Hi Whipsaw-
chart pattern I watch for good entry point. longtime coming but its getting closer by the day. something cautionary for all those currently in CSI to consider:
View attachment 38898
This is same chart posted the other day, for ease of adding some interp and discussion per Whipsaw's request.
So this chart shows the movement of the SP500 (black line=the market index our C fund tracks), over the past 3 years. that's what the right side chart numbers represent.
The green line measures movement of the 10day moving average relative to the 20day moving average, each day. It is not a simple metric that one can easily run for themselves in a spreadsheet or charting software, userque tried awhile back to figure out the formula that creates the green line from the moving averages. Even he failed, because somehow it measures 10 and 20 day moving averages of each and every individual company in the SP500 and integrates them into the green line that you see.
The level of the green line is essentially a measure of volatility and risk from what I can understand, based on statistical movement above and below the mean of the 10day moveing average relative to the 20day moving average. the left hand side of the chart measures the ratio of the 2 moving averages. 1 would be the value when the 10 and 20day moving averages are the same value. that is the mean/average of the averages.
When the 10day moving average drops below the 20day moving average, you move down below 1, but the green line formula is such that the line doesn't drop until there is a measurable/meaningful statistical difference (-1 standard deviation) in the ratio of the 2 moving averages (e.g. .99), relative to their mean, in statistical terms.
The farther one gets from the mean of 1.0, +/- 1sd, +/- 2sd), the bigger the risk of a snapback to the mean or drop below the mean of the moving averages, ie, when you see a pop up of the green line to the 1sd or more rarely the 2sd level (November 2014, November 2015), the greater the probability that a drop is coming in not too distant future. It's not perfect on timing, just probability that it's in the air.
On the down side, when I see a -1sd is a probably decent entry point if out. -2sd level is even better, but as you can see from the drops last August and in January, it would appear to be best to wade in a chunk at a time, in case an aftershock drop is coming.
the charts I've posted previously have often showed the 5day moving average/10 day moving average chart as well as the 10x20day moving average chart. the shorter timeframe tends to give faster exit/entry signals both directions with the 1sd and -1sd pops and drops, but there also seem to be more whipsaw action in those charts so I've started focusing mainly on the bigger, slower signals for myself, since they tend to be longer lasting trend indicators. which fits the 2x/month move limits a bit better, in my mind.