A Simple Way To Predict Market Turning Points (and impress your friends) - Bob Pelletier (President of CSI)
This brief report is designed to advise those who may have an interest in systems, methods, or services which predict market turning points far into the future. If you have been solicited by any firm that does this, you may gain some important insight into this area by reading on. Whether you plan to purchase such a service, system or secret is your personal choice. CSI has no preference for one commercially available procedure over another. We simply wish to point out facts that may be helpful.
If I were to tell you to "Pick any date in the future, for any commodity, and I will show you the next turning point that will occur relative to that date." You might think I'm crazy, or strongly doubt my claim. The truth is, that anyone can do this within an accuracy of, say, three days about 70% of the time, or within four days 80 to 90 per cent of the time.
The secret depends upon how one defines "turning points". Suppose we define intermediate market swings or turning points to occur about 25 times per year, or twice per month. Since there are about 250 trading days per year, this allows for one turning point per 10 days. With a dart and a calendar into the future, the dart will hit some seven day time interval (the day hit plus or minus three days) each time it is thrown. If turning points occur, on the average, once every 10 days, then there is a 70% chance my dart will include a turning point within three days.
Additionally, if I knew that last week there was a definite low, my next turning point will be a peak. I'm not interested in 1997; I may not live that long. I can only make money if I can bet on the next immediate turning point for various cycle lengths.
There is not enough room in this Newsletter to show how market turning points can be predicted with more reliability, but it is possible to provide an unbiased estimate of the next peak and the next trough for each given predominate cycle period. Using a method which treats peaks independent of troughs can produce a non-regular period between peaks and troughs (a more realistic behavior) for future market cycles.
Before spending your hard-earned funds on any system, be careful to discover what you can do under purely chance conditions without it.
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