Manfred Zimmel - Amanita Market Forecasting - Amanita Pivots

The free Amanita newsletter keeps you informed about interesting & valuable updates in the free area.

Amanita Pivots

Amanita Pivots

 

 downloaded-551368e03eac01e97ea44bd13ffcd147-1233655217.img

Example: This chart shows all Amanita pivots for the stock markets (S&P 500) from mid-March until mid-August 2004 with the rating system explained below. The pivots with a strong rating of 3 or 4 amanitas4 amanitas: Excellent prognosis quality. With respect to the Amanita pivots it means odds of P=85% of an intermediate-term trend reveral, however usually stretching over 1 week or longer. Amanita Market Forecasting is consistenly using a rating system with 4 amanitas (fly agarics) being best and 1 amanita (fly agaric) being poorest. caused major reversals within +/- 1-2 trading days, as expected the only very weak pivot July 6 rated one 1 amanita1 amanita: Weakest prognosis quality. With respect to the Amanita pivots it means odds of P=15% of an intermediate-term trend reveral. Amanita Market Forecasting is consistenly using a rating system with 4 amanitas (fly agarics) being best and 1 amanita (fly agaric) being poorest. didn't produce anything significant. The Amanita pivot April 23 was not on a closing basis but on an intraday basis a double-top with April 5 and thus an intermediate-termintermediate term means a time horizon of 1-3 months. turning point that was not significantly exceeded within +/- 1-2 months.

 

The Concept

Of great importance for traders and the greatest weakness of conventional methods is the exact market timingIn the Amanita prognostications, timing is almost always more important, reliable & precise compared to prices. The standard window for all time projections is +/- 1 week, with the exception of the Amanita pivots (+/- 1-2 days)., i.e. to recognize potential turning points (= decision points; in the language of chaos theory: bifurcation points) in the 5 markets tracked - stocks, bonds, currencies, precious metals, oil - with a good probability some weeks before the date. That's why the Amanita pivots (dates for potential intermediate-termintermediate term means a time horizon of 1-3 months. trend reversals) are a crucial part of the Amanita forecasts, they are sent out a few weeks in advance. After years of research the Amanita pivots have become much more than just a timingIn the Amanita prognostications, timing is almost always more important, reliable & precise compared to prices. The standard window for all time projections is +/- 1 week, with the exception of the Amanita pivots (+/- 1-2 days). model, it's actually a whole system also including prices. The 3 main functions:

  1. timingIn the Amanita prognostications, timing is almost always more important, reliable & precise compared to prices. The standard window for all time projections is +/- 1 week, with the exception of the Amanita pivots (+/- 1-2 days). of intermediate-termintermediate term means a time horizon of 1-3 months. (1-3 months) trend reversals:
    The ideal window is +/- 1 trading day, the normal one is +/- 2 trading days, the extended window of +/- 3 trading days applies to some 10% of all cases. In other words, within the normal window ~80-95% of the projected reversals come, whereby close or print extremes count and a tolerance window of some tenths of a percent (depending on the market and on volatility it may be more). Some 85-90% of the important reversals come with an Amanita pivot , so the odds are about P~90% that a price extreme set without an Amanita pivot is at least tested (or violated) within 1-2 months. The Amanita pivots have been developed to time intermediate-termintermediate term means a time horizon of 1-3 months. (1-3 months) trends though they often do predict short-term trends as well. For every market there is usually one Amanita pivot per month, sometimes two, the average distance is 3-5 weeks.
    ---
  2. setting of decision-points resp. time stops
    The market action in the 1-3 weeks before and after an Amanita pivot is very revealing, especially if there are two possible scenarios. Amanita pivots are always decision-points (bifurcation points) but not necessarily always reversals - the rating system modifies the odds of being a reversal.
    ---
  3. setting of price stops and support/ resistance levels
    The price extreme (high/ low) set near an Amanita pivot acts as a strong resistance or support and thus is a stop level for scenarios and trades with an allowed tolerance of a few tenths of a percent (double-top or double-bottom). The strength of the support or resistance price depends on the rating. Within the same intermediate-termintermediate term means a time horizon of 1-3 months.cycleA cycle is a recurring event in the markets. (depending on the market and the situation 4-6 months on the average) every Amanita pivot must be higher than the previous one in an uptrend and lower and in a downtrend.
    Example: The market is in an intermediate-termintermediate term means a time horizon of 1-3 months. uptrend since 1/1 and the next Amanita pivot is 3/1, so the trend can only turn down (market timingIn the Amanita prognostications, timing is almost always more important, reliable & precise compared to prices. The standard window for all time projections is +/- 1 week, with the exception of the Amanita pivots (+/- 1-2 days). #1) if the market rises into the exact Amanita pivot 3/1 (+/- 1-2 trading days, time stop #2), if however the market turns down 1-2 weeks early (e.g. on 2/20) and drops into the Amanita pivot 3/1, then the uptrend is expected to continue (error probability P<10-15%), i.e. the Amanita pivot was a decision-point (#2). At the same time the price stop (#3) for a long position can be trailed to the low set around 3/1. This low also becomes a good future support (#3).

 

The Amanita rating system

The rating system modifies the strength of the Amanita pivots, i.e. the probability of a major reversal:

weak Amanita pivots
Turning points set with a weak pivot are usually tested within 1 month (sometimes extends to 5-6 weeks)

file 1238158535-557db4e2fbe840fc2f89a199cb9f32a0 rating 1 amanita1 amanita: Weakest prognosis quality. With respect to the Amanita pivots it means odds of P=15% of an intermediate-term trend reveral. Amanita Market Forecasting is consistenly using a rating system with 4 amanitas (fly agarics) being best and 1 amanita (fly agaric) being poorest.:
probability of an intermediate-termintermediate term means a time horizon of 1-3 months. trend change: 15%
file 1238158549-32e91fe81292b155224c309707c0d5fb rating 2 amanitas2 amanitas: Average prognosis quality. With respect to the Amanita pivots it means odds of P=30% of an intermediate-term trend reveral. Amanita Market Forecasting is consistenly using a rating system with 4 amanitas (fly agarics) being best and 1 amanita (fly agaric) being poorest.:
probability of an intermediate-termintermediate term means a time horizon of 1-3 months.  trend d change: 30%

strong Amanita pivots
Turning points set with a strong pivot need no re-test

file 1238158562-e77fadbf68e2453bc802584ccecf480c rating 3 amanitas3 amanitas: Good prognosis quality. With respect to the Amanita pivots it means odds of P=60% of an intermediate-term trend reveral. Amanita Market Forecasting is consistenly using a rating system with 4 amanitas (fly agarics) being best and 1 amanita (fly agaric) being poorest.:
probability of an intermediate-termintermediate term means a time horizon of 1-3 months.  trend change: 60%
file 1238158575-d5d36f2b721b3e6e286ac102b2e38410 rating 4 amanitas4 amanitas: Excellent prognosis quality. With respect to the Amanita pivots it means odds of P=85% of an intermediate-term trend reveral, however usually stretching over 1 week or longer. Amanita Market Forecasting is consistenly using a rating system with 4 amanitas (fly agarics) being best and 1 amanita (fly agaric) being poorest.:
probability of an intermediate-termintermediate term means a time horizon of 1-3 months. trend change: 85%
In many cases, this is not just a medium-term reversal (1-3 months) but also a longer-termLonger-term means a time horizon of 3-12 months. reversal (3-12 months).

Besides, the rating system is also to some extent predicting the strength of a trend on the price axis, the stronger the turning point the more pronounced is the trend before and after the turning point. The absolute magnitude mainly depends on the volatility and higher trend, i.e. in  downtrend the up-phase will be weaker than the downphase, and vice versa in an uptrend.

 

CSQN Model

The Amanita pivots are based on the principle: no intermediate-termintermediate term means a time horizon of 1-3 months. turn without an Amanita pivots (error probability: P<15%). For this purpose I have created the CSQN indicators (CSQN means "conditio sine qua non", absolutely necessary condition). To my knowledge, the concept of the Amanita pivots is radically different than all other existing timingIn the Amanita prognostications, timing is almost always more important, reliable & precise compared to prices. The standard window for all time projections is +/- 1 week, with the exception of the Amanita pivots (+/- 1-2 days). systems, I'd like to explain that with the aid of the Fibonacci numbers that are widely used. This method starts at a major top or bottom (e.g. the March 12, 2003 low in the stock markets) and counts days in the Fibonacci interval into the future: 8, 13, 21, 34, 55, 89, 144 etc. days after the turn there are sometimes again major reversals.

Inspired by the Galactic Center in early 2003 I chose the opposite path and asked myself: which astrological and non-astrological conditions are present at all (or almost all) medium-term reversals? With that question I arrived - after hundreds of hours of researching and experimenting - at a set of some 20 CSQN indicators (the exact number is changes because the model is improved continuously) that all have to be fulfilled at the same time for to allow a major turning point. Every single indicator has relatively little predictive power and a wide window of +/ 2-7 trading days. By combining and weighting all indicators in a single model the possible turning dates are narrowed down, as the actual turn will almost always fall very close to the day with the highest rating. The CSQN model says nothing about the polarity (high or low).

I can't say much about the some 20 CSQN indicators to protect my competitive edge, two publicly discussed indicators are the Galactic Center and the Bradley siderograph. Some of the indicators are based on the Golden section and the holy numbers 3 and 7. While the astrological components of the model can be calculated years in advance there are also indicators that depend on the market action, so the model is complete a few weeks ahead of the Amanita pivot.

Here is an example for the Amanita pivot August 14/15, 2007 for the equity markets, which successfully nailed the low 2007 on August 15/16. Each trading day was assigned a value by each of the 18 CSQN indicators used, the sum is divided by the theoretical maximum score resulting in a percentage value for each day, with 100% being impossible to be reached in reality: 70-80% is the best you can expect, 50-70% is average, everything below 55% is weak. The day with the highest percentage value defines the exact Amanita pivot. The ideal case is a day with a high 70-80% and the days before and after scoring below 60%, in this case the Amanita pivot will likely be precise (+/- 1 trading day). If, however, the CSQN model is not as precise, you have to factor in +/- 2 trading days.

file 1239354987-aa8a6799b4fe066b2b65bfe23561a4f3


Further hints & fine-tuning

(1) context: While the Amanita pivots are a great help they are by no means a stand-alone tool. They make only sense within the context of a full prognosis and the other factors, especially the intermediate-termintermediate term means a time horizon of 1-3 months. model.

(2) benchmark: The Amanita pivots are optimized for the main benchmark in each of the 5 markets. The Amanita pivots for the stock markets are optimized for the leading index of the Western (US and European) stock markets, the S&P 500 (SPX). Mostly all 5 indices S&P 500 (SPX), Dow Jones Industrials Average (DJI), Nasdaq 100 (NDX), DAX, EuroStoxx 50 do turn on the same day, if not the divergences don't exceed a couple of trading days and are seldom significant.

(3) polarity (high/low): The polarity is open, the likelihood of a high or low cannot be calculated in advance with a model. Instead, an 'ideal' polarity is often suggested, this 'ideal polarity' may change from week to week depending on the market action. Nothing in the world can replace the real-time observation of the markets. Usually the polarity is finally determined in the week before the Amanita pivot by answering the question, "is the market trading at a 1-3 month high or low?""

(4) tolerance window: Amanita pivots are not always predicting the exact reversal on an intraday or closing basis but sometimes re-tests (double-tops and -bottoms) with a tolerance zone of a few tenths of a percent (depending on the market volatility). The rule applies that if an intermediate-termintermediate term means a time horizon of 1-3 months. turning point is set at a date that is not an Amanita pivot then this level is going to be re-tested within one month with the first (or sometimes second) ensuing Amanita pivot (odds ca. P=85-90%)

 

Consensus Pivots

Consensus pivots are turning points in some of the 5 markets (stocks, bonds, oil, precious metals, currencies), with the individual Amanita pivots for each market to be found within +/- 1 week. The advantages of the concept:
1. Consensus pivots count automatically (at least) as an Amanita pivot with  a rating of 2 amanitas2 amanitas: Average prognosis quality. With respect to the Amanita pivots it means odds of P=30% of an intermediate-term trend reveral. Amanita Market Forecasting is consistenly using a rating system with 4 amanitas (fly agarics) being best and 1 amanita (fly agaric) being poorest. in each market.
2. Synchronization: individual Amanita pivots in each market are often 'pushed' towards the consensus pivot on the time axis because the markets have a tendency to synchronize, to turn near similar dates.
example: Amanita pivot in oil (or any other of the 5 markets) on 3/10, consensus pivot on 3/13 - in this case the actual turning point is likely coming somewhat late (after 3/10) and hardly before 3/10.