Depression Watch (Fri. Jan. 23 2009)

{Dow Close}
(Fri Jan.23)          =  8,077.56   45.24 (-)
(Fri Jan.16) =           8,281.22    68.73 (+)
(Fri Jan.9)     =        8,599.18    143.28 (-)
(Fri Jan.2)   =        9,034.69    258.30 (+)     
(Fri Dec.26) =            8,515.55    47.07 (+)
{FFC - Friday to Friday Change}
(Fri Jan.23) =                            203.66 (-)
(Fri Jan.16) =                            317.96 (-)
(Fri Jan.9) =                               435.51 (-)
(Fri Jan.2) =                            519.14 (+)
(Fri Dec.26) =                            63.56 (-)
(4 wks) =                                297.89 (-)
(5 wks) =                                501.55 (-)
{VIX}
(Fri)     =                      47.27       
(wk-avg Jan.23) =                  49.408         2.336 (+)
(wk-avg Jan.16) =                  47.072         6.468 (+)
(wk-avg Jan.9)   =                  40.604         0.374 (-)
(wk-avg Jan.2)   =                  40.978         3.620 (-)
(wk-avg Dec.26)   =                44.597         8.017 (-)
{Oil}
(Fri Jan.23) =                 $46.47
(Fri Jan.16) =                 $36.51
(Fri Jan.9) =                      $40.83
(Fri Jan.2) =                    $46.34      

{Last Week}

Weekly trends (the FFC, Friday to Friday Change), leading to the monthly trend {4 or 5 week average}, is as close as we can currently get in predicting trends. From the above, we can gather a current trading range of 8,000 {bottom} to 9,000 {top}. This is the {limit} of our understand, with the above information. These are also called the {bounds} ; so if the weekly market trend moves up, beyond 9,000 bound, it's a possible signal that current bound is a market bottom ; conversely if it trades below the lower bound {8,000} the market will shrink further (a deepening recession or a depression). Knowing our bounds, we can now look for transition points between bounds.

The current 4wk month trend is (-) the number value show the momentum (or steepness) of the trend. However, as week look at the FFC we can see a momentum range with 64 as the lower bound and 519 as the upper bound, and a mean (average) of 204. This means that momentum of 298 is not out of bounds, but above the average. Then with the market being near the 8000 lower bound, this momentum could push the market out of bounds, and be a transition point. (In this case, signalling a growing recession.)

{This Week}

This week was two things; 1. Obama's Inauguration and 2. the addition of the FFC 5th week. The hype was that Obama was going to hit the ground running (which he did) and this would (hopefully) bring confidence back to the market. The result - an increase in the market's downward momentum. However, the silver lining (if one can call it that) is that the lower bound of 8000 has not be broken. This is economics strictly by the numbers, not by existing theory.

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Depression Watch (Jan.19 2009 to Jan.22)

{Dow}
(Thurs) =        8,122.80    105.30 (-)
(Wed) =                8,228.10    279.01 (+)  
(Tues) =        7,949.09    332.13 (-)     
(Mon) =               {closed}

{S&P 500} 
(Thurs)   =         827.50         12.74 (-)
(Wed) =           840.24         35.02 (+)
(Tues)   =       805.22         44.90 (-)
(Mon)   =         {closed}

{VIX}
(Thurs)     =                 47.29
(Wed)    =                  46.42
(Tues)  =                   56.65
(Mon)    =                 {closed}
(wk-avg;Jan.12) =  47.072
Normal   =                30 [3 +/-] {Best Fit Curve: Trig. function}

{Oil}
(Thurs)     =                $43.29  
(Wed)       =               $43.55           
(Tues)    =                $38.74
(Mon)    =              {closed}

Analyzing the date collected daily, it becomes clear, that interday predictions become very sketchy. Trends begin to appear weekly. This does not mean that sense of the interday data cannot be understood, or used for day & options trading. How you use this data will determine what you are doing in day trading. Those familiar with the VIX will know it's importance. However, those traders who don't understand the mathematics of trig. functions are now "playing the odds" - gambling. This is where the hedge, in hedge fund comes into play ; spreading the bets on the market around as to spread out the risk of losses. However, gambling is gambling - and at some point a massive loss will occur. The very descriptions of options traders, and their addiction to larger and larger profits, is the very description of a gambler's psychology (hence the VIX; a measure of volatility and fear). However, those who have a good understanding of mathematics, will see mathematic patterns that can be analyzed. Physicists, will recognize an analogy to the heisenberg uncertainty principle and chaos theory. This means that a model of interday economics can be developed, with a reasonable accuracy.

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Depression Watch (Fri. Jan. 16 2008)

Dow Close (Fri Jan.16) =           8,281.22    68.73 (+)
Dow Close (Fri Jan.9)     =        8,599.18    143.28 (-)
Dow Close (Fri Jan.2)   =        9,034.69    258.30 (+)     
Dow Close (Fri Dec.26) =            8,515.55    47.07 (+)
FFC (Fri Jan.16) =                            317.96 (-)
FFC (Fri Jan.9) =                               435.51 (-)
FFC (Fri Jan.2) =                            519.14 (+)
FFC (Fri Dec.26) =                            63.56 (-)
FFC (4 wks) =                                297.89 (-)
VIX (Fri)     =                      46.11       
VIX (wk-avg Jan.16) =                  47.072         6.468 (+)
VIX (wk-avg Jan.9)   =                  40.604         0.374 (-)
VIX (wk-avg Jan.2)   =                  40.978         3.620 (-)
VIX (wk-avg Dec.26)   =                44.597         8.017 (-)
Oil (Fri Jan.16) =                 $36.51
Oil (Fri Jan.9) =                      $40.83
Oil (Fri Jan.2) =                    $46.34      
Oil (FFC Jan.9) =                    $5.51 (-)

Weekly trends (the FFC, Friday to Friday Change), leading to the monthly trend {4 or 5 week average}, is as close as we can currently get in predicting trends. From the above, we can gather a current trading range of 8,000 {bottom} to 9,000 {top}. This is the {limit} of our understand, with the above information. These are also called the {bounds} ; so if the weekly market trend moves up, beyond 9,000 bound, it's a possible signal that current bound is a market bottom ; conversely if it trades below the lower bound {8,000} the market will shrink further (a deepening recession or a depression). Knowing our bounds, we can now look for transition points between bounds.

The current 4wk month trend is (-) the number value show the momentum (or steepness) of the trend. However, as week look at the FFC we can see a momentum range with 64 as the lower bound and 519 as the upper bound, and a mean (average) of 204. This means that momentum of 298 is not out of bounds, but above the average. Then with the market being near the 8000 lower bound, this momentum could push the market out of bounds, and be a transition point. (In this case, signaling a growing recession.)

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Depression Watch (Jan.12 2009 to Jan.15)

Dow Close (Thurs) =        8,212.49    12.35 (+)
Dow Close (Wed) =        8,200.14    248 (-)  
Dow Close (Tues) =        8,448.56    25.41 (-)     
Dow Close (Mon) =      8,473.97    125.21 (-)   
S&P 500 (Thurs)   =         843.74         1.12 (+)
S&P 500 (Wed) =           842.62       29.17 (-)
S&P 500 (Tues)   =        871.79         1.53 (+)
S&P 500 (Mon)   =        870.26         20.09 (-)
VIX (Thurs)     =                 51.00        0.83
VIX (Wed)    =                  49.14        0.00
VIX (Tues)  =                   43.27        2.27 (-)
VIX (Mon)    =                 45.84               3.02  (+)
VIX (wk-avg;Jan.5-9) =  40.604         {A potential bottom ; 39 daily}
VIX Normal   =                30  {Best Fit Curve: Trig. function}
Oil (Thurs)     =                $35.51
Oil (Wed)       =              $36.53           
Oil (Tues)    =          $39.21
Oil (Mon)    =          $36.43    

Back to the graphs, after a nice holiday. Understanding graphs is the key to understanding the economy. They beyond anything else show what's actually going on. However, as we see with the above data, historical data appears much different than current data. Daily volatility is smoothed out in the historical focus. As for the VIX, it does not appear to be a predictor of anything. However, that does not mean the VIX is useless. The VIX actually can provide a useful insight into market psychology, and the level predictability of human behavior. That's what the VIX is, a measure (and index) of market uncertainty and fear. We have seen here, that a trend line does not fit here, but a {best fit curve} (a trig function in this case) does. What next needs to be added to our measures, is what always needs to be added to any data measured - accuracy. For example, measured values (in science) are given as the value (plus or minus) a fractional amount of the value (like 10%). At a 10% margin of error, the 30 normal value for the VIX during a presidential administration change would allow for a fractional value of 3 (plus or minus) to normal. Thus any value between 27 and 33 would be considered to be on the normal. The current numbers are not on the normal, or within the margin of error - so it can be said that the market is operating outside of it's normal range for the period.

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Depression Watch (Fri. Jan. 2 2008)

Dow Close (Fri Jan.5)      9,034.69    258.30 (+)     
Dow Close (Fri Dec.26)            8,515.55    47.07 (+)
Dow Close (Fri Dec.19)            8,579.11    25.88 (-)   
Dow Close (Fri Dec.12)       8,629.68    64.59 (+)
FFC (Fri Jan.2) =                            519.14 (+)
FFC (Fri Dec.26) =                            63.56 (-)
FFC (Fri Dec.19) =                            50.57 (-)
FFC (Fri Dec.12) =                              7.41 (-)
VIX (Fri)                           39.19        0.81  (-)
VIX (wk-avg Jan.2)                     40.978         3.620 (-)
VIX (wk-avg Dec.26)                   44.597         8.017 (-)
VIX (wk-avg Dec.19)                   52.614         3.561 (-)
Oil (Fri)                  $46.34
Oil (Last Fri)                 $37.71      
Oil (FFC)                $8.63 (+)

Merry Christmas and A Happy New Year!

Analysis will return on Jan 12th 2009

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Depression Watch (Dec. 29 2008 to Jan.1 2009)

Dow Close (Thurs)         closed - New Years
Dow Close (Wed)         8,776.39    108.00 (+)  
Dow Close (Tues)         8,668.39    184.46 (+)     
Dow Close (Mon)       8,483.93    31.62 (-)   
S&P 500 (Thurs)            closed - New Years
S&P 500 (Wed)            903.25        12.61 (+)
S&P 500 (Tues)            890.64         21.22 (+)
S&P 500 (Mon)           869.42         3.38 (-)
VIX (Thurs)                      closed - New Years
VIX (Wed)                      40.00        1.63   (-)
VIX (Tues)                     41.63        2.27 (-)
VIX (Mon)                     43.09                0.37 (-)
VIX (wk-avg)                56.175
VIX Normal                   30  {The normal, reaches a peak of 30 during Presidential Admin changes }
Oil (Thurs)                     $41.41
Oil (Wed)                     $44.60     
Oil (Tues)              $38.25  
Oil (Mon)              $39.61 


Merry Christmas and A Happy New Year!

Analysis will return on Jan 12th 2009

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