CPOResearch.com  A Product Of Market Projection Technologies, Inc.

Cyclical analysis for traders and investors

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The chart shown above is an example of a recent projection on the 60-minute S&P cash.  The pink middle line is the projection, accompanied by an upper and lower band to indicate when prices reach extremes.  The middle line is the actual market action as represented by our detrended oscillator, similar to an RSI (Relative Strength Index).  

The best trading opportunities tend to arise when prices are hitting the upper or lower band of the projection while the cycle pressure is turning in the opposite direction. Additionally, when both the 15- and 60-minute projections are pointing in the same direction, the confidence level is increased.  Brief commentary will accompany the forecasts.  Of course if you already have a successful methodology our projections can enhance it.  Try it out for two weeks with no obligation.  It costs you nothing to see if it improves your performance.

Frequently Asked Questions

The most frequent question is, what is represented on the Y axis since it is not price?  Basically we are tracking and forecasting an oscillator that is very similar to RSI (Relative Strength Index).  It always stays between 0 and 100.  By converting price movements to a 0-100 scale it detrends the data and makes cyclical forecasting more accurate and efficient.  The period of the RSI (e.g. 21 day) we are forecasting is the first number in the series of numbers in the bottom right corner of each projection. (The third and fourth numbers show the number of data points analyzed, and then number of cycles we are using to make the projection).  Since we are by definition, then, forecasting RSI for all practical purposes one needs to become familiar with it and how it mirrors actual price activity.  I recommend you put up an RSI indicator along with your favorite chart to compare how it moves relative to the underlying market.  RSI peaks usually precede price peaks, and RSI troughs usually precede market bottoms.  This must be taken into consideration when using the CPO to trade.

Another question that has come up is how to read the time scale in the projection.  The software was originally set up to work with daily data, and on the daily charts the time scale is accurate. The intraday projections are for two weeks unless otherwise noted.

Another question is, what does the green middle line represent?  This line is an assimilation of cycles and actual market behavior.  It's not necessarily what the previous projection was, but basically a combination of the cyclical forces "marked to the market."  The pink line is the true projection.  If you compare an older forecast with a more recent one you can see how the green line relates to what was previously projected.

There are several ways one can use the CPO projections to assist you in your trading.  First, it can be used as a "filter" in conjunction with another methodology.  For example, one might want to only take trades generated by another method when they are in the same market direction as projected by the CPO.  Second, if you happen to be a trend follower you could stay with the trend until the projection shows that a trend change is imminent, buying on dips in an uptrend but standing aside when the projection turns down for example.  A third way to use the system is on more of a stand-alone basis.  Typically the best trades occur when there has been an established trend, say a rising market, and the oscillator is hitting the upper band of the projection just at the time that the projection is rolling over and turning down.  In this way by selling you would have the advantage of both a price extreme, and a significant change in market direction.  Projections that show a large and sustained move provide the most compelling opportunities, as opposed to sideways or very choppy projections.  Also, it's rare that our model will predict the precise timing of the actual high or low, and one must rely on shorter term indicators as a turn appears imminent to fine-tune the timing of it.  Of course one also needs to use solid risk control and ideally rely on their market experience to facilitate entries and exits.

Occasionally we will switch to a different "model" when a particular projection runs awry of actual market activity.  Different projections are derived depending on the length of the data series we analyze.  We only publish forecasts when the projection has been accurately forecasting the market for a lengthy period of time. This tells us that the cycles are "working" and are currently in phase with market activity.  In the case of the intraday analysis we usually try to show more than one time frame and/or index so that there is an increased level of confidence when they all point in the same direction.  If the market starts to deviate substantially from one of the projections, there will hopefully be one or two more that will remain on track.  We are constantly reviewing price data over all time frames to isolate projections that are in phase with the market.  Once we then see the projection track accurately in real time for several days or longer we then make that projection available.  The software is powerful, but unfortunately it's not simply a matter of loading data and hitting "project." There is a bit of an art to finding the right combination of time frames and cycles to produce an accurate projection.