversals at all, then from June 2011 through early 2012 such a large number of reversals with numerous overlaps in the extended window (+/- 1 week) that 2/3 of the time are marked as a potential reversal zone. With this set-up it's statistically next to impossible that between March 2011 & January 2012 the standard model is significantly better than pure chance.
• (2) The second reason is that we can be quite sure that in late August wave 5 of 5 of the hyperinflation has started, leading to a profound character change of the markets (more on that topic in the premium area). 

6/22/10

Bradley siderograph: watch the sun

The Bradley siderograph as the darling of readers hasn't been covered for a year (it was only touched briefly once), so let's discuss it today as I want to share some new insights with you.

What has happened since the last Bradley comment 6/30/09? The standard model 2010:

In the chart below please find the major turns of the standard model in large letters, the minor turns in small letters:

1. 7/14/09: important low July 7-10 (inaccuracy: -4 days)
2. 9/14-15/09: minor high 9/16-22 (inaccuracy: +1 day)
3. 10/22-23/09: high 10/19-21 (inaccuracy: -1 day)
4. 11/9/09: low 11/2/09 (inaccuracy: -7 days)
5. 3/1/10: -
6. 6/3/10: low 6/7/10 (inaccuracy: +4 days)
7. 6/9/10: low 6/7/10 (inaccuracy: -2 days)
8. 6/26/10
9. 7/8/10
10. 8/10/10

The (geocentric) standard siderograph available in the free area has been rather disappointing since August 2009 and of little help for the stock markets. Of the 4 really important reversals during this time frame (high mid-January, low early February, high mid/ late April, low late May/ early June) the standard model only nailed the latter one. Instead the turning dates of the Bradley only coincided with minor turns in the stock indices, and in half of these cases a large window of 4-7 days on either side was needed.

Today the Bradley siderograph is primarily an indicator for global liquidity, i.e. it is hardly specific for the indices. Actually it has worked better for the precious metals, for instance, as the Bradley date 3/1/10 that failed in equities nailed the intermediate-term high in gold/ silver & bonds in early May.

However, the heliocentric siderograph (available in the premium area) has worked much better than the standard siderograph. The standard model is calculated from the perspective of the earth (geocentric), while the heliocentric model is calculated from the perspective of the sun. It's uncommon that the heliocentric model is stronger than the geocentric model. I believe that the reason is the solar cycle pointing up since the solar minimum in 2009. The number of sun spots is now the highest since 2006, which may mean that the solar perspective is getting more important.

6/30/09

Surprising insights into the Bradley siderograph

„Bradley" and „siderograph" continue to be the most frequent search terms on http://www.amanita.at/, so the interest is still very high. Since the latest free comment on the siderograph dates back more than a half year, I'd like to dedicate this newsletter to the Bradley and present, among other factors, a small quantitative study with surprising results. The siderograph can be found on many web pages but Amanita Market Forecasting is the only place to find this type of groundbreaking research!

The past turning dates were (standard window +/- 4 calendar days, sometimes up to +/- 1 week - basis S&P 500 close):

• Dec 14, 2008 (low, important): 12/16/08 short-term high for 2-3 weeks (deviation: +2 days), in early January the indices went somewhat higher
• Jan 20/21, 2009 (high): short-term low 1/20/09 (deviation: to the day)
• Feb 8/9, 2009 (low): short-term high 2/9/09 (deviation: to the day)
• June 3, 2009 (high): intermediate-term high June 2-12 (deviation: none, extended topping out within tenths of a percent over 10 days)
• June 26, 2009 (low): intermediate-term low June 22, 2009 (deviation: -4 days)

In the past 12 months we had the following 5 major (multi-month) equity market reversals:

• (1) 7/15/08 low
• (2) 8/11/08 high
• (3) 11/21/08 low
• (4) 1/6/09 high
• (5) 3/6/09 low

Boy, oh boy! None of the 5 was caught by the standard model (although the heliocentric model did a much better job)! So the Bradley recognized only minor reversals in the past year. Especially painful and irritating for many is that the bear market bottom in early March was missed. The premium subscribers of Amanita Market Forecasting were informed just in time, however, as 2 days after the March 6-9 low an update was sent out suggesting that probably a low of ‘epic importance' (low of 76.6 year cycle) had been formed, and a monster rally would be due. And as a matter of fact, we have meanwhile witnessed the biggest advance in 71 years. In a nutshell, the Bradley siderograph is grossly overestimated (in its traditional interpretation). That's why in my work this model is just one of 20+ factors in the CSQN model.

Remaining turning points in 2009 (the Bradley 2010 is released in late 2009):

• Jul 14/15 (important)
• Sept 14/15
• Oct 22/23
• Nov 9 (important)

Of the past 5 turning points, the polarity was right twice (i.e. Bradley high = index high, Bradley low = index low) and 3 times wrong. This confirms the warning repeated all of the time, "The Bradley predicts turning points ONLY and not the polarity, i.e. a high in the chart may also be a low and vice versa."

However, that doesn't mean that the Bradley isn't saying anything at all about the direction of the financial markets, let me share some astonishing findings. I have calculated the Pearson product-moment correlation coefficient (r) of the siderograph with oil, EUR/USD, SPX, gold, and what (latest data point: 6/12/09). Below please find the results for the geocentric and heliocentric model (geocentric means from the perspective of earth, heliocentric from the perspective of the sun).

In the 2^nd column please find the average for the periods "since 2007, "since 2008", and "since 2009", the reason is to give the newer data points more weight. At the bottom please find the mean for each market, e.g. the average heliocentric correlation r (CL, SP) = 0.823. Interpretation:

• Crude oil: The 93.4% correlation for CL in 2009 (r²=87%) is almost too good to be true, especially if you take into consideration that over the past 180 trading days the correlation of Nasdaq 100 and Dow Jones was a mere r=55% (http://www.mrci.com/special/correl.htm). Convincing is not just the stability (the lowest correlation was still a good 73.5%) but also the rise each year geocentrically, as well as the agreement of the geocentric and heliocentric Bradley (average correlation in both models 82%). Thus the siderograph is extremely important for the price of oil and, at the time being, mostly a model for crude but not for stock indices!
• euro/dollar: A bit of all right also the correlation of 83% since 2008 and still 75% since 2007 (N=891) for the euro compared to the geocentric Bradley. In addition, the correlation is rather stable over different time frames and quite similar geocentrically and heliocentrically, so the Bradley is good to forecast the EUR/USD rate.
• stock indices: The correlation with the stock markets is unstable and fluctuates between a useless r=43% and a high r=88%. Forget anything below r=50-60% (r²<36%). The correlation with the rising BRIC countries is better, a sign that they are attempting to take over global leadership.
• gold: Even less useful is the Bradley for gold where the correlation is below 50% on average. Interestingly, gold has reacted much better to the heliocentric (r=54%) than to the geocentric model (r=40%).
• wheat: This correlation is very weak, inconsistent and not usable in forecasting, especially in the heliocentric model with r=28% (r²=8%). In contrast to gold, wheat is more leaning towards the geocentric siderograph.

Conclusions from this little study:

• timing (window +/- 1 month): The correlation with the siderograph is rising in bad times because of the synchronization of the markets (the highest in 2008) and declining in calmer times. One has to allow a fairly large window of +/- 1 months (or even more): even oil with its high correlation still diverged for weeks from the siderograph.
• differences between markets: the Bradley works best as a trend intensity indicator for oil & euro, as opposed to the popular wisdom the correlation with the stock market is barely useful. Gold and wheat don't pay attention to the Bradley. At any rate, the siderograph should never be used as a stand-alone tool.
• geo & helio: one should always monitor both models in a holistic synopsis as they are almost equally powerful with r=61-62%, i.e. the standard model alone is not sufficient for the analysis.

Bradley 1852-2040

After this short-term view now to a very long-term one. Below please find the siderograph chart 1852-2040 (calculated with the „Market Trader" by Alphee Lavoie):

The formula assigns harmonic angles (60°, 120°) a positive value and disharmonic angles (90°, 180°) a negative value, the sum of all values is the chart as you know it. The lower, the worse the (economic) situation on average. The all-time low was in 1931 during the Great Depression, the model was also very low in 1875 after the crash of 1873, and in 2010 we are approaching the level of 1875. Isn't it interesting that the two historic models for the current situation are the years around 1931 and 1875? The Bradley low of the past 500 years was in the 1640s by the way, at the end of the Thirty Years' War (1618-1648) and after the first speculative bubble in history had burst (1637 tulip mania in Amsterdam). The reason for the low in 2010: the massive tension angles between the slow planets (T-square, partly even Grand Cross).