quant cycles and probability map

The attached image shows the near term and macro cycles within the NuSep market space.

These are areas that will be of significant this week (near term) and the macro targets that will remain valid for a month or so give or take some minor adjustment.

We use these in conjunction with our macro risk model that you can see by visiting Latest IQMS Macro Risk Model Map for NuSep

At its most efficient this information shows the areas in which probability of price action trading higher or lower really drops off precipitously and it is at these points where the highest probability counter trade setups are present.

i.e - this week if NuSep sees 0.0360 area I will be allocating long as it is at the lower boundary of the realistically probable trading range (S5 - or the 5th support cycle layer) HOWEVER, given that 0.0430 is the lower boundary of the probably macro trading range (S4) I would look to commence shorting at this point as the macro levels are of greater historical significance.

From the topside things work in reverse helping to target near term and longterm over bought levels against which a person may short however we hold an underlying bias to the longside in stocks due to the weigh of money needing to be long the market from a fund manager mandate perspective so we would be unlikely to short the stock but rather sit aside until a buy opp presents.

Finally, the percentages are a reference that make the probabilities directly comparable with each other against a total or 100% probable market space range.

These levels are of course not etched in stone but rather are a quantitative output designed to highlight what is probable from a mathematical standpoint. We use these for tailoring entries and exits but always with the larger context of our risk model analysis in mind.

If you would like any further explanation let me know.

Enjoy the week.

David.