Thursday, November 29, 2012

IPM Model Decoder Library

As part of the ongoing IPM Model analysis and to better define the probable future market structure, UST team undertook an exhaustive study of the IPM Model turn points and the corresponding market action. The data used for this exercise spans over 3 years (From March 2009 to November 2012). The goal of this exercise was to come up with a library of IPM Model scenarios. This library will enable the readers to plan their accordingly in advance.

With the IPM Model Decoder, reader can decipher what path the market is most likely going to take from the Current turn date to the Next turn date. In this way, readers will be able to plan his/her trade and then trade the plan. Bold lines in the Projected Market Path column, are the areas of interest. IPM Model Decoder is shown below. The highlighted section (yellow rectangle) is pertinent to current market situation:

  1. Market has been rising since Nov 16 bottom, into the Current Turn Window
  2. Current Turn window is supposed to be a Top
  3. Next Turn window is supposed to be a Bottom
  4. Options: Either market rises now for another week and then declines into the turn window. Or the market immediately starts to decline sharply into the next Turn Window. 

Based on Current Situation, if the market does not start to decline immediately and all the indices make a new high tomorrow, then most probable scenario under play will be scenario I i.e. we might go up for a few more days before decline sharply into the low. As of today, a break below 1386 will indicate that the decline has started.

How to Use:

  1. Readers know if the market has been Rising or Declining coming into the Current IPM turn window
  2. Subscribers know Current and Next IPM turn dates
  3. Subscribers get the information of next turn date being a Top or Bottom
  4. Use 1-3 information to find the possible market trajectory in the IPM Decoder.
  5. Develop you trading plan accordingly by using Technical Analysis, Elliott Wave analysis, trend following systems etc
Good thing about this method of market analysis is that it does not negate any other form of technical analysis. It gives you the direction in which you should be looking to make a trade. For example, In case of Elliott Wave analysis the IPM Decoder will help to resolve the confusion of whether we are in wave 3 or in an A-B-C correction.

Strategies & Triggers:

Based on historical analysis, UST team has devised IPM Turn window trading strategies. Trading strategies highlight appropriate triggers to enter, stop points and profit objectives. Appropriate triggers & strategies will be shared with subscribers in the IPM Model updates.

As a part of this research project, over the next few weeks we will be analyzing stock market and IPM data for the past 3 years (since 2009 bottom). This will allow us to categorize each and every stock market peak and valley in one of the categories mentioned above. This exercise will be beneficial for both readers and UST team to better understand how the model has performed in the past and what returns to expect.

Please note that this exercise will delay the publication of Housing Market analysis. If readers are more interested in housing market analysis, please let us know in the comments section below.

For IPM Model Subscription, please fill out the following form:

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