Please visit the product guide if you require this
drawing tool for a different trading platform.
Video
below shows future and steps features
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This indicator for MultiCharts saves a huge amount of time when performing annual cycle analysis research in technical analysis of markets in a fully configurable format
Indroduction and concepts of the Tri-Spectral
Forecast tool for MultiCharts
In a typical year of a stock price there are approximately 251 bars of data
and a crypto currencey has 365 bars, the difference is that the
cryptos are trading at the weekends.
When analysising a daily stock or future with this
price forecasting tool for MultiCharts the settings
would be 251, 502 and 753 for the settings of Back1, Back2, Back3.
If using it on crypto currencey such as Bitcoin BTC these are set to 365, 730 and 1095
as these product trade through the weekends.
Once these values have been inputted, the next step is to input how
many bars into the future to plot. The chart example below uses 70
bars.
It reads the last years change in percentage from the
current bar number -251 to calculate what happened last year on the
same date going forward 70 bars and plots it into the future.
Delightfully simple in its concept when one observes three
years all projecting in the same direction, one can see there is
possibly a cycle in action on the market.
On the same theme
as above, if the three plots are not going in the same direction and
there is no "Covid crash" or similar in the history then it will demonstrate the lack
of an annual cycle.
To make things even
more clear the date of the last three years analysed are highlighted
in the colour you choose which matches the colour of the projection
lines in the MultiCharts plot.
The chart of Apple
below shows evidence of an annual cycle with all plots
running nicely upwards at least for the first 50 bars or so. Also
clearly seen are the selloffs occuring in late August and early
September.
This extra knowledge
could be useful to prevent bad trades and helpful in confirming good
trades. If a friend wants to buy Apple stock at the end of August,
you can point out the cyclical evidence may not support the idea based on historical
analysis.
The well known stockmarket adage of "Sell in May and
go away" in this case would have been somewhat ill advised. This
forecasting tool for MultiCharts can save a lot of errors.
Using this price forecasting tool to confirm trades is the
general idea. In some cases where there is concrete evidence of a
firm cycle such as director sales after announcing the company
results on the same date every year then it gets more important.
Special features of the Tri-Spectral forecast tool for MultiCharts
The projection lines are drawn on
the chart in the form
of a multiplicity of trendlines and the amount of "steps" is user adjustable.
The above chart is using 30 steps.
These steps represent the points of price and time that the
trendlines use to be drawn. Steps =1 will draw a single line from the
close of today to the end point X bars into the future.
Steps of 250 will draw a line
between every point and clearly resemble the price action of the
closing prices for each year. (Future must be less than "Back1" to
avoid running over itself)
For clarity it is often helpful to use a sensible value of 20 or 50 steps to make it cleaner
when multiple years are used. (Steps must also be less than Future
to avoid more steps than days)
In character, in manner, in style, in all things, the supreme
excellence is simplicity.
Quote by Henry Longfellow.
An example of a very highly
correlated annual cycle identified by the Tri-Spectral Forecast tool is found in the image below
If you are interested to see how this cycle runs over the next
few of weeks the name of this stock is given via the link in the
email that is sent out after
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This is NOT a trade reccommendation to buy or sell or stay
out.
Backbars feature
This is set to 0 by default ( as in the chart above ) which means it looks back from the
last bar of the chart, which is usually todays date.
If you set this to 80 etc it will
examine the data basis of the date 80 bars ago. The purpose of
this is so it can be observed what happened on earlier dates when
looking for cycles.
The chart below of the UK Stock Tullow Oil plc also indicates
some evidence that an annual cycle is
present. This time it is bearish, possibly resulting from lower
oil demand during warm weather.
It can be clearly seen that the
cyan plot is less trustworthy than the white and green plots simply
because of the time it occurred.
Basis of this it would be
very wrong to assume a drop down to 10.81 is a serious possibility
rather than a very remote one.
The ease of determination of
which year is projecting which outcome shows clearly that the cyan
plot, is coming out of the back of the Covid crash stalled recovery.
With the distortion cababilities of past crashes causing
confusing cycle readings, there is a feature added purely too avoid
such plots from "bad years".
Ignored years feature
In the example above the cyan plot is the most spurious and
was likely caused by "external market conditions" to a greater
degree than the white and green plots.
The ignored years
feature when set to 1 will ignore last years (green plot) and set to 2
ignores the white plot and ignored years 3 would ignore the cyan
plot.
The chart below of Lloyds bank plc shows a
distinct lack of any annual cycles as the three predictive lines are
pointing in different directions.
In this screenshot the
steps feature is set to 1 so it only draws the start and the end
points when plotted in MultiCharts.
In the below example
Steps = 1 it
would be unwise to do a trade based on historical annual cycle
analysis as there is just a small short term downward kilter which
ends at different projections. This seems to imply nothing reliable
exists in terms of cycles.
The shot below of Gold futures has it future set to 80 and steps set to 100 so the
plot has more detail than the one shown above.
This example is another where there is no evidence of a
confluence of events to base a trade on. The red plot is up, the
white plot is sideways and the yellow plot is down.
Looking
for annual cycles in Gold futures during June leads to the discovery
that there arent any. All these evidences can be useful to
avoid making bad trading decisions as the chart clearly shows this
time of year can lead to a big drop in Gold or a big rise in Gold,
or a dull sideways non event in Gold.
View
license prices for Tri-Spectral forecast for MultiCharts
Some
real and genuine causes of annual cycles in stocks
The directors selling some of their
stocks. This is a very real danger or real opportunity depending on
if the trade is carefully researched in advance.
Company
directors are often not allowed to sell any stock until after the
year end or quarterly results are announced. This is often the exact
same date each year and the news might show excellent results followed by
a brief and large move up, and often within the space of just a few
minutes the price will start selling off very hard with a key type
reversal bar.
This director
selling is often enough to completely reverse an uptrend as they are
big shareholders in the game to make money, likely they will be the
ones who buy back in later at another predictable cycle date.
Seasonal trends
in stocks can be related to the "Christmas rally" where shops have
booming profits in the run up to Christmas, there are seasonal
trends in the form of holidays, weather, temperature or regular
annual events.
Dividend Payments: Dividend-paying companies
typically have specific dates for dividend distributions, which can
impact stock prices around those dates.
Annual Shareholder
Meetings: Companies hold annual shareholder meetings on fixed dates,
which can generate interest and potentially affect stock prices.
Product Launches: The introduction of new products or services
by a company on specific dates can create anticipation and impact
stock performance.
Industry Conferences: Significant industry
conferences or events held annually can drive attention to specific
stocks or sectors during those periods.
Regulatory Filings:
Filing deadlines for regulatory reports, such as 10-K or 10-Q
filings, can create patterns in stock movement as investors react to
the disclosed information.
Index Rebalancing: When stocks are
added or removed from prominent market indices, it can influence
trading activity and stock prices around the rebalancing dates as
institutions have to buy these stocks for pension funds etc, this
method requires care however as being demoted or promoted does not
happen every year.
Options Expiration: Expiration dates for
options contracts can lead to increased trading volume and potential
price movements in the underlying stocks.
Seasonal Trends: Some
industries or stocks may have seasonal patterns influenced by
factors like holidays, weather, or specific events.
Economic
Data Releases: Key economic indicators or reports, such as
employment data or GDP figures, released on specific dates can
impact overall market sentiment and individual stock performance.
The chart below of Ashtead group PLC shows three plots going up
in the same direction. Viewing the green plot warns us nicely that a
sharp drop is reasonable to expect before the possible rise comes
and also "advises" us that it could be safer to wait until the 23rd
June is passed before taking a long trade. From a simpler stand
point if someone wanted to place a short trade on this market on
this date, you can confidently explain to them why it could be a bad
idea.
The beauty of the Tri-Spectral forecast is that it
gives a clear and realistic sense of what to expect for the future,
and this expectation is based on historical data. Similar to
predicting when the Swifts and Swallows will arrive in the UK after
spending the winter in Africa. Typically they arrive at their
earliest in late March to early April, but in colder years they can
come as late as the latter part of May or the early part of June.
They are a good example of a repeating cycle which is very valid and
robust.
With careful use this
product
can make an average trader into a better than average
trader as it offers a very simple method of forecasting the future
and filtering trades.
View
license prices for Tri-Spectral forecast for MultiCharts
Important technical
points to be considered when using the Tri-Spectral forecast
Added to this indicator in the form of
plots 5 and 6 are two dots which are shown below. These represent
the highest and the lowest of the three projections.
This
feature was an essential item to add to make the chart auto scale to
fit the screen as the trendlines do not reset scales in the
MultiCharts platform.
In use you can leave these in 1 pixel
width and match the background colour making them invisible or if
you prefer you can make them large dots which in some cases may
aid decision making in the placement of stops if a few ATRs are
added onto the top one and subtracted from the bottom one.
How to add more years
If a second version of this indicator is added with longer
Back1, Back2, Back3 values then it is simple to see six plots or
even nine if you have enough data. Doing this will add more
crudentials to the validity of the observed results. When doing this
on stocks the values of 1004 (251 days x 4) 1255 ( 251 x 5) and 1506
can be used.
If using on a crypto currency then you can use 365 x 4
= 1460 for Back1 and 365 x 5 = 1825 for Back 2 and 365 x 6 = 2190
for Back3.
Both of the above concepts are shown in the
screenshot below. Please remember, if you do not wish to see the
dots on the high and low, just change plot 5 and 6 to the background
colour.
This powerful example below clearly shows you at a glance
in a matter of seconds,
that Ashtead group PLC in five out of the six years over the next 130 bars were higher
and only the yellow year of 2018 was down.
This method of
technical analysis speaks a very clear message indeed.
Troubleshooting errors that occur
if incorrect inputs are used.
1.
Bars loaded must be greater than Back3 + Future.
If not enough bars are loaded the indicator will just
show as "calculating" and no plot will appear.
2. If future is
set to a value that is greater than Back1 then the plot for last
year will not be displayed.
3. If future is set to a value that
is greater than Back2 then the plot for last year and the year
before will not be displayed.
4. If future is set to a value
greater than Back3 then no plot will display for any year.
Chart types for the Tri-Spectral
forecast
This product works on daily charts of the types, Line,
Candlesticks, Bars of HLC, OHLC but other types of chart will cause
invalid readings to the plots due to not being one bar per day.
If this product is used on minute or hourly
charts the data will make no sense as it looks back a number of
bars, instead of using the date.
Margin width to the right side of the last price
There is a setting called chart shift in
MultiCharts which you can locate as follows. Right click on the chart
background > Format window > X-Time scale > Chart shift.
Set this
value larger until you can see the entire future plot, this will
vary depending on the future setting you have used. Once it is set
you can select different charts and it will automatically use the
correct same settings.
Please note this varies a lot based on how much zoomed in or out the
chart is and smaller numbers can be used when zoomed out than when
zoomed in. 
Annual cycles which are found in
commodities are shown below
Crop Planting and Harvesting: Agricultural commodities such as
corn, wheat, and soybeans have specific planting and harvesting
seasons, which can create cyclical patterns in supply and demand.
Weather Patterns: Weather events, such as hurricanes, droughts,
or seasonal rainfall, can impact commodity prices and create
"fairly" predictable cycles (but not exact as with the Swallows)
OPEC Meetings: For oil and petroleum-related commodities, OPEC
(Organization of the Petroleum Exporting Countries) meetings and
decisions on production quotas can influence prices.
Inventory Reports: Regular reports on inventory levels, such as the
weekly crude oil inventory report in the United States, can affect
commodity prices.
Mining Production Reports: For metals and
minerals, periodic reports on mining production and output can
impact supply and prices.
Seasonal Demand: Certain
commodities, like natural gas for heating or gasoline for summer
travel, experience seasonal fluctuations in demand that can affect
prices.
Global Economic Events: Economic indicators, such as
GDP growth, interest rate decisions, or geopolitical events, can
impact commodity prices worldwide.
Commodity Futures Expiration: Expiration dates of commodity futures
contracts can lead to increased trading activity and potential price
volatility.
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license prices for Tri-Spectral forecast for MultiCharts
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Precision Trading Systems was founded in 2006
providing high quality indicators and trading systems for a wide range of
markets and levels of experience. Supporting NinjaTrader, Tradestation and
MultiCharts.
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