Stock market waves in the light of the Moon 

Everybody agrees that the stock market follows some waves, but not everybody believes that it is possible
to predict these waves. The stock market rises up to the sky and drops down to earth; since the beginning
of the stock market, everybody wants to be able to anticipate these waves - otherwise the price for
mistakes is too high. In this small article, I would like to introduce some new techniques and our team
findings in regards to stock market waves. All results are based on solid grounds of statistical analysis and
are performed by Timing Solution software.The most known theory on stock market waves is Elliot
Wave Theory suggested in 1939. I think everybody is familiar with the classical  pattern that consists of
five upside waves and three downside waves. Like this:

  

The most important question is the height of the swings of these waves, because these swings' turning
points are the moments when the trader makes his/her decisions (it is an ideal situation). Another
statement of Elliot Wave Theory is that stock prices follow to Fibonacci series (1-2-3-5-8 ..). This simple
and clear principle provides some clues regarding stock market timing. Usually the Fibonacci ratios apply
to wave heights (like a ratio between up and down swings). Look at this picture
Here we are interested in defining the height of the upswing 2-3. We assume that the height of this swing
is in good ratio to the previous downswing 1-2. In other words, we may draw several resistance lines
based on half weight of the previous wave, its 100%, 38.2%,61.8%, etc. We can make it 161.8% as well.
If the data pass one of the lines, it might stop at the other. There are a lot of possible varieties there.
However, the main assumption is that the end of the swing hits one of these levels. Thus, we can say that
these levels provide us some clues regarding trend change points. The same approach can be applied to
time forecast based on the wave's length. And this approach is very intriguing. It has occupied the human
mind for centuries as it proclaims the existence of some universal law of Mother Nature that rules the
rabbits' reproduction, the shape of the seashells and the stock market geometry as well! In terms of the
twentieth century science, we can say that stock market waves have the quantum nature and we may
consider the turning points as some kind of energetic levels using the analogy with quantum mechanics
principles. But the commonly asked question still exists: "How and when can we apply these ratios? What
ratios are more preferable and when? How can we rely on them?". In this article you will find some
answers to these questions and some unexpected results as well. Let's go ...

Research

As an example, we will look through the data for Dow Jones Industrial Index from the year 1885 up to
February, 2006. As a tool, we apply the newly developed module in Timing Solution software; its name
is "Turning Points Analyzer". Actually, the answer to the question above will be received immediately
after downloading the price history and running this module. In a few seconds, you will get this
histogram:

This histogram represents the distribution for the ratios between heights of up swing and down swing. We
calculated the 4.6% zigzag exactly as A. Merrill did that (see Filter Waves Basic Theory, A. Merrill,  NY,
1977).  This zigzag has shown 900 turning points within the data interval; we used them to calculate
ratios between swings. The purple stripes represent the classical ratios most used in technical analyses.
The meaning of this histogram is: the highest and the narrowest peaks here correspond to the ratios this
market (i.e., DJI in our example) "likes" more.  As you see, one of them is 1.38:
It means that 138%  up trend swing is pretty typical for the stock market:

If you do not like working with the histogram, just pay some attention to red stripes located under it:

Each pair of down and up swings is shown on this diagram by one vertical red stripe. For example, there
is one stripe at the 1.64 position. It means that there is only one down-up swing pair with the ratio
between up and down trend swing equal to 164%. When we have several pairs at the same level, we can
speak of a zone of trend change. Thus, we are able to locate active zones where the stock market "likes"
to reverse its trend (some of these active zones are marked by yellow bars). Meanwhile, there are
relatively quiet, calm zones where the stock market prefers following the current trend. This idea is worth
to play with.  Actually, when I started developing this module I expected to get one of the two possible
variants of the histogram:
1) the boring kind of a bell histogram, something like this: 

Practically, it would mean that there are no selected ratios. The trend can change at any price level, and
Fibonacci levels simply do not work;

2) if the classical ratios work we should get the set of peaks around purple vertical lines. It would mean
that the stock market prefers the "good looking" price levels to change its trend.

The histogram above not did confirm any of these statements. When I saw it first time, I decided that
there was some mistake somewhere in the program, and I spent some time checking all parts of it to be
sure that the program works OK.As usually, the Mother Nature does not  provide us with the completed
answers to all our questions. We just move from one enigma to another. Solving one problem, we come
across another, and always it is so unexpected! It is how we grow up in our knowledge and
understanding.The strict statistical analysis shows that the stock market does follow some ratios, and the
most interesting fact in respect to stock market waves is that the Moon has very strong impact on them.
To be exactly, these waves are different for rising Moon and descending Moon. And it is quite naturally,
because people's emotions have a great impact on the stock market while, from the other side, the Moon
phases have impact on human emotions. It is easy to prove the first statement that price waves "like"
some ratios more than other ones. The histogram calculated for different zigzags always contains different
peaks; it means that the stock market does not move in a chaotic manner, some market geometry presents
here. To make reliable verification of  this fact I have calculated the ratio histogram for 21 different
zigzags with different time periods: 

Here the same histogram for up moving swings is shown in different ratios: ratios for price and ratios for
time. You can see what ratios are more important; the worth of classical ratios is obvious here as well.
Make your conclusions yourselves.But the most interesting thing has happened when I have started to
research zigzag ratios together with Moon phases. Skipping all details and concentrating on final results
only, I can say that the histogram becomes more informative if we consider separately the waves in
respect to the rising and descending Moon. In other words, the market geometry strongly depends on
Moon phases. The picture below represents these histograms calculated for rising Moon:
As you see, these histograms are more informative because the peaks are more localized, they are not so
messed up as on the previous picture.  Mathematically, the narrow high peaks mean the presence of some
information, while even diagram means its absence. It is the same like you asked somebody where the
office of  Mr. Brown is located - you can get the answer "somewhere in Toronto" (which is true though
not enough informative), while the answer "Toronto, north of Young, east of Clark" provides more
helpful information. To be sure that this certainty is caused by the Moon phases and not some artifact, I
repeated the same thing using random values instead of the real Moon phases. In this case the information
just disappeared.      The certainty of this histogram allows to use it as a good helping tool for traders.
Practically, it means that we can locate the most active price levels where the trend changes are more
probable. More info regarding this see below.Also we can state that the classical ratios work better for
time forecasting than for price. As you see in "Time Ratio Distribution", three purple vertical  lines hit
three strong peaks. These ratios are: 1 (the duration of an up swing is equal to the duration of a downtrend
swing), 1.618 and 4.236. As per Elliot Theory, we used these values 38.2%, 50%, 61.8%, 100%, 161.8%,
200%, 261.8%, 300% and 423.6%. But in Timing Solution you can add any ratios. They will be shown as
vertical lines.   It is very interesting how astronomical factors move the stock market. It looks it is a
mistake to research their influence in the terms of direct impact (something like the statement that the
price goes up around the New Moon). In many cases, statements like that one do not work. From other
side, we cannot exclude them from our consideration - the most reliable models with long term forecast
horizon that I have got are based on astronomical models. I believe that we should consider the
astronomical influence in the terms of information. In the example above, we have not got a correlation
between turning points and Moon phases. The stock market does not adjust its clock with the Moon
phases. But it looks like the market geometry depends on Moon phases. The rising and descending Moon
provokes the stock market to follow different patterns, and its influence is much more deeper than just
simple timing of the turning points. 

 The Tool for the Trader

Actually, it is very simple. Download the price history and run "Turning Points Analyzer" module. In a
moment (as always) the program will perform the huge calculations regarding the statistical analysis of
your data, and you will get this:

It is an output ready for use. In the right side of the price chart, you can see the colored diagram that
represents the most probable price levels where the trend will change. Red regions mean a high
probability, the blue ones stand for the low. Besides, you can figure out the risk degree. The blue zones
indicate that the price can change its trend on these levels as well. Seldom, but it might happen. His
Majesty Fundamental Factor can destroy any market geometry.  Providing more detailed analysis, you
can draw these support (blue) and resistance (red) bands:
Even if you have not enough price history and not enough turning points to provide the proper statistical
analysis, you can got a valuable information based on previous turning points:

Here we have six price levels calculated from ratios for six previous swings.If you have enough historical
price information to calculate high probability zones, the major cluster usually provides a very valuable
information regarding future price movements.Look how it works! I have downloaded the S&P ASX 200
for 1983-2006. You can see two the most important clusters there - potential turning points zones. The
price chart definitely shows that the price is "stumbling" around these zones. Between them the price
movement is pretty straightforward. The momentum is high, while around these zones the price loses its
momentum. 

 
 What concerns the most typical ratios that rule the stock market, this question requires special and
systematic research. As far as I know there is no other software that is able to deal with this task but
Timing Solution. Now it is possible to provide the mathematically correct analysis of this issue. 
The first glance definitely confirms that these ratios: 

a. exist; 
b. they depend strongly on analyzed financial instrument; 

c. it is very important to choose the most informative zigzag. 

As a preliminary result of the research for upward swing ratios (ratios between the height of the upward
swing and the previous downward swing), we can point out three typical clusters:

1) Very strong cluster corresponding to the height of the up trend swing equal to 93%-98%. In other
words, the stock market "likes" changing its trend just before the previous  top (2%-7%). Maybe this
factor can be explained by specifics of charting. Anyways, the previous top can be used by traders as a
basis for drawing the resistance line. Also, the fact that this level is always less than 100% can be
explained by traders' psychology - this is a broken resistance line phenomenon. See this advice right from
some trader's article: "If support is broken an uptrend, the uptrend is suspect.
(http://www.RealMoney.com)". If thousands of traders would think the same and decide that this support
line is going to be broken, it will definitely happen (so called "self-fulfilling prophecy").

2) The 120%-130% level.

3) Around 140%.

The pictures below show high probability diagrams for four different financial instruments. They point
out the most interesting clusters for trading:
Dow Jones Industrial 1885-2006

S&P 500 1950-2006

Microsoft 1986-2004

 
 S&P ASX 200 1983-2006

 All diagrams indicate that the 93%-98% cluster is pretty strong for all these instruments. The other
clusters vary for different instruments (like 122%-127% cluster is very strong for Dow Jones Index, S&P
ASX 200 and possibly for Microsoft shares). 

Non future leaks technology

I believe everybody of us have come across the situation when you buy a software/trading course/book
and try to apply the described there technology. And you realize that this stuff "does not work for you".
The reason for all this disappointment is not "because it does not work for you". The reason is much more
simpler: it is possible to find one or two (or several) "good" examples for any theory/technique, and there
are thousands ways to make a good view of any theory. The "cold wind of reality" starts to blow when
you apply all these theories for your trading and risk your own money. (I do not want to blame any
vendors; they might be doing this unwillingly and are the victims as well. Why? Only because there is
still no comprehensive theory of what is actually happening on the markets and what moves the stock
prices.)Non future leaks technology incorporated in Timing Solution allows you to see how the models
work in reality. Back Testing module is our tool. With it, we have blocked hundreds of situations that can
cause the good view for non working models.In Timing Solution the whole price history is divided on
two intervals: a training interval (usually blue) and a testing interval (usually red or pink; here I have it
creamy - to remind you that you are able to choose colors that you like):

 
Why we do it? The reason is simple: we avoid any kind of future leaks.

To train the models, we work with the data from the training interval. The testing interval serves for
forecast only. We do not use the data on testing interval to cook our models. The border between the
training and testing interval is called Learning Border Cursor (LBC):

This border can be moved to any side. But - no matter in what position it is, the data from its left serve
only as a training interval while the data from the right are for the testing only.When we create a model,
the program does not know about the price movement beyond the LBC. So if we get a good projection
line after LBC, this is a good sign that our model is able to generate a good projection line.It means that
you need to leave some price history data beyond LBC - to verify how our model works. In statistics this
interval is called "out of sample".You can set LBC manually; just set the mouse at any place of the price
chart (it will be a position of your LBC) and do the RIGHT mouse click:
Choose this item, and program will set the LBC on this chosen position. The same result can be achieved
if you press this button:

and click the mouse at the position where you need to set LBC. You can do this procedure while the
Neural Network is training. Thus you can observe how the projection line is changing when  the new
price bars are coming.If you have decided that the model is good enough (we discuss it later, speaking
about the models), set the LBC on the last price bar:

   

And the program will use the whole available price history to generate the projection line. In the program
it is called "Final Forecast".

One button solutions

In Timing Solution there are three buttons that allow to make forecast clicking on just one button.Here
they are:

The first button "Solutions" opens a list of ready solutions that are made for you.  Click here:
You will get the list of prepared Solutions that you may apply to your financial instrument. Some
Solutions are adjusted for specified financial instruments. Please read all the comments carefully. 

Let us choose one of the Solutions, the Solution that works with the model based on fixed cycles:

Within a minute the program performs a huge number of calculations and provides the ready Neural Net
projection line based on fixed cycles (the cycles that are present inside the data time span):

This line can be prolonged into the future (this example is taken from the article written on December 12,
2005, and the forecast is made at that time). You may choose and create the astronomy based model, auto
regression model and others. And this is the only thing you actually do: you make a choice of the
Solution. Then the program does everything itself; it is fully automated process.. If you would like to do
this projection line on your own, you will have to know many things. Here are just some of them:
Spectrum analysis, Neural Net technology, Nonlinear Dynamics, basics of Wavelet analysis (these are
from the Math side). Add to the list Technical Analysis basics. Plus - some models use parameters that
are common in Astronomy, while several models apply basics of Astrology. You may spend years
preparing yourself for this type of forecast. Timing Solution saves your time and efforts as we program
all these techniques, create models as their applications, and adjust them for real financial data. With all
suggested Solutions, you can get a forecast by several mouse clicks only.

Let us look at the other two buttons. These are Fast Solutions. They are combine in two groups -
Spectrum based models and Astronomy based models: 

In comparison to the Solutions above, fast solutions are half automated. Here you can vary the parameters
of the models:

Clicking the "Style" you define the parameters of chosen models. Also you can define there the indicator
that you want to forecast.

Look at the parameters for Spectrum models:

The most important parameters are marked by the yellow digits. Their importance for the quality of the
projection line was found through extensive Back Testing of the model. In other words, when making a
forecast based on fixed cycles, try first to play with amount of the strongest cycles (it is marked by "1").
After that we recommend to play with the amount of overtones and the training interval (they are marked
by "2")

After that you can play with "stock memory" parameter:

The small value of the stock memory makes the forecast more concentrated on the most recent cycles
(nearest to LBC), while the big value of stock memory forces the program to search more permanent
cycles.

For intraday data use this setting:

Easy Cycle Module: how to create the model

based on fixed cycles
  In this article I will introduce the simplest module that allows creating the cyclic forecast models in a
few minutes. You will be able to create models like this one:
To make this projection line, you do not need any special skills. You simply draw the cycles on the screen
using your mouse. Being quite simple, this approach allows to reveal rather complicated cyclic processes
that take place in financial data. However, it is necessary to make a simple introduction into cyclic
analysis.  Let's go ...Everything goes in cycles. What does this statement mean? Practically, it says that
the history repeats itself. Nobody argues that. The question is what can we learn from the history in
regards to financial data analysis?In this article, I would like to discuss the new feature of Timing
Solution software – Easy Cycle module. This module easily shows the lessons that the history gives to us.
Remember that Timing Solution has already much more comprehensive Spectrum module that is able to
reveal any cycle/cycles. However, this new module is a good helper in understanding the general idea of
the cycles.Before any discussion, let us figure out what the cycle is? Mathematically, the cycle is a timely
process that can be presented by a sinus curve. It looks like this:

This nice looking curve describes a marvelous amount of processes in our lives. Since Fourier discovered
it in 18th century, any scientist spends a lot of time with this nice looking "lady". They even gave her a
special name – the harmonic function. In this article, we will try to present the harmonic function’s point
of view. There are three most important parameters to describe it:

 Period – it shows the length of one full cycle.

 Phase – it shows how the maximums of this curve are located.
 Amplitude – it shows the height of this curve.

 This is everything you need to know regarding this curve. With the new module, you will be able to draw
these curves manually. It means that when you change the length of this curve, you change its period. If
you decide to make this wave higher, you change the amplitude. When you shift this curve, you change
the phases. You will do these three operations to adjust this beautiful harmonic curve to your choppy
financial data.How to do this? Let us try together.I downloaded the EURO/USD  financial data from the
year 2000 to the end of 2006. Now follow this:  "Tools"->"Easy Cycle".Looking at the price chart for the
last 3 years, we can see there a wave that may be prolonged into the future:

To initiate this wave needs just one mouse action: drag the mouse from one bottom to the next top of the
price chart. While drawing this wave, watch how it  fits other tops and bottoms. The more tops/bottoms
covered the more reliable the wave is.Now put this wave into "Cycle Box":

I need to mention one very important thing: always start with the bigger cycle (highest amplitude)
and then go to the smaller ones.Now, when we have established the first cycle, let us look at the price
chart again: are we able to find the tracks of some other cycles? Look at this one:
Draw this cycle and watch how this wave fits other turning points:

Click "Add" button to put this cycle into "Cycle Box" as well:
 

Immediately you can see there the superposition of these two waves.  To get the better fitness between
price history and this composite curve, try to vary amplitude/phase/period for these cycles as it is shown
on the picture.Sometimes (when you deal with trended data) it might be difficult to identify these cycles
visually. In this case I recommend to activate "Index" option:

Here the program displays the oscillator in the bottom of the screen. Try to vary the oscillator's period
catching the waves with different period. Look at this option; its variation is useful when creating the
band based on the constructed projection line:

 
 

Also you can draw a trend line. Click on this button:

and add new cycles to this trend line:

 One step ahead:  Easy Cycle + Spectrum

Although the approach described above is the simplest approach to harmonic analysis it allows you to
"touch" cycles manually. However, following this approach you will never be able to answer the
question: "Is this forecast reliable?". You can see how the cycles work, but you cannot tell how much you
can rely on these cycles and apply them for your trading.The power point of Timing Solution is that we
provide the full analysis of all techniques that we recommend. You never ever see on our website (
http://www.timingsolution.com)  the statements like "this technique works very well ..."  if we do not
have the real statistical verification of its performance. Remember the fact that 95% traders lose their
money, and they all use "good" tools ...

So, playing with Easy Cycle module you definitely will ask the question as to what cycles are really
important. To answer this question, the best tool is Spectrum analysis provided by another module of
Timing Solution. It gives you a diagram like this:

  

The peaks on this diagram correspond to the most important cycles (the analysis has been done for
EURO/USD). We have spent 2 years adjusting standard mathematical procedures for these noised
financial data, to get the maximum of possible information while doing the minimum amount of
operations. The result is that now you need to make only one mouse click.
Let me demonstrate how to use the cycles calculated in Spectrum module. I have calculated Spectrum and
clicked on "Extract" button to find the most important cycles. These cycles are shown in the "Extracted
Cycles" list:

Now run "Easy Cycle" module and drag by mouse the most important cycles from "Extracted Cycles" list
in Spectrum module to "Easy Cycle" window:
 

The program automatically finds the amplitude and phase for this cycle using the price history viewed
in Easy Cycle module. See this projection line that I have received by dragging five most important
cycles:

How to choose the most important (or the strongest) cycles? I would recommend to use the highest and
narrowest peaks on the extracted cycles diagram. The higher and narrower the peak on the Spectrum
diagram, the stronger the cycle is:

Two steps ahead

To get the answer to the question above, we need to do the extensive Back Testing. Timing Solution
group constantly conducts this hard and time-consuming work while the user gets ready solutions - the
best models for different financial instruments. Simply saying, the back testing procedure analyzes
hundreds of models, calculates thousands of projection lines and looks for the best models. To do this
work manually is absolutely impossible, it takes weeks of several computers working. We will keep you
updated.

Example of creating a cyclic model

In reality the procedure of creating a cyclic model needs your preliminary study of the analyzed financial
instrument. First of all, you need to remember that usually the cyclic waves do not live long. Usually, the
cycle lives just several waves; after that the stock market "forgets" about this cycle and switches to
another ones. If two decades ago the scientists tried to find the persistent cycles that work all the time,
they are mostly concentrated now on finding a cycles structure transferring to a chaotic structure. Thus,
creating the cyclic models try to pick up few cycles only.I have downloaded T-Bonds chart for the last 3
years:

Look attentively on this chart and try to find the cyclic patterns here. It looks like the top in the beginning
of 2006, the bottom in the middle of 2006 and the top in the end of 2006 are the parts of the same wave: 
 

Some hints in revealing cycles can be provided by the charting tool "Vertical Lines" that is available in
the program:

Drag the mouse from the bottom in the middle of 2006 to the top in the end of 2006. You will get these
vertical lines: 

You can see  that these lines hit the bottom in the middle of 2005; however we face with the inversion
effect here - this cycle is inverted.

Drag the mouse from the point "A" to the point "B" and add this cycle to cycle box:
Look for other cycles. I see a small cycle of one month length that looks like active in the end of 2006: 

I have added this cycle to the Cycle Box and have got this picture:
Looking at our projection line, I would think that we have missed a trend here. I draw this trend line:

and add this trend line to the Cycle Box:

This is a very simple model, and I like this approach. The best feature is that you create these cycle by
your own hand, getting a feeling regarding the cyclic nature of your analyzed financial instrument. With
Timing Solution, you can easily create much more complicated models that analyze hundreds of cycles
and generate pretty impressive projection lines. But this approach allows to work with cycles "tête-à-
tête".

Forecast in three mouse clicks

This small article demonstrates one very simple and very effective technology to get forecast based on a
special type of spectrum. This multi frame spectrum algorithm is our "know how". It allows to resolve
the most difficult question that arises when we deal with forecasting models based on fixed cycles - to
define the longevity of cycles' life. The idea of cycles is the key part in the assumption that the stock
market may have a cyclic nature. If we accept this assumption, we can compare the stock market to some
water surface. Some factors affect the stock market, and it reacts in some way - similar to the waves on
the water surface when you throw a stone into the river. Finally, the waves are dissipated - as they loose
their energy; and the stock market no longer follows the same cycle. We can say that the market "forgets"
the event that has been a cause of the beginning of this cycle and is waiting for another event to react on.
The nature of the cause is not discussed here; it could be any of fundamental/inner factors; what is
important for us is that any of these factors is able to generate waves, i.e., to start small cycles in the
market's life. In other words, we believe that small cycles (not big ones) are responsible for the changes
on the market. Therefore, our main target is to find the way to deal with these cycles, or the waves,
keeping in mind that they are not infinite and have a rather short life. In my opinion, the best way to get
the visual impression regarding the "life" of any fixed cycle is the wavelet; it will be discussed in some
other article. Here I would like to show you the easy way of getting the forecast. Let's begin... Suppose
we have some price data for the analysis. Before doing anything, click on the "Calculate" button (to
activate the program's features for creating the forecasting models). As an example, I take the first chart
that has captured my eye; it has turned around to be the chart of Dell shares. I have downloaded these
price data for  the last 3-6 years, starting from 1998 to middle of the year 2004.

Click #1: Click on this button:

You will get the Spectrum diagram that represents the most important playing cycles till 9, 2003 (the
price points for May 9, 2003 and after that day are used to verify our model):

  

Be sure that the "Basic Interval" is set this way (it is a default setting):

If it is not, set it on "Last Cycles" item and click on the "Recalculate" button. (In this case, please change
the title of your copy of this article to "Forecast in four mouse clicks".)

If all the above is done, it means that we have activated multi frame spectrum algorithm option (which
is the subject of this article).

Click #2: Click on this button:

  
 

Click #3: Click on this button:

You will see the diagram that represents the superposition of the cycles calculated from the spectrum. The
black line is the normalized price while a red line is the projection line calculated through these cycles; it
can be prolonged as far as it seems necessary.

Drag the mouse on any piece of the diagram to see the details. The picture shows a part of the diagram
near the border line between the learning and testing intervals:
 

You see that the red line follows the main tendencies of the black line very well on both intervals,
learning and testing as well. To get the forecast, we need simply continue this line further (drag the mouse
on the interval that goes beyond the testing interval).

The models created by this method give very good forecasting results very often. Usually it allows to see
the future price movements several months ahead.

The following are some examples of forecast for several randomly selected stocks (they are in the
alphabetical order according to my data base):

Disney:

I would say that we can trust this model for several months ahead.

DJI
The forecast looks not bad though the peak in the beginning of March 2002 has been in reality much
stronger than the Spectrum analysis shows.

Dupont

This is not the best of the samples

Ford

A bit of theory

The main feature of the Spectrum analysis is that it allows to consider short  term cycles for the analysis,
especially those that occur close to LBC (Learning Border Cursor). In other words, if we consider the
strength of 10-days cycle, the price history 3 years ago may be not so relevant as the latest history. It is
obvious because the wave corresponding to this cycle (if any exists) can be caused by some fundamental
factor that has happened a month ago. Therefore, this wave is a kind of response of stock market to this
disturbing factor, it is the way how the market communicates with the world. The multi frame Spectrum
is more sensitive to short term cycles than to the long ones. Traders are not much interested in long
cycles; the most exciting opportunities for the trader occur with the short cycles. But it is not easy to
reveal the short cycle; there are so many factors to be considered. Thus, we need to be pretty accurate
with these cycles.
For those who would like to play with this feature of the program and who prefers self-set options to the
default ones, I would recommend to vary this parameter:

You can take it as the length of market's "memory" in respect to different cycles. 

As an example, let us look again at the Dupont shares forecast (see above). I would not consider it as a
sample of good fitness to the price. Change this parameter to 7 cycles:

It looks like the projection line becomes better; the possible conclusion is that this stock has the shorter
memory (or the shorter reaction interval to the disturbing factors):

I cannot say now whether the factors causing these cycles (fundamental or other factors) have been not so
strong as in the other examples or this particular stock market is able to recover quickly. These are
possible directions of the future research involving the fundamental analysis. What we can do now with
the Timing Solution software is - to calculate the short term cycles and research the time intervals of their
influence with the main purpose - to get the reliable forecast and create a base for successful trading.

Spectrum - Quick Start

In this lesson we discuss the basic definition of the cycle analysis and learn how to create the simplest
forecast models based on cycles. This issue will be considered in more details in the other lessons.
Before starting this lesson I would like to show how to generate the projection  line based on fixed cycle
quickly. The pictures below will illuminate the whole process in five minutes:

1) Download the price history

2) If this is the final forecast, i.e if you use all available price history data to generate the projection line, -
click this button to set the Learning Border Cursor to the last available price bar:

3) Click this button:

4) Do this to extract major cycles:

5) Click this button to generate the projection line:

6) After several seconds, the projection line based on these cycles will appear:
 

7) If you are working with intraday data, I recommend to use the bar metric to calculate Spectrum:

It was the brief explanation for very busy persons. Now I will explain all details relevant to this
technology.

Basic Definitions

The cycle is something that repeats itself in time. The simplest example is a workday routine: enter your
office 9AM, do your duties, 1AM is a lunch-time, 4:30PM go home; same schedule day by day. Another
example is a year-round cycle, annual cycle - from January 1 to December 31; same order of days, weeks
and months year by year. If you talk to scientists and engineers, they will add cycles in space, not only in
time; the simplest example of such a cycle is a bus route - from station A to station B, again and again.
Waves - different waves - are also samples of the cycles.

We can talk about different cycles indefinitely. The most fascinating thing with the cycles is that they
make possible a forecast. If we know the cycle, it is easy: find out where you are in this cycle, and you are
able to tell what will happen in a minute, in an hour, next kilometer, etc. This is why the scientists love
cycles. There is one more reason for this love: many cycles can be described by equations and functions.
It means that (knowing a cycle, of course) we are able to program the cycle and the forecast. 

Now, I believe that you have heard enough in your life about cycles in general. In this article we will deal
with the cycles that can be described by harmonic functions mostly, i.e. represented by sinus/cosine
waves. This is a sample of sinus (cosine) curve:
 

    

To describe any sinus wave, you need to know: a period - the length of the cycle, amplitude - the
strength of the cycle (you can see it on the diagram as the height of the sinus curve) and a phase - the
angle that defines the start of the cycle (the start point on the diagram is marked as "A").

Mathematicians know many ways to play with the cycles. They have found a way to summarize several
cycles at the same time. It is called superposition of the cycles; the result is a cycle as well. The resulting
cycle may look like this one:

Here I did the summation of 183.1, 135.5 and 87.6 days cycles. It is displayed together with Dow Jones
Industrial Index chart (a black line) and its 300-bar detrended oscillator. In regards to our main goal,
making a forecast, superposition of the cycles is a very useful thing as normally we have many different
cycles working at the same time.

Other interesting things that you need to know about the cycles are:
Weighting: In the previous example the same weights were used for all three cycles. Imagine that you
know that one of the cycles is more important than others. You can assign to that cycle double meaning
(same period, same phase, double amplitude). It leads to a different appearance of the resulting curve.
Thus, playing with cycle weights we can significantly improve our superposition curve. 

Overtones: Suppose you touch the guitar string, and it starts vibrating. How many different sounds do
you hear?

First of all, you will hear the main vibration of the string; on the picture above this is the upper vibration
involving the whole string length. Besides, you will hear the vibration of the half of the string length; it is
the next "octave" of the main sound. Also you will hear 1/3, 1/4 .. length vibrations. These "additions" to
the main sound are called overtones. Some overtones sound loudly while others are very quiet; it is the
reason why every musical instrument makes its unique sound.

Overtones can be used not only in music. They can add something meaningful to any cyclic process. See
the difference between a pure sinus wave calculated by Timing Solution (a red one) and the same wave
with the overtones - enriched wave (a green curve):

I used there 6 overtones. 

Nyquist frequency: it is named after the Swedish-American engineer Harry Nyquist; he has spent a lot of
time determining the minimal time tick to be able to see a cycle. For us, it is important to remember that if
we are working with daily data, it is no use to try catching the cycle lesser than two days (nyquist
frequency); if we have 15 minutes data, the 30 minutes is the shortest cycle to use. Based on my practice,
I would recommend using 5-7 ticks; i.e. for daily data use the cycles with a period higher than 5-7 days. I
would say that Nyquist frequency is a door to a kingdom of Chaos. Keep this door locked.

Spectrogram

Try to produce different sounds in a small room. You will easily find out that some of them sound very
well there, loud, you can enjoy them; while others sound very quiet, the room absorbs them. You may say
that the room itself "likes" some sounds and "does not like" others. You can image the spectrogram as a
result of "asking" some financial instrument how well a cycle fits to it. 

See a sample of a spectrogram created by Timing Solution". Download any financial data and click
"Spectrum" button. You will get something like this:

This is a spectrogram. The X axis on this diagram corresponds to the period of the cycle (or a frequency
of the sound in the example above), while Y is a strength of this cycle (more exactly, spectrum density).
If we compare this periodogram to the sounds in the small room, the highest cycles for our financial
instrument are like the loudest sounds in that room. The periodogram simplifies our life: when we have it,
our task is only picking up these cycles and asking the program to cook a projection line from them.

Picking up the most important cycles

This is a very simple procedure. Just click the mouse around the peak you want to catch:

 
 

Even if you are missing the peak itself, the program automatically will catch the highest point, put this
cycle into "Extracted Cycles" window and mark this cycle on the spectrogram by a vertical line.

Do this procedure several times while picking up the most important cycles:

You can also perform this procedure automatically: click "Extr" button and define the amount of the
strongest cycles you need to extract (four cycles in this example):
  

What cycles are important?

The new "multiframe technology" developed in Timing Solution allows to make a decision regarding a
cycle's significance very easily. There are 2 criteria and 2 recommendations there:

1. choose the highest peaks;

2. the width of a chosen peak should be as narrow as possible:

The higher the peak, the bigger the amplitude of this cycle. The  narrower the cycle,  more energy
is concentrated in this cycle. 

Recommendations:

1. Do not use too many cycles. There are two extremes here: the usage of just one dominant cycle or
the usage of hundreds of  different cycles, dominant and not quite dominant. I believe that
normally 3-10 cycles define the weather on the stock market. Though these cycles change
constantly change, multiframe spectrum handles this situation the best way.
 2. If you have a choice between short-term "good" cycles and long-term ones, choose the short term
cycles. They carry the maximum information regarding the nearest price movement. From other
side, the short term cycles can be a source of noise, so you need to try different combinations to
find the best balance between the noise and the information. 

One mouse click - and the forecast is ready

If you picked up the most important cycles, click this button:

In the Main screen, the forecast based on chosen cycles appears:

As you have guessed already, the forecast is a weighted superposition of the chosen cycles. The program
finds the weight of each cycle automatically aligning them to the previous price movement. 

To save some seconds instead of clicking the "wave" button, you may simply drag these cycles from the
"Extracted Cycles" list in the Spectrum module to the Main screen:

To prove you that this technology is worth of your attention, see here 7 projection lines created for a
randomly chosen LBC.

 
Parameters to vary

Here are the most important parameters to vary:

1) First of all, I would recommend to play with picking up different cycles. Use 2-10 cycles; usually this
is the amount of cycles really playing some part for the financial instrument.

2) Next thing to vary is the amount of overtones. Usually I start with the pure cycle (just 1 overtone), then
I increase this number. Do not use small values for "Min overtone"  parameter (see Nyquist frequency)

3) Also you can play with "stock market memory" parameter. The smaller value of this parameter, the
more our cycles are concentrated on the most recent price data. Usually i try these numbers: 3, 7, 12.

4) You may try as well to play with the oscillator's period.

You can delete any chosen cycle or delete all of them using these buttons: 
 

This allows you to work with different cycle patterns and projection lines generated by these cycles. 

You can delegate the choice of cycles to the program. You will do just one mouse click on this button:

. The program recalculates the spectrogram and extracts  strongest cycles

automatically.

One more approach is to make a forecast using several projection lines; it is called Committee. We
generate the projection lines one by one and put them into Strategy window by clicking on this button in
ULE tab:

These projection lines are visible on Main Screen now. Here I put three projection lines varying the stock
memory parameter:
Detrending, or what to forecast?

Mostly the financial instruments have some trends. Therefore, it is mathematically necessary to use
indicators instead of the price data: our goal is to forecast as close as possible to the functions used in
forecasting, i.e. sin curves. To reach this goal, we do not use the price itself to calculate the spectrum
diagram. Instead, we use the detrending indicator - the relative price oscillator with the period=100 bars
(as an example):

You can set this parameter manually depending on what swings you want catch. Or you can use other
indicators as a forecast target - like RSI, ADX, Volatility and others.

In other words, in this particular case we perform the spectrum analysis not for Dow Jones Industrial
index with its up and down trends, but for its oscillator:
This oscillator is much more convenient for the cycle analysis.

 Scientific parallels

In this lesson I used the lexicon of the spectral analysis science. However, this technology can be
expressed using different scientific accents. Let me explain it.If you are mathematician, you will deal with
the cycles from the point of view of Fourier Transform. If you are a professional in Digital Signal
Processing science (DSP), you would prefer speaking in terms of filters. The spectrogram shown above
can be interpret as a filter that converts "white noise" (data set that has no selective cycles) to the
analyzed financial instrument. These two are practically the same math entities; only accents are made on
slightly different sides. In the following classes I will try to make the parameter (getting results)/(learning
time) as high as possible.

All about Spectrum Models: Step By Step guide 

This is a step by step guide for different types of Spectrum models. You can read it through or you can go
right to the description of the model you may be working with (in this case, follow the hyperlink above).
In general, for any model, you need to reveal the cycles that have impact on your market and then create a
projection line based on those cycles. Therefore, we provide very technical descriptions for any type of
models, trying to cover all important issues regarding each model. If you have any questions, please
contact us.  

1) The simplest model

Let us reveal the most influential cycles for some stock and then create the Neural Net projection line
based on these cycles. In Timing Solution, it is really simple to do. Run the Spectrum module and click
on this button:

 
There are several very important parameters in Spectrum module that has impact on the quality of the
projection line. The default values for these parameters are based on Back Testing; the results of this
work are presented in "Naked Truth" section on this website. Here are these parameters:

You can change them and click button once again.

Now run the Neural Net module. As a target (outputs), we will use the oscillator with 50 days period:
 

As we create a model  based on fixed cycles, we can use these cycles as inputs for the Neural Net. We
take them from the clipboard:

Also you can perform these operations using fast access button:

Now we are ready to train Neural Network to obtain the projection line based on extracted fixed cycles.
But before doing that, you should set up one very important parameter - the length of the training interval.
You can take this parameter as the length of stock market memory regarding fixed cycles.

It looks like the best way to reveal the optimal length of the training interval is applying the Chaos Theory
features. Click this button:
  

You will get this window:

Drag the mouse cursor to the maximum of the yellow diagram. In the left top corner, you will see the
corresponding period of this "stochastic" cycle.

To do that, click this small button:

The same window is available  through the "Train" tab:

 

Now you can set the length of the training interval:

Then click on "Training". The process of the Neural Net training starts, and soon you will get the
projection line based on the revealed cycles. 

Click "Stop" after 10,000 steps of training and click    button to put this
projection line into Main Window. To remove the Neural Net Panel, push this button:

Now you can see our projection line:

You can do the same procedure easier, using this Fast Solutions button:

2) Spectrum model based on manually chosen cycles

In the previous example, clicking button, you have extracted all important cycles (as the program
sees them), put these cycles into the clipboard and then created the forecast based on these cycles. The
weakest point of this approach is - the program itself decides  what cycles are important and what are not
that important. However, you may have a different opinion regarding the cycle's importance. Timing
Solution Spectrum module allows you to choose the most influential cycles manually. To do this, click on
"+" button and then click the mouse button somewhere around the peaks of Spectrum diagram:
The program will calculate the nearest cycle that corresponds to the chosen peak and put it into the list. 
You can perform this procedure many times picking up the most important cycles:
As a good tool to see how any particular cycle works, you can create the wave for any cycle. Click this
button:

Look at the Main window:

You also can choose several cycles to create several waves at the same time:

Here they are:

 

This is a very good tool to play with cycles trying to understand how they affect the stock market.

Now we are ready to make the projection line based on chosen cycles.  Put all these cycles into the
clipboard (clicking on this button):

Then you can use them in the Neural Net module as the inputs to get your projection line. Just repeat the
steps you have done in the previous chapter.

In these examples, we have selected manually the cycles around the maximums of Spectrum histogram.
Actually, you can use any cycle. For example, you would like to explore 75 days cycle (you may have
learn from somebody that this cycle has some meaning for your market). Though this cycle is not a
maximum of the Spectrum diagram, you can work with it:
I would like to make some recommendations regarding how to choose the cycles.

Recommendation A: The peak on the Spectrum diagram should be high and narrow. The narrower is
the peak, the more certain you are that this cycle component is presented in the stock market data.  

Recommendation B: In Timing Solution, there is the ability to calculate the Spectrum diagram using two
independent intervals. If you do that, check "Do Split" option:
In the example above, the red curve represents the Spectrum calculated on all available price bars (1988-
2004). Blue represents the Spectrum calculated on the first interval (1988-1996 years), green - on the
second interval (1996-2004). The most influential cycles are confirmed by all diagrams (like in this
example).

3) Spectrum model with wavelet cycles - second dimension

In previous examples, we were dealing mostly with a linear approach. It means that the compound impact
of all revealed cycles on the market is a mere sum of each individual impact. Thus, what we do is just
revealing the most influential cycles and prolonging them into the future. But the reality is much more
complicated - the cycles do not affect the stock market in the same way all the time. Sometimes the same
cycles affect the stock market a lot, while at another periods these cycles are not active at all. It makes
sense to take into account the cycle's activity and periods when it is presented. The wavelet analysis
allows to reveal such periods. Moreover, we can provide the analysis for these time zones and use this
information while creating a forecast. More information regarding this issue is here:
http://www.timingsolution.com/index.php?module=subjects&func=viewpage&pageid=10

As an example, let us extract cycles and provide the wavelet analysis for these cycles. 

Run the Spectrum module and click on this button: .

We'll get the list of the most powerful cycles for the market. Let analyze them one by one. 

Highlight the first cycle:

  

If the program does not display the wavelet diagram check this option:

To reveal the cycles for its wavelet diagram, click on this button:

We will get the spectrum for the wavelet diagram:

This diagram represents the spectrum of cycle's activity for 58.1 days cycle. For example, one of the
peaks is situated around 3 years (approximately). It means that our 58.1 days cycle mostly impacts the
market with a 3-year periodicity. In other words, every 3 years there is a strong possibility that such a
cycle (58.1 day) is playing an important role for the chosen market. We can find out any other important
cycles of activity for this 58.1 days cycle. In other words, we can understand  how 58.1 days cycle reveals
itself in time. we do it through these wavelet cycles (we call them as w cycles).

Let us extract the most powerful cycles from this diagram. We can do it clicking the mouse around any
peak:

In this example, we have extracted 6 powerful wavelet cycles (w cycles):

Now, we can do the same for the next (96.1) cycle at the initial Spectrum window; picking it up from the
list:
If we have enough information already, we can stop this process. Otherwise, we should continue and
extract wavelet cycles for other longer cycles (141 days, 162 days, etc.). We recommend to provide this
analysis for the first 2-3 fastest cycles (in our example, these are 58.1, 96.1 and may be 141.8 days
cycles). The fastest cycles provide the most important information for the trader regarding short term
price swings. This is why we recommend to provide more detailed analysis for the fastest cycles. 

The program automatically puts all these cycles into the clipboard, and we can create the Neural Net
projection line following the same steps as in the previous example. 

A few words for advanced users regarding w cycles: To model these cycles, we use the special math
approach. Modeling usual cycles, we used to apply sin and cosine  waves; modeling w cycles, we use
regular wavelets. This approach gives better results in revealing nonlinear effects caused by the
interaction of different cycles.

This option

indicates how many overtones we use to model w cycles.

4) Spectrum model with wavelet ASTRONOMICAL cycles (recommended)

In this example, we try to take into account some external factors for the Spectrum model. To extract
astronomical cycles from the wavelet diagram, click on this button:

This module allows to extract the astronomical cycles:

Usually, it is necessary to use several wavelet diagrams to extract astronomical cycles. As in the previous
example, we recommend to provide this analysis for 2-3 fastest cycles. In this example, the first two
cycles were analyzed (58 and 96 days):

Now, in our "Cycle Box", we have fixed cycles:

and astronomical cycles:

The program automatically puts all these cycles into the clipboard, so we can create the Neural Net
projection line following the steps as in the previous example. 

5) Creating models that catch turning points better

In the previous examples, we were dealing with some relative price oscillator. This oscillator fits very
well if we would like to research the timing for future price movements. If you are more interested in
making a forecast for turning points, the detrended zigzag  may fit better. The detailed information
regarding the detrended zigzag is here: http://www.timingsolution.com/TS/Uphistory/u_5.htm

Look at this picture. Here you can see the relative price oscillator (period=25 bars) - a blue curve and 5%
detrended zigzag - a red curve at the same chart:
You can see that the detrended zigzag reflects the turning points better than the oscillator. The relative
price oscillator is more oriented to reflecting the price movements, while the detrended zigzag "sees"  the
turning points only. Anything going between two subsequent turning points is not interesting for the
detrended zigzag.

If you decide to work with the detrended zigzag, use it as the target in the Spectrum module and the
Neural Net module as well.

In the Spectrum module, you should set it here:

After that the Spectrum will find the cycles for the detrended zigzag.

For the Neural Net, the detrended zigzag should be set this way:

Clicking on the "Try" button, you will get the window where you can adjust the parameters of our zigzag:
In this example, the setting of the critical change for the zigzag at 5% gives us 382 turning points; the
average distance between two subsequent turning points is 24.7 days. It means that this zigzag generates
an average 49.5 days wave. 

I have found that the Neural Net is very selectable to detrended zigzags - it likes some zigzags while there
are some that it does not like. I tried to make Neural Net projection lines for 2%, 5% and 7% zigzags. It
gives the best projection line for 5% zigzag. 

In any case, the zigzag used to calculate the Spectrum and the zigzag used for the Neural Net should be
based on the same critical change.   

The projection line generated by the Neural Net for the detrended zigzag has a "triangle"-like structure
which is very convenient for the identification of turning points:

 
 6) Multiframe versus Standard Spectrum

Calculating the Spectrum for all examples above, we applied the multiframe algorithm:

This algorithm is very good in revealing short term cycles. You can read about it here:
http://www.timingsolution.com/TS/Study/EasyCycles/forecast_in.htm

The standard spectrum is more oriented to revealing permanent cycles in the stock market movements:

It makes sense to play with both possibilities.

But in some cases the usage of multiframe is preferable. Look at this example: let's consider the Spectrum
that uses all available price bars for 7 years price history (Eur/Usd - 1998-2005 yy). Here it is:

 
The short cycles area is very noisy, and this is unavoidable because the stock market is moved by too
many different forces; in the long perspective, this mosaic looks chaotic. The irregular diagram in the
short term cycles region simply reflects this fact. For example, if we consider 7 days cycle in the
perspective of 7 years, this cycle will perform 365 revolves during this period. This cycle will be visible
on a spectrum diagram only in one case - when it is able to keep its "nature" during all these 365 cycles.
In other words, it should keep the phase (like its Monday price movements now should be similar to
Monday price 7 years ago), it should keep its period of 7 days, not 8 days. In reality, the picture is much
more complicated, especially regarding the cycles phase. I recommend to use the wavelet diagrams that
make "cycles nature" visible.

When we consider the 7 days cycle in the short term perspective (like 70 days), the picture is much more
stable. This is what the multiframe spectrum is for. It uses only last price history data to calculate short
term cycles. This drastically  diminishes the noisy effect:

This spectrum looks a lot better.

7) Models Spectrum based on Spectrum Committee (for advanced users)

upgrade Sep. 23, 2005

This model allows to catch non linear effects in models based on fixed cycles. If we assume that stock
market is moved by some interacting cycles in some non-obvious/nonlinear manner, we should not expect
getting a good spectrum diagram with high narrow peaks - because the spectrum diagram reveals only
permanent cycles. The existence of nonlinear effect can make the peaks corresponding to any cycle wider,
or "melted", or sometimes splitted (we have seen this while experimenting with different model
examples). The best way to observe this effect is the usage of Spectrum Committee module in Timing
Solution software.    

Let's demonstrate how it works. Download the price history data (S&P 500 1950-2005) and run the
Spectrum module. Click on this button:
You will get the Spectrum Committee panel:

What the program does is calculating the Spectrum diagram for different Learning Border Cursors:

You will get 4 Spectrum diagrams plotted in one window:

  

Dragging the mouse cursor, you can see the details of Spectrum diagram:

You see that all four spectrum diagrams show one of the peaks around 320-day cycle, it means that this
cycle is strong enough. It presents in different time frames. We definitely should use it for the forecast. 

The most interesting feature of Spectrum Committee window is that we can select different active zones
to create the Neural Net projection line.
We can select these zones this way:

We can choose several active zones. Also you can push the right mouse button to choose the active zones

Now open Neural Net module and in the dialog box where you usually set events click on this button:
You will get this window:

Click on "Try" button; the program will create 100 fixed cycles with 3 overtones each. All these cycles
are located in active zones that you have defined in Spectrum Committee window:

In other words, we create a bunch of fixed cycles with different periods. The Neural Network creates the
model based on these cycles. Thus, we can catch nonlinear effects and changes in cycles periods.
Actually, this is the first approach to one of our middle term projects, 6-12 months, to develop a special
Nonlinear Spectrum that allows to reveal almost ALL possible cyclic processes in price data, linear and
non linear as well.

The good news regarding this technique is that it provides the forecast. All four examples (Dow Jones,
S&P 500, Nasdaq and Euro/USD)  discussed above provide a positive correlation between the projection
line based on cycles from active zones and the price. See here the details

8) Planetary Time Spectrum

upgrade Oct. 14, 2005

This is the most exciting feature of the Spectrum module. Instead of the standard Universal Time, we can
use a new kind of time that is connected to planetary positions. We can consider this new time as a
regular time, i.e. we can apply the typical math routines to reveal the cyclic processes in this time and
make a forecast based on this time. The preliminary research definitely shows that this approach is worth
to be used.

Let's begin to work with Planetary Time. Open Spectrum module and choose this option:

   

Now you should press these buttons (1 and 2):

The program will create the data base that is necessary for Planetary Time techniques. You need to do it
just once.

Now you can define the planetary pair or one planet that will serve as a "clock hand" for our Planetary
Time:
This is the planetary time defined by Mercury geocentric position. The experiment shows that the usage
of the Sun Time only (that is close to Universal Time) provides the different Spectrum than for Universal
Time. This affects the projection line based on such cycles drastically.

The Spectrogram based on Planetary Time looks like this:

Here we used the Sun Time. The period of strongest cycles is pointed in degrees, because the Planetary
Time is measured in angles of appropriate planets. This diagram reveals the strongest cycle processes in
Planetary Time flow.

We can use these cycles in a regular way:

1) Extract them, put into clipboard:

2) Use these cycles as inputs for Neural Net module:

 

This techniques is a brand new. There are many hidden details and nuances here. We provide the Back
Testing to clarify these details. There are two possible algorithms to calculate the planetary wave in
Planetary Time flow:

It looks like the "Algorithm B" provides the better results than "Algorithm A". We continue the research
in this direction.

In Upgrade October, 17 it is possible to define the metric (Universal Time, Price Bar or Planetary Time)
right through the "Style" window:
 

August 3,  2005 - March 15, 2006

© Sergey Tarassov

Improving your forecast

The technology described in the previous lesson (see Lesson 10: One mouse click - and the forecast is
ready) appeared to be an effective one. The advantage of its approach is that we can get a rather
reasonable projection line avoiding the application of more advanced technologies (such as Neural
Network). So, in this lesson, we will discuss how to improve this forecast. Our special concern will be
considering the application of this method to intraday data.

Time/Bar Metrics and their application

We need to get a forecast before starting to improve it. We will do it for the intraday data as there are
some issues to be discussed. Let us start.

Download the S&P 500 index with 15 min. bar (I have downloaded 2000 bars, it covers 4 months). 

Before doing anything, look at the price chart. This is how it looks in a real time:
You see the gaps there. It is not a mistake, the gaps are present due to non trading periods. This price
chart reflects exactly what is happening in time though this presentation is not convenient for a real
trader. Switch to "Bar" option; the same price chart will have no gaps. It looks now more convenient for
the trader:  

Now, using the "Bar" metrics, we have a consistent data set for intraday. It means that we can apply all
our methods to these data; only do not forget that it is in price bars instead of minutes and hours.

So we do now our routine. Run the "Spectrum" module. There is the option there, "Metric", that shows to
us in what domain the analyzed cycles exist:

If we set there "Time", the analyzed cycles will be dealt with in our usual time. It means that the cycle
with the period of 28 days repeats itself every 28 calendar days.

However for intraday data this kind of cycles does not reflect the reality. There are weekends and non-
trading hours; sometimes the gap might be of 3 days during long weekends, and the trading time is
"stopped" for all these three days. To take into account this fact, it is better to use "Price Bar" as a cycle
metric:

 
 

Here the program calculates the cycles that exist in "bar time". Therefore, for daily data the period of a
cycle is measured not in calendar days, but in trading days. For intraday data, the usage of this metric is
highly recommended. The usage of the usual time here mixes all cycle patterns.

Also while you download the price history, pay attention to "trade days/hours" settings:

The program should "know" trade days and hours to display the projection line correctly:
Do not forget to define the forecast horizon:

When all this is done, we able to work with the Spectrum module using the intraday data. 

For our example (S&P 500 Index, 15 min.), I have chosen four strongest cycles:
  

Drag these cycles to the Main screen to receive this projection line:

Final Forecast

As you see, the Learning Border Cursor is set on the last day of September. We have data for two more
weeks in October. We can see that our model provides a forecast for these weeks. I would say that this
forecast is not bad, and the chosen cycles affect this market. We do not use the price history after LBC
(i.e. October price history) to adjust our projection line, we try here to get a general impression of the
forecasting based on our chosen cycles. This is an absolutely necessary procedure that gives us some
confidence that what we do here makes sense, it is workable. If we would not like what we see, we can
try other cycles or their different combination (three or five cycles instead of four that I have chosen for
this example). Thus, we keep some part of the price history untouched to see how our technology works.
In statistics this part of a data set is called "out of sample". We do not use this piece of the price history
neither to calculate the spectrum nor to generate the projection line. 

If we decide that this forecast is good enough to work with, we do the final step: we recalculate our model
using all available price history. It is very easy to do; just set LBC on the last price bar and recalculate the
projection line. Follow these steps:

This is the projection line that I have got:

 
Dangerous point

I would like to point out one dangerous moment in the procedure of making a forecast. You may have
some long term trend like this one:

Here we have a relatively long down trend, and the projection line goes up right after the last available
price bar. This is a kind of "reaction"; practically any intraday model will show the upward movement
here.

To see the whole picture and be sure that the forecasted instrument is actually going up, it is better to use
the models that can work with bigger cycles (as an example, try Annual cycle).  Sometimes it is better to
not use all available price history, keeping some portion of it untouched; otherwise the program is too
concentrated on the most recent price history. 

Parameters to Vary

 First of all I recommend to use different cycles, like three strongest cycles, four cycles, etc.
 Also it is worth to play with the amount of overtones:

Start with the pure sinus wave (one overtone) and increase this value.
  Stock market memory:

 You can also try the special indicator developed for the intraday data:

This indicator shows the percentage of the price changes during the trade session. Simply set this
indicator in Spectrum ("Target") and recalculate it. This is how the forecast based on this indicator
looks:

 Also there is one feature to speed up the process of calculation. In "ULE" tab, set "Calculate after
LBC only":
  The program will calculate the projection line after LBC only and without calculating and
displaying anything prior this moment. It will save the calculation time while the projection line
will be optimized and calculated as usual.

Spectrum - some recommendations to create

Spectrum model
In this article I would like to share with you some useful ideas and methods of creating the forecast based
on fixed cycles. The models that provide this type of forecast in Timing Solution are called "Spectrum
models". There the projection line is created in two stages: 

1. Spectrum module finds the most efficient cycles for some financial instrument;

2. Neural Network or ULE module generates a projection line based on those cycles found in step 1.

If you like to try Spectrum models for your practice, I highly recommend to start with reading these
classes (if you have not read it yet):

http://www.timingsolution.com/TS/Study/Classes/class_spectr_1.htm

and for intraday data

http://www.timingsolution.com/TS/Study/Classes/class_spectr_2.htm

Thus, instead of repeating the basics of Spectrum module, I concentrate now on the application of this
approach to some real financial instrument. If you think about creating these models for intraday data,
please read also this class:So everything below is shown for S&P500 daily data. You can easily apply this
technology for any other financial instrument. Whatever financial instrument you choose, these are the
steps you have to do while creating the forecast. Once again, I will not discuss here the main idea of this
approach or any small detail; see it in classes above. For each step, I will show what I usually do.

1) Data: how many data do you need? For daily data I use 4-10 years of price history. The usage of
bigger price history does not change the situation, it only takes more time for calculations.

2) Forecast horizon. This method provides forecast 2-4 weeks ahead.

3) Pay attention to short term cycles. When you run the Spectrum module, it is better to adjust it by
revealing the short term cycles. It seems to me that the best way to do that is using the short term relative
price oscillator as a target for Spectrum module.

I use the oscillator with 5 bar period:

 

See the Spectrogram with this oscillator:

Now try as a target the oscillator with 50 bars period. See the difference:
The short term cycles are not so visible here as they are in the previous diagram. Thus to emphasize the
short term cycles we use short term oscillator as a target for  spectrogram. We may try as well the
supershort oscillator RPO(1,2,2).

4) Stock market memory. This thing is available under multiframe spectrum option:

One parameter here is called "stock market memory":

I have found that for most financial instruments this parameter should be between 5 and 10. I use here 7. 

5) Better avoid the weekly cycle. I did not get any results while using weekly cycles. I set the length of
minimum cycles to 12 bars:

With this setting, a weekly cycle is skipped. It is very interesting that usually  we can see the 7 days
weekly cycle on spectrum diagrams, though its application for modeling the price movement does not
provide any remarkable results. It might be that the usage of shorter cycles opens the door to Chaos. 
6) How many cycles to extract?  Now when the Spectrum diagram is calculated, you can extract the
strongest cycles from this diagram by clicking on this button. The strongest cycles correspond to the
highest peaks on this diagram:

Here the question arises: how many major cycles is it better to extract? The experience shows that 2-4
cycles is enough. Do not use too many cycles. You will not get improved results, only a confusion.

7) Amount of Overtones. The last parameter you need to set is the amount of overtones used for cooking
a projection line with revealed cycles. I use these parameters:

Sometimes I use only 1 overtone. Do not use many overtones as it is a door for Chaos. Keep it locked!

8) Getting the forecast. This is a really simple step: just drag your cycles to the Main window, and you
will see the projection line immediately:
The same result may be achieved by clicking "Wave" button.

9) Final recommendation. Keep your mind cold as the ice and clear as the crystal. You may be confused
by the general appearance of your projection line - it might be not ideal or beautiful or it might be simply
a bad one. Usually some users in this situation add more overtones, apply more cycles, etc. Sometimes
they get a better looking projection line - though for just one particular case. This picture disappeared
when LBC is moved or new data added. What can I say? Before claiming your projection line as "the
one", move LBC several times and repeat the whole procedure for different LBC positions (i.e., calculate
Spectrum, extract cycles, generate the projection line). And remember that sometimes you may not find a
good enough projection line at all. Accept this, - and try again later, with new data.

The last recommendation. There is an option in Timing Solution that sets LBC in a random way:

I use this option a lot for checking my models.

Below I put several projection lines calculated for different Learning Border Cursor (LBC) positions:
 

 
 

 
 
Wavelet analysis - cycles early warning system
 Cycles do not live forever

When you hear that some cycle, let's say with a period of 105 calendar days, is strong for some particular
financial instrument, - you always should ask what time span is used to reveal this cycle. The fact that it is
impossible to find  the cycles that consistently work in the stock market should be accepted as a scientific
fact. There are special math procedures that immediately reveal any constantly working cycles (if they
only exist), and this analysis does not leave any chance for the existence of constantly working tradable
cycles. Though this analysis reveals the existence of long term cycles (Annual, Kitchen, Juglar cycles),
but these cycles are too long for traders. 

Does it mean that the cycle analysis is not applicable for the stock market? No. Definitely not. We have to
accept that cycles live their own "lives": they are born, they live and finally they die. The cycle's life time
is limited, and we need to deal with this fact. As I know, historically the first one who applied this
approach to the stock market was John F. Elder; it is known as MESA analysis.  We are developing this
approach further. So let's start ...

What a wavelet is?

A wavelet is a wave limited in time; it is a piece of some regular wave. In the picture below you can see a
regular wave together with the wavelet:
 

While the regular wave is not limited in time, the wavelet exists within some finite time interval. The
wavelet technology has been developed a  lot in 1990s. It is used a lot nowadays: for example, when you
call using your cell phone, in reality the cell phone packs your speech as a bunch of wavelets, this
approach allows to lighten up the traffic a lot.

Wavelet diagram

For the stock market application of this idea, the most important feature is wavelet diagram. This is the
example of this diagram:

 
 

You can take the wavelet diagram as a history of the cycle's life. It shows the bio of any cycle right away:
born at XXXX, did something within YYYY, died on ZZZZ. 

The horizontal red/yellow stripes represent here the cycle's BIO, its lifetime length.  The horizontal axis
represents TIME while the vertical axis shows the PERIOD of this cycle. The hot (red and yellow) zones
represent active zones - the periods when cycles are active. 

Looking at this diagram, we can say that the cycle with the period of 117 calendar days  has been active
on the stock market since the middle of 2007 till the beginning of 2010:
So looking at this diagram we can easily say how many cycles are active on the stock market now and the
bio of the each cycle (whether it is newborn, young and strong or old and weak).

Look at another horizontal red stripe, it corresponds to the period of 189 days:
 

This cycle is not so strong (the stripe's color says it, it is not so bright as for the 117 days cycle),
however it looks like this cycle is active at least from the year 2007.

It might make some sense to pay attention to the 56 days cycle as well:
To emphasize short term cycles, you can vary the position of this slide bar:

So, our goal is to reveal the cycle as early as possible. When the cycle becomes obvious for all, this is a
sign that this cycle is weakening, and its time is over (this is the way how the Efficient Market Theory is
working in the cyclic analysis).

The system of early warning

I have found a good analogy in military. They have such a thing as a ballistic missiles early warning
system; this is the system that finds the enemy missiles as early as possible. Similar to that, our main goal
is to reveal the young and strong cycles as early as possible, otherwise this cycle being unattended can
destroy any of our trading strategies.

You can take the wavelet technology as a system of early warning for the trader: when some new cycle
becomes active, the red horizontal stripe appears on the wavelet diagram. This is the "red alert", and you
need to pay some attention to this cycle. Just watch this cycle, we don't know how long this cycle might
live.
 

Technique

The technique is very easy here. It is based on the "drag and drop" cycle model; this approach is
explained in this class: http://www.timingsolution.com/TS/Study/Classes/class_spectr_1.htm

In brief, this is how it works:

a) on the spectrum diagram, pick up the most influential cycles; they correspond to  peaks of the diagram.
Just make a mouse click on the spectrogram around those peaks;

b) drag and drop these cycles from the Cycles box to the Main screen (or click
button);

c) the program will calculate the projection line based on these cycles:

d) I recommend to vary the amount of overtones and the stock market memory parameter:
Now we perform the similar procedure with the wavelet module.

Run the wavelet module, it is in the Spectrum module of the program:

click "Calculate", and you get the wavelet diagram like this:

 
You can hide the spectrum module now clicking on this button. From now, you
will work with the wavelet module only.

Move the mouse cursor to some red stripe that represents the strong cycle and make the left mouse click:

As you see, the program puts this cycle into the cycle box and marks this cycle by horizontal line on the
wavelet diagram.

You may choose several cycles:

Now drag and drop these cycles from the Cycle box to the Main screen (or click
button), and the program will immediately calculate the projection line based on these cycles:

I recommend to vary the amount of overtones:

You can also remove any cycle from "Cycle Box" ("Delete" button) or delete all cycles ("Clear" button).

I recommend to pay attention to the "age" of the cycle. The age of any cycle is calculated in its period.
For example if 10 days cycle is active within the last 30 days, we say that the age of this cycle is 3 full
periods (3x10=30).

If we consider another cycle with the period of 100 days that is active within the last 200 days, we say
that the age of this cycle is 2 periods. I recommend to take into account the cycles that are active 2-3
periods at least. To see the age of any cycle, look at the red bars while moving the mouse cursor through
the wavelet diagram. These 3 red bars cover a time interval of three cycles:

The red stripe on the wavelet diagram should cover the time interval of 3 cycle periods at least.

The rules to pick up cycles are:

1) the stripe should be bright (red or yellow color)

2) the stripe should be long enough (in time) and cover at least 2-3 full periods of the cycle

3) the hot zone should be narrow

 
If calculations are too slow

We recommend:

1) to download not the whole price history, but only the most recent price history:

1000-2000 last price bars is enough.

2) try to decrease the maximum period:

Note for intraday data

For intraday data, the program automatically switches on the bar metrics, in other words the period of the
cycle is measured in bars (not in hours, days ...). Accordingly the period vertical scale on the wavelet
diagram shows us the period in bars:

 
 

 Forecast based on fixed cycles 

In this lesson we discuss the basic definition of the cycle analysis and learn how to create the simplest
forecast models based on cycles. This issue will be considered in more details in the other lessons.Before
starting this lesson I would like to show how to generate the projection  line based on fixed cycle quickly.
The pictures below will illuminate the whole process in five minutes:

1) Download the price history

2) If this is the final forecast, i.e if you use all available price history data to generate the projection line, -
click this button to set the Learning Border Cursor to the last available price bar:

3) Click this button:

4) Do this to extract major cycles:

5) Click this button to generate the projection line:

6) After several seconds, the projection line based on these cycles will appear:

7) If you are working with intraday data, I recommend to use the bar metric to calculate Spectrum:
 

It was the brief explanation for very busy persons. Now I will explain all details relevant to this
technology.

Basic Definitions

The cycle is something that repeats itself in time. The simplest example is a workday routine: enter your
office 9AM, do your duties, 1AM is a lunch-time, 4:30PM go home; same schedule day by day. Another
example is a year-round cycle, annual cycle - from January 1 to December 31; same order of days, weeks
and months year by year. If you talk to scientists and engineers, they will add cycles in space, not only in
time; the simplest example of such a cycle is a bus route - from station A to station B, again and again.
Waves - different waves - are also samples of the cycles.

We can talk about different cycles indefinitely. The most fascinating thing with the cycles is that they
make possible a forecast. If we know the cycle, it is easy: find out where you are in this cycle, and you are
able to tell what will happen in a minute, in an hour, next kilometer, etc. This is why the scientists love
cycles. There is one more reason for this love: many cycles can be described by equations and functions.
It means that (knowing a cycle, of course) we are able to program the cycle and the forecast. 

Now, I believe that you have heard enough in your life about cycles in general. In this article we will deal
with the cycles that can be described by harmonic functions mostly, i.e. represented by sinus/cosine
waves. This is a sample of sinus (cosine) curve:

    

To describe any sinus wave, you need to know: a period - the length of the cycle, amplitude - the
strength of the cycle (you can see it on the diagram as the height of the sinus curve) and a phase - the
angle that defines the start of the cycle (the start point on the diagram is marked as "A").
Mathematicians know many ways to play with the cycles. They have found a way to summarize several
cycles at the same time. It is called superposition of the cycles; the result is a cycle as well. The resulting
cycle may look like this one:

Here I did the summation of 183.1, 135.5 and 87.6 days cycles. It is displayed together with Dow Jones
Industrial Index chart (a black line) and its 300-bar detrended oscillator. In regards to our main goal,
making a forecast, superposition of the cycles is a very useful thing as normally we have many different
cycles working at the same time.

Other interesting things that you need to know about the cycles are:

Weighting: In the previous example the same weights were used for all three cycles. Imagine that you
know that one of the cycles is more important than others. You can assign to that cycle double meaning
(same period, same phase, double amplitude). It leads to a different appearance of the resulting curve.
Thus, playing with cycle weights we can significantly improve our superposition curve. 

Overtones: Suppose you touch the guitar string, and it starts vibrating. How many different sounds do
you hear?
First of all, you will hear the main vibration of the string; on the picture above this is the upper vibration
involving the whole string length. Besides, you will hear the vibration of the half of the string length; it is
the next "octave" of the main sound. Also you will hear 1/3, 1/4 .. length vibrations. These "additions" to
the main sound are called overtones. Some overtones sound loudly while others are very quiet; it is the
reason why every musical instrument makes its unique sound.

Overtones can be used not only in music. They can add something meaningful to any cyclic process. See
the difference between a pure sinus wave calculated by Timing Solution (a red one) and the same wave
with the overtones - enriched wave (a green curve):

I used there 6 overtones. 

Nyquist frequency: it is named after the Swedish-American engineer Harry Nyquist; he has spent a lot of
time determining the minimal time tick to be able to see a cycle. For us, it is important to remember that if
we are working with daily data, it is no use to try catching the cycle lesser than two days (nyquist
frequency); if we have 15 minutes data, the 30 minutes is the shortest cycle to use. Based on my practice,
I would recommend using 5-7 ticks; i.e. for daily data use the cycles with a period higher than 5-7 days. I
would say that Nyquist frequency is a door to a kingdom of Chaos. Keep this door locked.

Spectrogram

Try to produce different sounds in a small room. You will easily find out that some of them sound very
well there, loud, you can enjoy them; while others sound very quiet, the room absorbs them. You may say
that the room itself "likes" some sounds and "does not like" others. You can image the spectrogram as a
result of "asking" some financial instrument how well a cycle fits to it. 
See a sample of a spectrogram created by Timing Solution". Download any financial data and click
"Spectrum" button. You will get something like this:

This is a spectrogram. The X axis on this diagram corresponds to the period of the cycle (or a frequency
of the sound in the example above), while Y is a strength of this cycle (more exactly, spectrum density).
If we compare this periodogram to the sounds in the small room, the highest cycles for our financial
instrument are like the loudest sounds in that room. The periodogram simplifies our life: when we have it,
our task is only picking up these cycles and asking the program to cook a projection line from them.

Picking up the most important cycles

This is a very simple procedure. Just click the mouse around the peak you want to catch:

 
 

Even if you are missing the peak itself, the program automatically will catch the highest point, put this
cycle into "Extracted Cycles" window and mark this cycle on the spectrogram by a vertical line.

Do this procedure several times while picking up the most important cycles:

You can also perform this procedure automatically: click "Extr" button and define the amount of the
strongest cycles you need to extract (four cycles in this example):
  

What cycles are important?

The new "multiframe technology" developed in Timing Solution allows to make a decision regarding a
cycle's significance very easily. There are 2 criteria and 2 recommendations there:

1. choose the highest peaks;

2. the width of a chosen peak should be as narrow as possible:

The higher the peak, the bigger the amplitude of this cycle. The  narrower the cycle,  more energy
is concentrated in this cycle. 

Recommendations:

1. Do not use too many cycles. There are two extremes here: the usage of just one dominant cycle or
the usage of hundreds of  different cycles, dominant and not quite dominant. I believe that
normally 3-10 cycles define the weather on the stock market. Though these cycles change
constantly change, multiframe spectrum handles this situation the best way.
 2. If you have a choice between short-term "good" cycles and long-term ones, choose the short term
cycles. They carry the maximum information regarding the nearest price movement. From other
side, the short term cycles can be a source of noise, so you need to try different combinations to
find the best balance between the noise and the information. 

One mouse click - and the forecast is ready

If you picked up the most important cycles, click this button:

In the Main screen, the forecast based on chosen cycles appears:

As you have guessed already, the forecast is a weighted superposition of the chosen cycles. The program
finds the weight of each cycle automatically aligning them to the previous price movement. 

To save some seconds instead of clicking the "wave" button, you may simply drag these cycles from the
"Extracted Cycles" list in the Spectrum module to the Main screen:

To prove you that this technology is worth of your attention, see here 7 projection lines created for a
randomly chosen LBC.

 
Parameters to vary

Here are the most important parameters to vary:

1) First of all, I would recommend to play with picking up different cycles. Use 2-10 cycles; usually this
is the amount of cycles really playing some part for the financial instrument.

2) Next thing to vary is the amount of overtones. Usually I start with the pure cycle (just 1 overtone), then
I increase this number. Do not use small values for "Min overtone"  parameter (see Nyquist frequency). 
Here is the projection line based on one cycle and amount of overtones is 1:

2 overtones:
6 overtones:

3) Also you can play with "stock market memory" parameter. The smaller value of this parameter, the
more our cycles are concentrated on the most recent price data. Usually I try these numbers: 3, 7, 12.

4) You may try as well to play with the oscillator's period.

 You can delete any chosen cycle or delete all of them using these buttons: 
 

This allows you to work with different cycle patterns and projection lines generated by these cycles. 

You can delegate the choice of cycles to the program. You will do just one mouse click on this button:

. The program recalculates the spectrogram and extracts  strongest cycles

automatically.

One more approach is to make a forecast using several projection lines; it is called Committee. We
generate the projection lines one by one and put them into Strategy window by clicking on this button in
ULE tab:

These projection lines are visible on Main Screen now. Here I put three projection lines varying the stock
memory parameter:

Detrending, or what to forecast?

Mostly the financial instruments have some trends. Therefore, it is mathematically necessary to use
indicators instead of the price data: our goal is to forecast as close as possible to the functions used in
forecasting, i.e. sin curves. To reach this goal, we do not use the price itself to calculate the spectrum
diagram. Instead, we use the detrending indicator - the relative price oscillator with the period=100 bars
(as an example):

You can set this parameter manually depending on what swings you want catch. Or you can use other
indicators as a forecast target - like RSI, ADX, Volatility and others.

In other words, in this particular case we perform the spectrum analysis not for Dow Jones Industrial
index with its up and down trends, but for its oscillator:

This oscillator is much more convenient for the cycle analysis.

Working with intraday data

If you are working with intraday data, it is better to calculate the spectrum using price bar metric:
Thus you eliminate the effect of non trade gaps. This approach is described here. 

Scientific parallels

In this lesson I used the lexicon of the spectral analysis science. However, this technology can be
expressed using different scientific accents. Let me explain it.
If you are mathematician, you will deal with the cycles from the point of view of Fourier Transform. If
you are a professional in Digital Signal Processing science (DSP), you would prefer speaking in terms of
filters. The spectrogram shown above can be interpret as a filter that converts "white noise" (data set that
has no selective cycles) to the analyzed financial instrument. These two are practically the same math
entities; only accents are made on slightly different sides.

In the following classes I will try to make the parameter (getting results)/(learning time) as high as
possible.

Models based on fixed cycles: playing around

This article is devoted to the forecasting model based on fixed cycles. The most appealing features of this
model are:

1. This model is based on fixed cycles. But, comparing to the standard approach, this technique
allows you to observe details formed by each cycle.
2. This model allows to model the inversion phenomena - when the stock market is beginning to
move in the opposite manner within the same cycle starting from some particular moment in time. 

3. You do not need extensive price history data to create this model. I recommend to use 4 years
price history. More history data (like 10 years) slow down this technique significantly while the
short history data make the resulting curve more jumping. 

Technique

To create this model you need just one mouse click. When you have downloaded the upgrade of April 22,
2005, you will find there a new button:

Click on this button. In a moment, you will get this window:

 

What does the program do? It runs the spectrum module, extracts the most influent fixed cycles that
appear within this price history data, and then creates the model based on these cycles. In the example
above, the program has extracted 20 cycles. For each cycle, you see a special slide panel in the right side
of this window. Dragging the slides, you can vary the force of each cycle. At the same time, you are able
to observe how the final projection line is changing in respect to these slide's movements. In other words,
playing with the slides, you change the coefficient of the importance for each cycle in the price
movements of your market. Thus you can see easily the possible ways of the price movement regarding to
each cycle.

Select some piece of price data from the red (i.e., testing) interval. Let us try to understand how really this
model predicts the future price movement. (Reminder: To calculate this projection line and these cycles,
we do not use the price points from the testing interval, the future leaks are excluded in this program). 

I recommend to follow three steps while making the forecast: 

Step1 - Specifying the dominant cycle: First of all, find the cycle that is dominating in this period.
When we have more than one cycle inside some data, the cycles behave similar to people in the group.
Though each one of the members of the group is a unique human being, with his/her unique features,
habits, knowledge, power, etc., they do not demonstrate all these abilities in the group. As the group
members, they have different functions in it. And there always is a leader - otherwise the group will cease
to exist. The leader may be different in different circumstances, like one person is leading in one activity,
while the other may be leading in something else. The same with the cycles. Between all of them, playing
at some time period, one is dominating. It may be dominating for the whole period, and it may transfer its
role to other/others down the road. This idea may be an explanation how and why bullish market turns to
bearish from time to time, and vice versa.
Enough general discussion, let's go back to the model. You can make any playing cycle visible checking
the "eye" option:

In this particular example, you can see that 163.2 days cycle is the most influent from July 2002 up to the
middle of August 2002. Does it ring the bell for you? For me, it is not surprising: it is very close to a half
of 320 days cycle  that appears very often in different price data (equity, commodities, indexes - see here: 
http://www.timingsolution.com/TS/Study/Coffee/coffee.htm ).

Step 2 - Specifying inversion phenomena: Look at the same example. You see that, starting from the
middle of August, the projection line and the actual price move in an opposite manner. For the whole
month, the projection line was like a mirror of the price. We can take this inversion as a fact of changing
the stock market's structure; some cycle starts working here in an opposite way. Another possibility is an
intervention of some fundamental factor. Here we will follow the first possibility - the cycle working in
the opposite way than it has done earlier (the fundamental factors and their influence are in our list of
research). You can see that the top for the projection line in the beginning of September 2002 corresponds
to the bottom turning points for the price.

Can we find out what cycle of these 20 is playing this way? Let us try.
Picking up all cycles one by one, I have found that the most probable candidate is 22.3 days cycle. This
cycle produces the turning point of the projection line in the beginning of September and looks like is
starts working in the "inversion mode"  from the  middle of August. To confirm our finding, we do the
step 3.

Step 3 - Manually modeling the inversion phenomena: Dragging the slide that corresponds to this
cycle, we can change the force of this cycle. Dragging it to the left, we make the weight for this cycle
negative. Thus, we are modeling the inversion (i.e., opposite movement) for this cycle. The small red
mark in the left side indicates the inversion:
Now we can see the projection line with inverted 22.3 days cycle that explains September price
movement better than the regular model.

If you want, you may vary the parameters for the Spectrum module and run the same model through the
Spectrum module:

By the way, I recommend to use "Speed" option for this model:

It is a derivative of the projection line. Sometimes the price follows the speed curve (the blue line on the
picture) rather than the projection line. 

Parameters to vary

For this model, I recommend to vary these parameters of the Spectrum module:
 1. The Basic Interval. Try do decrease it (like 5.0). This approach reveal much more information for
the short term cycles.
2. Min overtone cycle period. I recommend to use 5 ticks, the usage of shorter overtones (like 3
ticks) makes the projection curve more jumpy. 

3. Parameters for oscillator.

How to apply this technique for intraday data

The following is a description of necessary steps to get a fixed cycles based forecast for intraday data:

Step 1. Download the price history data. But do not use the long history. I used to use 14 days for the
model's training and 3 days for its testing. In other words, about a month of data is well enough.
 

Step 2. Run the Spectrum module. But - to calculate the Spectrum, use "Bars" basis, not "Time". Do
these operations:

Step 3. Optimize this model to get the forecast. Click on these buttons:
 

After 10,000 steps of optimization, I have got this projection line on TESTING (red) interval. It is not
bad! At least, we can see the tendency for intraday movement:

The usage of the bigger price history makes the projection line worse.

When working with intraday do not forget to exclude non trade days in "Options" window:
 Overview of cycle based models in Timing Solution
written by Sergey Tarassov

In this article you will find an overview of cyclic models that present in Timing Solution now (spring
2008) and are based on regular cycles. Timing Solution provides the wide variety of techniques based on
these cycles starting with simple charting tools (that allow to draw any cycle manually) and ending with
Back Testing module. (Regular, or fixed, or math cycles are not the only cycles in the program. Timing
Solution is able to work with astronomical cycles as well; the astronomical cycles are discussed in
another article. This article is devoted to the cycles that can be described by some math function.)

Charting tools:

Let us start with the simplest model. The most obvious understanding of cycles comes when we observe
some regularity in the distance between turning points:
 

I draw these lines using "Equidistant Lines" charting tool by dragging the mouse from point A to point B.
The good confirmation of significance this cycle is when other vertical lines point at turning points as
well. We can draw these lines using calendar time or trade days only (excluding holidays and weekends).

If you would like to deal more with cycles, try another charting tool, "Harmonic Wave". It allows to draw
a sinus wave over the price chart:

You may draw the same sinus wave together with its overtones (2nd and 3rd):
There is one more charting tool, "2 Wing Wave". With it, you may draw irregular waves, like this:

Or you may draw the wave that consists of four wings (A-B, B-C, C-D, D-E). Watch how this pattern
repeats itself in the past and find out when to expect it again in the future:

 
 

Easy Cycle module:

Next step is "Easy Cycle" module. In this module you draw cycles manually. However the difference
with charting tools above is that you can combine several cycles here and create a composite cycle model:

 
These options are designed to vary the parameters of each wave (its amplitude, phase and period): 

Thus you will be able to adjust your model to real price history data.

Here is one tricky thing here. Ask yourself what the cycle is? We can state: a cycle is something that
repeats itself in time. What time do we use? It makes the difference as we can measure the time in a usual
way - calendar days and normal hours, or we can measure the trading time in price bars. The explanation
regarding this approach is here: http://www.timingsolution.com/TS/Study/Easy_Cycle/index.htm

Spectrum + ULE:

What we did above was just to apply the cycles idea, assuming that some cycles exist inside our price
data. With that assumption, we could either draw the cycles or correct them adjusting the cycle's
parameters. However, there is a way to reveal the most significant cycles for your data. Applying math
methods such as spectrum analysis we find the strongest cycles easily:

 
Then, by dragging these cycles into Main screen, you immediately get the projection line based on these
cycles (three cycles in our example):

This procedure takes several mouse clicks and several seconds for calculation.

Play with different cycle combinations, amount of overtones and with different
waveforms.

This approach is very effective. It allows to obtain very easily the projection line based on advanced
technologies.

More information about this approach is here: http://www.timingsolution.com/TS/Study/E/4.htm

If you apply this method to intraday data, see this:

http://www.timingsolution.com/TS/Study/E/class_spectr_2.htm

Advanced charting tools:

Here you can find new charting tools based on fixed cycles. It combines the simplicity of charting tools
and the calculating power of nowadays computers. Let us look at the charting tool "Fourier string". What
you do is just dragging the mouse from one point to another while the program performs the Fourier
analysis for the price data within this interval and draws the projection line based on this analysis:
 

Another charting tool, "Harmonic string", allows to set the dominant cycles manually.

More explanation regarding these tools is here: http://www.timingsolution.com/TS/Uphistory/Advanced/

Planetary time

Let us return to the question above, how we measure cycles. You can calculate the cycle's period in
calendar days. It is a regular way of understanding the time. As an example, we may say that the distance
between two succeeding turning points is 35 calendar days. The variation of this approach is to calculate
the cycle's period using trade days only (i.e. excluding weekends and holidays).

This approach is based on the Sun and the Earth mutual movement (or the angle between the Sun and the
Earth). We can extend this idea and apply more sophisticated measures for time calculation. Say we may
calculate the time using the angle between the Sun and Uranus. See the picture below. It shows vertical
lines that correspond to the moments when the angle separation between the Sun and Uranus reaches
41deg 48min, 2 x 41deg48min=83deg 36 min, etc.):
Therefore, we have one more charting tool that works exactly as other charting tools: you simple drag the
mouse from one turning point to another one. The difference is that you choose as well planetary
combinations that describe the turning points the best way. 

This is a very effective technique, read more about it

here: http://www.timingsolution.com/TS/Articles/PT/index.htm

It is possible to calculate the spectrum using this planetary time. Look at this spectrogram calculated for
the time that is measured as the angle between the Sun and Jupiter:
The peak around 180 degrees means that the price repeats its pattern while the angle between the Sun and
Jupiter is changing within 180 degrees interval. It corresponds approximately to 200-days regular cycle.

You can work with these cycles as with usual cycles, i.e. drag it into Main screen and get projection line
based on this cycle.

You can read about this approach also  here:

http://www.timingsolution.com/TS/Articles/Time_Metric_1/planetary_time_1.htm

Auto regression Model

Auto regression model (AR) assumes that price today is a linear (or nonlinear) combination of prices (or
indicators) several trade days ago. Like:

Close today = A1 x Close 1 day ago + A2 x Close 2 days ago ....

In Timing Solution you can create practically all possible variations of AR models. Also (and this is the
most important) you can create nonlinear AR models (using methods of Fuzzy Neural Network).

See here the results of back testing one of these models: http://www.timingsolution.com/TS/BT/Candle5/

Also I would like remind that MESA (maximum entropy spectrum) technique is mathematically
equivalent to TS linear regression model.

Chaos Theory

Chaos Theory allows to reveal non obvious cycles - stochastic cycles. 

Read here about them: http://www.timingsolution.com/TS/Articles/Chaos/chaos_ts.htm

 
Neural Network + Back Testing:

Neural Network is an universal tool of getting a forecast. It can work with any models created by you
with the help of Timing Solution.  Also, all models used in Neural Network module can be Back Tested.
See more information about Neural Network technology on the website.

Planetary Time Metrics - introduction to the

theme 
 In this small article, I would like to introduce an absolutely new technology that allows to improve the
forecasting abilities of our models significantly. We (my friends and I) have begun our first numerical
experiments with this technique almost two years ago. At that time we considered this technique as a
totally experimental one. During the following years, we continued experiments and created a software
that can deal with it. Now we are ready to demonstrate this approach to the public. For me personally, the
most exciting fact is that this approach opens our eyes to a new kind of phenomena: it looks like the stock
market follows not the ordinary time that we all used to deal with and can measure by different kinds of
clocks, but rather with the special kind of time; this kind of time is very related to the planetary
movements around the Sun (at least, the Earth movement). This is a statistically approved fact (see the
table of results below). I would like to say that the moving planets generate a kind of their own time
flows, and we can think of that time and apply it using standard technique procedures, i.e. we can
calculate the Spectrum in our usual way to reveal cyclic phenomena persisting in that particular time, and
then create the forecast model based on that time. Also, there are already some physical experiments that
provide a legitimate base for this approach (I will write more about these scientific experiments in another
article). This technology presents in Timing Solution software only, and all rights regarding this approach
belong to Sergey Tarassov. 

Why Planetary Time?

To be brief, this technology deals with another kind of Time. Time is one of the most fundamental
characteristics of our World. Usually, describing any process, we assume that this process has some
longevity in time. We can measure the time - using atomic clocks (as we do now) or the Earth's rotation
(as we did 100 years ago) or observing astronomical phenomena (as our predecessors did many years
ago). In any case, measuring the time, we link it to some physical process that looks constant and even.
Then we divide it onto smaller parts (years, hours, minutes and seconds, etc.) - to be able to apply these
parts to other processes, to measure them and get a kind of a control over our world. Thus, for our
Universe, we use our Universal time. And this universal time (as we know it) is based on the rotation of
the Earth (what else could you expect from the earthlings?). 

Skipping all intermediate thoughts (that is the issue of the next article), we have found that the usage of a
special kind of time measure (based on other planets positions) provides the better projection line than the
projection line obtained using the Universal time. This fact is statistically verified, see details below.

Technically, it means that we are considering the phenomena not in Universal time, but in Planetary
Time. (By the way, the Planetary Time differs from local time for different planets, it is a totally different
thing).  In other words, the hands of the clocks designed for the Planetary Time are moving in respect to
the planetary position. The most appealing feature of Planetary Time is that it is not even in respect to the
Universal Time. As an example, consider the Mercury Time; it looks like this:
  

Sometimes this time is flowing in opposite direction. In other words, sometimes, for one point of
planetary time, we have several corresponding points of universal time. There is nothing unusual in it, we
simply need to change the way how we used to look at Time. It is like watching the football game and
using different clocks - yours, your friend's, the watches of the gentleman in the first row, etc. How do we
know which one says the "right" time? Because the "right" one is exactly like on that big clock on the
wall? Or because you like your watches more? We used to live in the Universal Time, but it is just a
matter of opinion. Try to consider this Planetary Time as a true time for some specific process. Then you
can calculate the spectrum diagram based on this time and reveal cyclic phenomena happening in that
time.

The first time when I calculated the spectrum diagram based on Planetary Time the first impression was
that: this spectrum looks better. The peaks corresponding to different cyclic processes in Planetary Time
look better in comparison to the same spectrum diagram in Universal time. You can trust me with this: I
look at these spectrum diagrams hundreds times a day, and my eye is trained to see such a difference
immediately. But to be sure that this is not an artifact/dream/fantasy, I had to conduct the statistical
research. It took me one year to find appropriate math/software decisions to verify this fact.

In other words, the planets define their own kind of Time. We did not use it before - only because for all
our earthly things the Universal Time was enough. But, at least, the Planetary Time is very suitable for
making forecasts, and some cyclic process may be considered in this Time. This is the reason why these
cycles might look irregular in the Universal time though they are regular in Planetary Time. In other
words, speaking poetically, the Planetary Time is habitable, at least some regular cycles live there and we
can use it for creating a projection line.  

Statistical Results

Timing Solution software provides a possibility to calculate the spectrum diagram using different time-
kind metrics. You can describe your process using different time parameters:

 Universal time, 
 the price bars or trading days; 
 Planetary Time (planets positions or angle between planets). 

In other words, if we do believe that price changes for some security have a cyclic nature, we can reveal
different cycles for the same set of data using different time coordinates. And we can get a better
projection line.

In the table below you will see the results of some experiments. You can do it yourself following these
steps:
1) Download the price data for different financial instruments;

2) Divide this price history on two independent intervals - the training interval and the testing interval;

3) Calculate the spectrum for different metrics using price points from the training interval;

4) Extract the most significant regular cycles (in different time metrics) from the spectrum diagram;

5) Train Neural Network on the  training interval. As inputs, use the regular cycles  (in different time
metrics);  as the output, use the detrended price oscillator with the period of 25 price bars;

6) Calculate the Neural Network  projection line and calculate the correlation between the projected line
and the oscillator on the testing interval. The "future leaks" are excluded here because we keep the
training  and testing intervals independent.

This is the table of results; it shows the correlation between the price and the projection line based on
different time models (cycles extracted from Spectrum based on Universal Time and Planetary Times):

  Regular Time Metrics Irregular Time Metrics

model model
based on model based based on
model based on model based on
cycles on cycles cycles
cycles cycles
Instrument calculated calculated calculated
calculated for calculated for
for for for
Mercury Time Venus Time
Universal Sun Time Mars
Time Time

Dow Jones
from 1950 to
Sep. 2005. r=  0.088 r=  0.233 ! r=  0.097  r=  0.064 r=  -0.072
2109 test price
bars

S&P 500 from

1955 to Sep.
2005 r=  -0.042 r= 0.169 ! r=  0.068 r=  0.033 r=  0.002
2084 test price
bars

NASDAQ
from 1985 to
Sep. 2005 r=  0.095! r=  0.094! r=  0.035 r=  0.010 ***
792  test price
bars

EURO/USD
index from
1991 to Sep.
r=  -0.155 r=  0.108 r=  0.226 ! r=  -0.154 ***
2005 *
776 test price
bars

* Before 1998, EURO/USD was interpolated as Dollar index. 

The table definitely shows that the models based on Planetary Time provide better results than the usual
models based on cycles in Universal Time. In any 3 of 4 cases, the model based on Planetary Time
provides better results than the model based on Universal Time.

But the most reliable statistical approve for the usage of the Planetary Time was received when I did the
analysis of Sun spot activity (Wolf index). I used the data from 1848 year to 2003 year (here is the source:
http://sidc.oma.be/html/sunspot.htm); in total, it gives 60,000 points!!! Using the data from 1848 to 1979
(my training interval), I have created a forecast model. The other part of data, from 1979 to 2003, served
as the testing interval, with 7,600 points; I used it to verify the projection line, i.e. to calculate the
correlation between the projected and normalized Wolf index. Then I extracted the most significant cycles
using different Times: Universal Time and Jupiter heliocentric Planetary Time. The difference between
these two time metrics is caused by the ellipticity of Jupiter's trajectory.

The model based on Universal Time provides the projection line that correlates with the index 0%±1%,
while the projection line based on Jupiter Time provides the correlation of 5%±2%. The big amount of
testing points (7,600) confirms the statistical approval of this approach with a very high probability.

PS. Timing Solution users can see the technical details here:
http://www.timingsolution.com/TS/Study/Spectrum/index.htm#A8

© Sergey Tarassov

September 30-October 15, 2005

Toronto, Canada

Astro based charting tools

These charting tools are based on different principles than standard math applications; they use
astronomy's rules. Some of them are just the continuation of ideas developed for previously discussed
charting tools. The difference comes mostly from a special way of dealing with the Time. 

  Equidistant lines

Let us start with non astronomical charting tool - "Equidistant lines". This way you will easily understand
how all astronomy based charting tools are organized.
Dragging the mouse cursor from point A to point B (while "Equidistant lines" tool is activated), you
simply display a bunch of vertical lines equidistant one to another (59.4 calendar days step is used in this
example):
 

In other words, these lines are based on equal steps on the time scale. If you use BAR scale, the distance
is calculated in bars (or in trade days for daily data):

For your convenience, you can set in parameters the color and thickness of these lines as you like; also
you can order displaying additional lines (overtones):
 

  Planetary equidistant lines

Technically this charting tool is pretty close to "Equidistant lines" charting tool. The very important
difference is that the TIME is measured here in degrees of the angle separation between two planets or in
degrees of the planetary position of any single planet. 

(We can measure the time using the atomic clocks, or using the Moon phases, or Venus phases. What
time measurement is more appropriate? It depends on the task we deal with. If we analyze some physical,
chemical, or other process - no doubt, the time measured by the ceasium-133 atoms oscillations is more
suitable. However, for the processes where human activity is involved - like the stock market - I  do not
know how appropriate atomic clocks are.) 

Thus, while with "Equidistant lines" charting tool we measure time in DAYS (calendar or trade days),
with "Planetary equidistant lines" we measure time in planetary angles. Planetary angles play a role of
TIME in this charting tool; see more about it here
http://www.timingsolution.com/TS/Articles/PT/index.htm

The example below shows "Planetary equidistant lines" for Jupiter-Uranus heliocentric angle. Here the
increment for the angle between these two planets (Jupiter and Uranus) in the chosen system of
coordinates (heliocentric) is 4 degrees 30 minutes of arc:

 
The other name for this procedure is "stepping"

Technically it works this way. Clicking on "Planetary equidistant lines", you get this dialog box; set there
the planetary combination (in our example, this is Jupiter-Uranus heliocentric angle separation):

If you prefer to display the charting tool for the Sun position (or any single planet), change this setting to
Sun-Sun (or some planet to the same planet).

Now drag the mouse cursor connecting two turning points:

 
 

Why this charting tool is so important? The answer is in non even planetary movements. This fact makes
the astro based charting tools irregular, and this is very typical for the stock market behavior.

Here  you can see regular equidistant lines (blue) together with Jupiter-Uranus helio equidistant lines
(red):

The difference between red and blue lines reaches two weeks within one year. 

In Options window you can define the planetary combination, Zodiac, lines appearance - color and
thickness.
In the example above, we chose only the planets and Zodiac. The step (degrees of the angle separation)
was defined by the change of that angle between the two turning points. And then we have applied that
step (found by the program) to create the charting tool. You can set the degree of angle separation
manually as well. Suppose that you set the step of angle separation as 17 degrees:

 The program moves the second anchor to the new position that corresponds to the change of 17 degrees
in angle separation between Jupiter and Uranus, heliocentric, starting from the value of this angle in the
first turning point :

In other words, when you set the step manually, you actually define the planets and Zodiac (or the system
of coordinates) and the step and choose some starting point. The program uses the value of the angle
separation between your planets (initial angle) and shows the lines that correspond to the angles: (initial +
17 degrees), (initial + 2*17),..., (initial - 17 degrees), (initial - 2*17), etc. 
Here is one recommendation while using this tool. Try to draw "Planetary equidistant lines" connecting
any two important turning points, then vary planetary combinations and Zodiac types in the Options:

While doing that, watch how other lines hit other turning points. This is the way to look for the most
informative planetary combination for your stock market.

  Planetary returns (same cycle)

This charting tool is based on the idea of returns - the moments when some planet comes again to some
position or when two planets make again the same angle between themselves. The actual job of
calculation and comparison is done by the program, your actions are just to define your intentions and
operate the mouse. While you drag the mouse cursor, the program calculates the Zodiacal position of the
chosen planet or the angle between two planets and displays a bunch of vertical stripes that correspond to
the moments when this planet reaches the same Zodiacal position (or when there is the same angle
between two planets). Look at the example below. Here the mouse cursor is located in the middle of
February, 2009. The Mercury position was 3 degrees 17 minutes. Two additional vertical lines indicate
the moments when Mercury has passed the same Zodiacal position:
 

  Planetary returns

This charting tool is very similar to the previous charting tool. The only difference is that this charting
tool covers all synodic cycles, and therefore more vertical lines are shown . 

  Planetary steps

Again, this charting tool is similar to the tool discussed above, "Planetary equidistant line". As for that
tool, here you can set the angle increment manually. And you can use not only the same step, but different
steps (like in Fibonacci sequence). In the example below the mouse cursor is set on the beginning of
April, 2009, when Mercury was in the first degree of Aries.

The steps 15, 72 and 90 degrees are used. So vertical lines here point at 15 degrees of Aries, 12 degrees of
Gemini (72 degrees) and first degree Cancer (90 degrees):

 
 

  Planetary fan

This tool allows to display the bunch of planetary lines starting from point indicated by the mouse cursor.
Here you can see the planetary lines for Mercury, the 1H, 2H, 3H, and 4H harmonics are used:

 
  Multi Planetary fan (fixed scale)

You can display the bunch of planetary lines for many planets at the same time. Here you can see the
planetary lines for major planets:

When you use more harmonics, these lines look this way:

  Multi Planetary fan (free scale)

This charting tools works very similar to the previous charting tool, though there is one important
difference. You do not need to set the scale parameter for planetary lines, the program finds its
automatically while you drag the mouse cursor. In example below the mouse cursor moved between two
points of the price chart; the Sun's planetary line hits both points. The planetary lines for other planets are
displayed using the same scale as the scale for the Sun:

In options you define the planet to be used for Scaling:

  Two Dimensional distance charting tools

You might hear sometimes phrases like this: "analyze price and time together", "price time chart".  All
these phrases mean that we analyze price and time as a whole Universe. Not analyzing separately price
and separately time. Together, they form a kind of Universe, like South-North and East-West are not
separate geographic entities - but they describe one and the same entity - the Earth's surface. Exactly the
same approach can be applied to price-time Universe. These two charting tools represent our vision of on
this problem. This set of tools combines regular and astro based tools are the advanced version of the
tools discussed above.

See here for more details: http://www.timingsolution.com/TS/Articles/ptd/

Remember that this is an experimental technology. We do not provide any recommendations here yet as
we need some time to understand how this approach really works. We will be able to do that after getting
enough response and feedback from users of these tools. However, even now this set of tools may provide
some ideas how price-time landscape looks like.

The first thing we should to is to define the distance between two points on this price-time landscape.
Here you can see the example - the distances between turning points A, B, C and D; they form the angles
close to harmonics:

distance A-B=356.47 degrees, close to the whole cycle;

distance B-C =89.22 degrees, close to a quarter of the whole cycle;

distance C-D =46.13 degrees, close to the eighth part of the whole cycle.

Thus we can draw equidistant cycles on the price - time landscape. It is possible (once again this is an
experimental technique) that these cycles form a kind of attraction zones, like this:
 

Depending on the planetary combination used to calculate the geographic map for this price-time
Universe, it may look like this:
This "Terra Incognita" needs to be explored more.

 Astrology without Natal chart

I would like to start this article with a quote from Robert Hand's foreword to Bill Meridian's book,
"Planetary Economic Forecasting". Here they are:
"Modern astrology is based on what is usually called the horoscope or birth chart... But there is also a
kind of astrology which does not use horoscope chart. Here the planets are used as indicators of cycles.
For example, we have the 20 year cycle of Jupiter and Saturn. We except to find cyclical patterns of
twenty years duration in terrestrial phenomena and these phenomena reliably and continuously correlate
with the movements of Jupiter and Saturn. Business and economic cycles fall into this category".

We first faced with this problem in 1998, when the first astrological Neural Net had been developed. The
task was classical: to get a forecast for future price movement taking into consideration the aspects to the
Natal chart. Immediately the question has been raised: what Natal chart is correct? In 1998, I had not
doubt regarding Natal charts - we used charts found and checked by such a professional in this field as
Bill Meridian. However, while making a research, we always have a nasty feeling "what if our Natal chart
is not correct? It means that all our calculations are wrong". A mistake of 10 minutes for the Natal chart
can cause a significant discrepancy between the forecast and reality.

The solution has been found very unexpectedly. Instead of analyzing the aspects of transiting planets to
the Natal chart, we can analyze EACH degree of Zodiac. Thus, we move the accent from Natal chart to
sensitive points.

Look at this Composite diagram:

This diagram shows how the Volatility for Dow Jones Index changes in respect to Mars's position in
different parts of Zodiac. The peak in the beginning of Virgo indicates high volatility when Mars is in the
beginning of Virgo (geocentric system). It means that there is a lot of activity on the stock market when
Mars passes this sensitive point.

We can assume that the beginning of Virgo is some sensitive point for DJI. It is quite possible that some
object of DJI's Natal chart is located in this point.  The main idea of this approach is we do not care what
Natal chart is applied for the analyzed financial instrument, we simply reveal its sensitive points, and the
Composite module does this job very well.

Thus, instead of arguing what Natal chart is true, we are watching what happens to the stock market when
different planets come through different parts of Zodiac. Like in this example, DJI overreacts when
Jupiter crosses 15 degrees of Leo:
 

Some other sensitive/Natal point is responsible for this fact (not the same one as in the previous example).
The advantage of this approach is that we do not need to know the exact time of the Natal chart, the
program itself finds the sensitive points and creates the forecast models. The most important fact is that
these models definitely provide the better forecasting models.

So, how does Timing Solution software work with these sensitive points? In the Neural Net module,
define this:

In the appeared window, choose diagonal elements that correspond to the FAM model for planetary
positions:
 

TS Neural Network will run a very sophisticated procedure called suboptimization. This procedure
reveals the sensitive points very accurately. Moreover, it find the best orbs for all sensitive points.This
approach seems to be more effective as it eliminates human preferences regarding true natal data, choice
of the chart type (corporation versus registration etc.) and the orbs.

Forecast based on astronomical cycles

The models applied in this forecast are based on the assumption that planetary positions or angles
between the planets are somehow related to the stock market movements. I would not say that the market
moves because of the Sun in Libra or because of the Mercury - Mars trine. We do not know yet how the
links between the planets and the market work. However, we can state that some connection exists
between market's ups and downs and the mutual disposition of the planets in the sky above. The statistics
is behind this statement. However, it is a subject for the scientists. For us, it is enough to know that there
is a connection, and we can work with it. So, we can use it for our forecast. Download any daily price
history and click this button:

You will get something like this:

 
 

This curve shows how the price changes in regards to the Sun passing through different Zodiac signs.
There is no mystics here, it is a natural cycle that we all know. In other words, this is the Annual cycle.
Now look at the Main screen:

This green curve shows how the Annual cycle works in time. To display this curve together with the price
chart (not on a separate panel), click this button:
Similarly you can calculate any astronomical cycle. As an example, analyze the angle between the Moon
and the Sun, i.e. Moon phase cycle:

It is possible to use different Zodiacs (why not? they are nothing else but different coordinate systems
where we can observe the same planetary movement). See this cycle generated by a heliocentric position
of Mercury:

"Mercury-Mercury" here means that the position of Mercury is being analyzed. When you change the
planets/Zodiacs, the program redraws the projection line automatically. 

You may work with just one cycle (I always start with the Annual cycle). Better results are achieved if
you apply more than one cycle. 

Click on this button:

 
The cycle you are working with goes to "Composite Box". Thus you can add as many cycles as you need
and obtain the projection line which is based on several astronomical cycles. 

Look at this picture:

The blue line represents a composite cycle which is based on heliocentric positions of three planets:
Mercury, Venus and Mars.

If you need to get more smooth projection line, not so choppy, increase the smoothing orb parameter in
"Options":

Astrological cycle based models in Timing

Solution
This article is devoted to pure astrological models presented in Timing Solution. We have discussed
already two other types of models used in the program - based on math methods and based on astronomy.
Now it is time to look at totally different models - models based on astrological phenomena. This
approach is very interesting, and the most interesting part is that today we can combine thousands years
of astrological wisdom together with the newest math technologies (like Neural Network modeling) and
hardware abilities (i.e. computers, their memory, speed, etc.).  However, before any discussion, I would
like to explain the main difference between astrological and astronomical/math based cycles. 
Do you have any idea as to what would a mathematician and an astrologer think when somebody tells
them about the Sun cycle?

Mathematician:
He sees it as the regular cycle with the period of 365.25 days. He may discuss how many figures are after
the point. Anyways, immediately the sinus curve appears in his brain, something like this:

The mathematician likes this curve very much, and he tends to describe the whole Universe as the Great
Combination of these Harmonic waves.

Astrologer:
Astrologer sees a totally different picture. He sees Zodiac, either as a circle or something like this: 

This picture demonstrates the movement of the Sun through 12 signs of Zodiac. Each year, on March 21,
the Sun ingresses the sign of Aries; it is there for a month, and during that month the Sun's quality is
colored by Aries sign. The astrologer also may use the phrases like this: "The Sun likes this sign because
it exalts there". Practically it means that the Ecliptic is divided into 12 equal sectors (signs of Zodiac), and
the Sun "feels" itself differently in each of these sectors. For example, in Leo (middle of summer) the Sun
feels itself very good, like being home (Leo is a sign ruled by the Sun, or the sign of the Sun's dignity).
When the Sun ingresses Aries, it feels itself there very good as well, like staying in the house of a very
good friend (in Aries the Sun exalts). To continue the analogy, there are some places where the Sun feels
itself not comfortable. One of these places is Libra (October), the Sun's fall  place. Another is Aquarius
(at the end of winter), a place of the Sun's detriment - the Sun is weak there. The same picture comes to
the astrologer's mind when he thinks about other planets, they also feel themselves differently in different
places of Zodiac.

This approach came from ancient times, astrology goes back for several thousands years! The ancient
astrologers observed the celestial bodies and simply compared what had happened on the Earth and on the
Sky. You can get in touch with their feelings if you try to watch the Moon in different signs of Zodiac
within several years; simply memorize your attitude during these 2-days intervals, year by year.
Now you see the difference between the mathematician's and the astrologer's  view on Annual cycle. The
mathematician sees a smooth wave, and the difference between 359th and 1st degree of Ecliptic
coordinates is not a big thing for him. For astrologer, there is the difference between the two, a big
difference: the Sun in Pieces and the Sun in Aries gives to us a totally different astrological situation and
results in two totally different outcomes. The astrologer takes into account not only quantities, but
qualities as well.There are more places in Zodiac associated with specific planets. One kind of them is
terms. This approach is based on the idea of rulership. The Zodiac is divided on 60 non equal sectors,
and each sector is ruled by some planet. For example, the sector 0-6 degrees of Aries is ruled by Jupiter.
Next segment is wider, 6-14 degrees of Aries, and it is ruled by Venus. (Actually there are two systems of
terms - Egyptian and Ptolemy; here we speak about Ptolemy system).I like this table with planetary
dignities from this website http://www.astrologycom.com/dignities.html

 The classical astrology says that the planet becomes stronger (i.e., its qualities are more obvious) when it
moves through its own term. (It is a hint for a good model, and I cannot imagine how this model could be
done manually, without a computer. Too many calculations...)Other division of the Zodiac is faces and
decanates. The Zodiac is divided here on 36 equal segments, each segment has 10 degrees. And each
segment is ruled by some planet.The faces and decanates use different planetary rulers. The face is more
ancient system based on so called Chaldean order (our 7  days of the week come from this system).I
believe that you have now enough reasons to try astrology based models. (I did not mention here aspects
and midpoints for a reason. They are rather recent additions to astrology. They combine astrology and
astronomy, and nowadays there is a tendency to more astronomy there. Remember the essential and
accidental dignities; you will see my point.) 

Technology

There is one more thing to tell you. I would like to share with you my experience in regards to applying
astrology for stock market. When I started to develop a trading system based on astrological factors, my
first attempt was to use aspects. It was a very appealing idea - turning points would occur when important
aspects culminate. But the results were not good. Then I tried to use middle points, planetary pictures etc.
The models became more and more complicated while the results were not good at all. Finally I
recognized the obvious truth that we have to start with the most important factors, and in Classical
Astrology this truth is essential dignities (related to planetary positions and planetary qualities; as the
source of information, see Bonatti, Lilly's books).  Now we are ready to discuss the technology; it is time
to apply this ancient knowledge to stock market forecast. The time is right because we have now modern
computers that are able to conduct in seconds the calculations that would take many years of hard work
for the ancient astrologer.Running Neural Network module, set this forecast model:

You will get the window where you can define the parameters of forecast models:
 

These controls allow you to analyze the position of the planets in different places of Zodiac, it can be
Dignity, Detriment, Exaltation, Fall, Terms, Faces and Decanates:

Thus the program will find how the position of the planets in different Zodiacal places affects the stock
market.

This option    allows to research different divisions of the Zodiac.

Take it as an analysis of different Zodiacal symmetries.

As an example, consider the Sun in one of the triplicities. Let it be the event "The Sun is in Fire signs".
This event involves three signs - Aries, Leo, and Sagittarius. The diagram shows them as red-colored
sectors:
The example of cardinality event is "The Sun is in Cardinal sign", here it is:

The example of hemisphere event is "The Sun is in upper hemisphere". It looks:

 

Try to create the model setting this option only:

You will see how the ancient techniques work. Try also to use Geo and Geo+Helio combinations.

Here you can set different Zodiacs. Use "In Mundo" Zodiac for intraday data. It is obvious that ancient
astrologers worked with Geo only:
Here you can set the scheme of rulership:

  

 If you choose the "Own rulership", the program will analyze the positions of the planets when they are in
places of their dignities, like "The Sun moves through its own sign of exaltation", or "Jupiter moves
through Ptolemy Term that is ruled by Jupiter". If you choose "Mutual rulership", the more advanced
events that involve two planets will be available for you, like: "The Sun moves through Jupiter's sign of
exaltation", or "Jupiter moves through Ptolemy Term that is ruled by Venus". I highly recommend to try
this option.

This is a totally experimental feature:

It allows to research the angle between the planets. In other words the Zodiacal position is defined as an
angle between planets.

The next very important parameter that I recommend to vary is the amount of price bars that is used to
train Neural Network:

I recommend to use this model for daily price history.

Usually I start to work using all available data (before Learning Border Cursor) to train Neural Net ("All"
button). After that I use 1000 bars  (4 years = Presidential cycle), then 2000 bars and 5000 bars.
Clicking "Train" button

we tell the program to calculate the  projection line based on these events.

Ancient + Modern Technology

You definitely hear the statements like this (from website http://en.wikipedia.org/wiki/Triplicity):

In medieval systems of astrology, each essential dignity was given a different weight. Domicile rulers
were given 5 points of weight; exaltation rulers were given 4 points; and triplicity rulers were assigned 3
points of weight. This gives some idea of how much power medieval astrologers accorded to each
essential dignity. [7]

In other words, we weight planetary positions in attempt to evaluate their rank in the situation. This
ancient technique fits well to the modern technology. I have download Dow Jones Industrial index data
for the last 18 years. Then I ran Neural Net module using the model based on astrological events and
trained it. 

After that I click this button:

Here you can see the ranked list of events for this model:
 

The first item here is "Saturn in Cardinal signs", this is the strongest term in this model. The second
strong is "Mars is in own sign of dignity". Next is "Saturn in Air signs", etc.

Now highlight %X first the strongest events there (push "Shift" key and select these items). I highlighted
first 24 events. 

Click this button to put these events into Universal; Language of Events (ULE)
module. You may like to hide Neural Network results panel now; push this button:
 

You will get the projection line based on these 24 astrological events.

To see inside of this model, click "Edit ULE" button:

Simply read this formula as it is. To forecast Dow, we need to set these weights for astrological events:

Event Weight
Saturn in Cardinal signs (designated as L1) -18.2
Mars in own sign of dignity  (designated as L2) +14.2
Saturn in AIR signs  (designated as L3) -13.4

Overview of astro cycle based models in Timing

Solution Pro et Contra 
Working with astro based cycles, I always face with a sociological phenomenon of non acceptance of
astrology. This attitude has no rational explanation, it just reflects the social status of astrology. However,
for medium/long term forecasts the astro based models provide very good projection lines, and it would
be simply stupid to not use them.Here I put several random projection lines based on so called "Dynamic
Model". There was no selection here, just a mere fact as it is. This model is based on astronomical factors,
and I did the detailed back testing of this model many times. The conclusions are:

1) This model is not ideal, it explains only some part of the stock market behavior. But - while working
on the stock market forecast, any information is important.

2) This model is really able to forecast for one year (250 daily bars) ahead, it is a statistically verified fact.

3) This model is not a combination of well-known Annual cycles, some other factors are playing here.

I very often ask myself:  "Does the astrology works?" Actually the Timing Solution's architecture reflects
my search for the answer. With this software, we can create the astro based models as well as very
complicated math based models (like spectrum analysis, auto regression and others). And we can
compare these models. I love the astrology; however my scientific background requires to test all
statements before putting them into models that TS users apply for their trading. I feel myself responsible
for the provided information.
So, I will introduce astronomical/astrological techniques available in Timing Solution. I tried to be fair
here, i.e. the examples were not selected with the purpose of making a good appearance. See yourselves...

Bradley Model

This is a model based on Ptolemy aspects applied for market forecast by Donald Bradley in 1946. This is
how it looks like:

The turning points A and B projected by Bradley model are very impressive, are not they? 

To get a better understanding of this model, view it in a bigger time frame:

 

It is obviously not ideal, and we need to work more with this model.

In Timing Solution you can adjust this model using slides on the right side. You can vary this model in a
thousand ways: using different weights for aspects, playing with the orbs and Zodiacs; you may even
create something like a kind of Bradley model based on middle points. 

Here you will find some information regarding Bradley model

http://www.timingsolution.com/TS/Study/Bradley/index.htm

I love Donald Bradley’s book "Stock Market Prediction". It looks like he was the first one to try to
present astrological techniques using a language understandable not to the astrological community only.
However we need to develop this technique further. I believe he would do the same if he would be alive.

Evolution of Bradley Model

  The model proposed by Donald Bradley (he called it siderograph) in 1947 is the most fractionated
technique in financial astrology. I personally believe that Bradley opened for astrology the door to
financial analysis. At least, since that moment the financial astrology started speaking the language
understandable to somebody else, not only to astrology fellows.

Technically speaking, the siderograph is nothing more than a curve based on transiting aspects. So we can
consider the siderograph as the summary effect of transiting aspects.
The aspects are divided on three groups: 
middle term - the aspects that include the Sun, Mercury, Venus and Mars;

long term - the aspects for slow planets (from Jupiter to Pluto)

declination factor - "..half the algebraic sum of the given declination of Venus and Mars ..."

This article is devoted mostly to technical issues of using the Bradley type indicators for traders needs.
If you would like to know more regarding the history of Bradley barometer. please see this interesting
article by Larry Pesavento:

http://www.esignallearning.com/education/marketmaster/archive/0706/070706.asp

Of course, the original book of Donald A. Bradley is highly recommended.

When the theory comes to the open World, the first question that usually arises is: how to improve this
theory. Regarding Bradley model, there have been a lot of questions there: 

- do we need to take into account the North Node?

- what orb is better (Bradley used 15 degrees orb)?
- what about heliocentric aspects?
- what about creating a model based on Natal Chart?
- what weights for different aspects are better to use?

In 1947, when most of the calculations were performed manually, it was practically impossible to answer
these questions. The only available computers (like ENIAC) were used for army and nuclear physics
needs only.

Nowadays, we can answer these questions. Each one was a step in developing the Bradley models as we
now them now.

So, this is the story of developing Bradley models. The Bradley model has been presented in the earlier
versions of Market Trader software (see http://www.alphee.com). In 2004, it was developed as a stand
alone Bradley Barometer program. This program allows to create all possible Bradley type models (with
Natal chart, Heliocentric Zodiac on others). You can find Alphee Lavoie's video explanation regarding
this software here: http://www.alphee.com/videos/index.htm

The most interesting feature here is that we can adjust the weights for all terms and immediately see how
the projection line changes:
Now, as a part of Timing Solution project (http://www.timingsolution.com), the Bradley models use
genetic optimization procedure. It helps to find the best fitting projection line based on these models. The
idea of optimization is pretty simple - we are looking for the weights for all aspects in order to describe
the past price movement in the best way.

Let's demonstrate how to get the optimized Bradley model. We do just one example. Download the Dow
Jones Industrial Index from February 2006 to July 17, 2006. This is short price history, five months only.
The Neural Network does not allow to make the projected line based on such a short price history.
However, Bradley module does this job very well.

 The classical Bradley provides this projection into the future:

Let's optimize this Bradley model. Click button. You will get this window:
Here you should define the "target" - it is what we need to forecast. In this example, I work with the
relative price oscillator with the period of 10 price bars. You can try to make forecast for other indicators
like volatility, ADX, RSI, etc.

Click "Start" button to see how the red projection line changes while adjusting to available price history.

Be advised that to optimize we use the price data on TRAINING INTERVAL only:

The red zone is TESTING INTERVAL to verify our projection line.

After the optimization procedure, the projection line looks:

 

Now, I would like to add some technical notes regarding the usage of Advanced Bradley Barometer in
Timing Solution software.

When you work with long price history data, the program shows you the projection line not for ALL
available price history points, but for the LAST %x price bars only:

 
We have done that to speed up the process of recalculation of the projection line when you vary the
weights corresponding to different terms.

You can increase this parameter like this:   to see the projection line for
all available price history (do not forget to clock "OK" after the increase).

When you run the Bradley model, choose one of the following models:

"Custom FAM 1" model allows to create so called FAM model that analyses the active zones of Zodiac.

Try to apply this type of models (I mean, Bradley models) for the short price history data. Comparing to
Neural Net based models (that need a lot of data for training), this is a very important and unique feature.

Have a happy trading!

Planetary Time

It is a popular technique among TS users.

It is simple: we display the vertical lines that are equidistant in respect to some planetary position (or to
the angle between two planets). The example above shows the lines that correspond to 5-degree step from
some initial position of Saturn in Leo (to be exact, 5 degrees and 42 minutes). Thus, instead of time
intervals, we watch planetary position related intervals. This technique is described here
http://www.timingsolution.com/TS/Articles/PT/

Astronomy Module

This module allows to reveal astronomical cycles inside the financial data.

The simplest astronomical cycle is Annual cycle. It uses the Sun position only. See how this cycle looks
for S&P 500:
And this is a projection line calculated for the Sun's cycle:
We can calculate more complicated cycles as well. For example, this is a composite for the Moon phases
(the Moon - the Sun angle):

The diagram shows that in average S&P500 is higher when the angle between the Moon and the Sun is
between 0 and 150 degrees (increasing light/Waxing Moon).

You can combine many different cycles creating models based on that combination of several astro
cycles.

This module is described in details in Classes: http://www.timingsolution.com/TS/Study/index.htm

Universal Language of Events (ULE)

You can calculate practically any astro phenomena using this module.

As an example, see the speed difference between Mars and Venus in Declination Zodiac (a red diagram):
or Berg astro indicator:

or the Moon tidal force:

All these events as well as many and many others can be calculated there.

Moreover you can provide the statistical analysis for all these events avoiding any kind of dicing/guessing
so dangerous for trader. This is a very powerful module, and I recommend to everybody to study it really
well. You will be able to test in seconds any statements that may affect your trading. Try it any time when
you hear about some magical aspect/astro combination/ astro hint from some advisor - you will see
immediately whether it is just one time magic or there is something behind it that worth of your attention.

This module is described in Classes as well:  http://www.timingsolution.com/TS/Study/index.htm

Planetary Lines

This module is available in Timing Solution. See the documentation.

Neural Network Module

This is a universal forecast system that allows to make a forecast based on any astro and non astro
event/events.

This is the list of the most used models in Neural Network module: 
The model can be based on:

 planetary speed (the description is here

http://www.timingsolution.com/TS/Uphistory/upgrade_27.doc);
 waxing/waning planetary phases (the description is here
http://www.timingsolution.com/TS/Articles/waxwan/);

 planetary positions (FAM model)

 aspects between planets (improved Bradley model) 

 the old technique of planetary positions in different terms/faces (this is a surprisingly effective
model); and many other things.

You could use midpoints, planetary pictures, Zodiacal positions, planetary hours (for intraday), and more.

Our strong point is that any of these models can be back tested providing a trader a solid background for
his/her decisions.

Forecast models based on planetary speeds

In this upgrade I have found a way to work with planetary speeds smarter. Actually you were able to
work with planetary speeds before, using this ULE event:
For example, this is the diagram of Mercury speed:

However, the usage of this type of events for the forecast is not a good idea. It is much better to forecast
with the planetary speeds if we apply the ideas that come from Fuzzy Logic science. Instead of using the
speed itself, we deal with events like this one: "Mercury is direct and its speed is the highest" or "Mercury
is retrograde, and its speed is medium".
To create this kind of events in the Neural Network module, follow these steps:

Here choose this tab:

See what events the program creates for the Moon (as an example):

1) 20% of the time ("20" - because the amount of grades=5) the speed of the Moon is lower than
12º2’52”
2) Another 20% of the time the speed of the Moon is between  12º2’52” and
12º44’45’’
3) Next speed range is 12dº44’45’’ and 13º34’24’’
4) 13º34’24’’ and 14º13’02’’
5) and finally 20% of time the speed of the Moon is higher than 14º13’02’’

The most important issue regarding this way of breaking the Moon's speed is that they are of equal
time intervals. See how these events for graded Moon's speed look in time:
Starting from this upgrade, you are able to apply these events to generate the Neural
Network projection line using all planets in geo and helio Zodiacs:

These are the random projection lines based on planetary speeds:

Here I use planetary speeds for the planets in Geo and Helio Zodiacs; training interval = 1000 bars:

The detailed Back Testing for this model shows that the best training interval for the short/medium term
forecast is 500 bars (2 years). Here is the statistics that shows how these models forecast future %X bars
ahead:
Forecast %X bars ahead % positive correlations Average correlation
between price and
projection line
10 bars 62.5% (+125/-75) 0.153
20 bars 60.0% (+120/-80) 0.145
30 bars 60.5% (+121/-79) 0.124

Also this model is good to forecast 1 year ahead (250 bars). To make a long term forecast, set the
training interval to 2.000 bars (8 years). This is the statistical result for this model:
 The Back Testing report is here (800Kb)

Dozen of projection lines based on the best model are here

See here the detailed Back Testing reports for this model.

Waxing/Waning - Optimistic/Pessimistic
indicator
 

In this article I will demonstrate how to work with models based on waxing/waning phases of the aspects
between the planets. The research shows that this model is one of the most reliable though to obtain this
model we need to use a very advance Neural Network technology. This model is a very good combination
of the old and the newest knowledge.The old knowledge regards to the usage of the Moon phases. The
fact that different Lunar phases affect human nature differently is well-known for centuries and usually
does not need any proof. Together with the tides, it is the most popular argument of the astrologers. The
waxing Lunar phase (increasing light; it takes place between the New and the Full Moon) usually is
considered as a good time for new deals and the beginnings. It looks like this is more optimistic period
than the waning period between the Full and the New Moon, especially the last day before the New
Moon.We can apply this idea to any planetary pair, not only the Moon -  the Sun. As an example, we can
say that the Sun and Jupiter form the waxing angle between their conjunction and opposition while the
waning angle between the Sun and Jupiter goes from their opposition to the next conjunction. I know two
indicators based on the balance of waxing/waning planetary angles. First of them is Guneau Index; it is
calculated by adding the angle of separation between the planets for waxing pairs and extracting for
waning pairs. Another index is Index of Cyclical Variations; it is calculates as a difference between the
amount of waxing and waning planetary pairs. The higher this indicator the more waxing planetary pairs
we have. Even a general glance at these indicators proves that they are pretty useful to reveal the stock
market behavior. This is Index of Cyclical Variations calculated for planetary pairs that involve the Sun,
Mars, Jupiter and other planets up to Pluto. It is shown together with Dow Jones Industrial index for the
last 5 years: 

 
 

To be sure that this fact is not occasional, I have conducted the statistical analysis. It shows that the
probability that this indicator correlates to the oscillation of Dow index is 98%:

The analysis is performed for Dow data from 1885 till the year 2007 years.Leave 2% to skeptics while we
continue our research and try  to improve our model.I personally think that waxing/waning between
planetary pairs somehow gives to the humankind the optimistic/pessimistic feelings, and this mass factor
is affecting the stock market. Of course this is just some phenomenological theory.The newest technology
allows to go further. Above we have assumed that the weights are the same for all planets, though it looks
like the optimistic/pessimistic effect should be different in respect to different planetary pairs. Now we
can think about this difference, and our Neural Network technology allows to figure out how actually
these planetary pairs work.In order to do that with Timing Solution software, run the Neural Network
(NN) module and train this NN using waxing/waning events as inputs for the neural net (inputs are things
the forecast is based on). As output (what to forecast), I use the relative price oscillator with period 100
bars. After training I have got this projection line (the red line):for last 5 years:
for last 15 years:

For the next two years this index looks:

 
 

The interesting fact is that we can extract knowledge from Neural Net. Look at this table:

It shows the most influential planetary pairs. Some planetary pairs provide upward effect while others
have downward effect.

How to read this table? Look at the first line . It means: Dow tends to
go above the average when the waxing angle between Saturn and Uranus  in Helio i.e. this is an optimistic
factor. The second line means: the Dow tends to go below average  (a
negative digit) when Jupiter and Pluto forms a waning angle - a pessimistic factor.

 On the diagram below you can see the most active pairs. I have marked by green color the optimistic
pairs and by red the pessimistic ones:
Some recommendations to Timing Solution users:

1) I have found that it works in Geo and Helio Zodiacs. Also it is necessary to use the transiting Moon. In
Neural Network you can set this model this way:

2) Use all available price bars to train the NN:

It means that this model has "infinite stock market memory", i.e. this model would work the same way for
now and 100 years ago (as an example). In other words we assume that the human reaction on
waxing/waning phenomena has not change in time.

Phenomenological Solution in Timing Solution

 

Among standard solutions provided by the program is one called "Phenomenological" (based on
phenomenological models). I will explain in this small article how this model works. 

Phenomenological models are based on astronomical ideas. Inside the models, the program not only
calculates the positions and physical parameters of involved physical bodies, it also defines the
importance (weight) of each factor in a general picture. To make the weight decisions, we use Neural
Network technology. 

Before running this solution, you should break the whole available price history data on two parts,
"training" and "testing" intervals:

The border between them is called LBC (the learning border cursor). 
The general idea of this model is: we optimize many models using the price history from the testing
interval. After that we compare how all these models can forecast; we do it on the testing interval. Thus
we estimate the forecast ability of all these models. We analyze many astronomy based models. Then we
choose three of them that provide the best forecast on the testing interval. To obtain the final forecast, the
program sets LBC on the last available price bar and optimizes these Neural Nets once again, now  taking
into account all available price history. Thus we find the models that have provided the best forecast in
the past and use these models to forecast the future. Here the future starts right after the last available
price bar (the position of LBC), and for the forecast all available price history is taken into account.

Let's do it together.

First of all, download the price history; it should be daily data. To apply this solution, the minimum price
data is 5 years.

Next step is to break the whole price history on two intervals, training and testing ones. There are many
ways to do that in Timing Solution; the easiest way is using the right mouse button. Move the cursor to
the place on the price chart where you want to set LBC, click right mouse button:

and choose "Set LBC ... " item in the menu.

Then clicking this button

and highlighting "Phenomenological.ts" item, we run this solution:

The program will analyze 33 different models based on astronomical factors, choose the best ones and
provide the final forecast based on the chosen models:

 
 

The only parameter I recommend to vary is the length of the testing interval. Try to put the LBC at
different places on the price chart. I usually do two variants: one uses two last months as a testing interval
(thus we try to find the models that have provided a good forecast recently), another uses several years for
a testing interval (because we are looking for permanent models).

Phenomenological  Models
A good forecast is based on a proper model. It means that the choice of the forecasting model is
important. Actually, this is the first thing to do in forecasting - choose the model that is the best for the
problem that needs to be solved.
Let look at one practical example. Somebody wants to know what is most likely to happen to the financial
instrument X. In other words, we need to do a forecast for this financial instrument (here I do not provide
the name and actual data file for the financial instrument X as it is a part of a commercial project for one
of our users; however, I understand that it is an additional information that helps to choose the proper
model). 

The available data file covers more than 200 years of history. And the task is to make a long term
forecast.

First question is: what this forecast should be based on? The Timing Solution has a huge arsenal of
methods that allow to make a forecast easily, just by few mouse clicks: 

 models based on fixed cycles (extracted from Spectrum module of the program);
 astronomy based cycles;
 auto regression (nonlinear auto regression + Fuzzy Logic + Neural Net, see Back Testing results
for this method);
 wavelet analysis.

The specially developed Object Oriented Neural Network allows to get the projection line that uses the
maximum of all available historical data.

The question is: what technique is more suitable for this particular task?

We state that the use of astronomy based models is the best approach for this task. It looks like this is
simply the best choice. The long and hard Back Testing work shows that the regular spectrum based
model very often reminds the kite without the rope. It is there, and we cannot do much; it follows some
high winds that we may not be even aware of. The Spectrum module reveals the playing cycles very well;
however, this approach fits very well to the short term forecast. But when we try to apply this technique
to the long term forecast, we fail. To make a long term forecast, we should find a support of something
more fundamental. Astronomical cycles are the best for this task.

So, we download the price history (sorry, the price chart is not displayed due to reasons mentioned above;
the main idea of this Study article is just to show how to make a long term forecast):

Usually we divide the price history on two intervals: blue - training interval - we use this interval to
research our data and train the Neural Net. Red - Testing interval serves to verify our models. The "future
leaks" are excluded.

These are monthly data, and we need to decide what astronomical cycles can help with our research. Keep
in your mind this table of planetary periods:
  

I marked the cycles that are more suitable to research 200 years of monthly price history.

Do a mouse click somewhere in the middle of 2006, to mark down where we are now:

Run module to reveal the astronomical cycles and set this parameter in "Options":

In other words, to calculate the composite, we will use all price history on TRAINING INTERVAL. 
This option reflects different approaches to the nature of astronomical cycles' impact on markets. Setting
"All Points" option, we state the permanent approach. We assume that some planet affects the stock
market the same way in the year 1790, in the year 1850, in 1900, and now - the effect is always the same;
we speak here about the infinite memory of the market. 
Another approach is finite memory (under this approach, we believe that the Moon's impact on the stock
market in 1980 differs from what it is now).

We have not find a final answer to that question; however, it looks like this scheme works better for slow
planets.

Now we need to look at all composite diagrams one-by-one.

Look at this Jupiter cycle composite:

Besides the major colored diagram, you can see three red, blue and black lines that correspond to
composites calculated on three different independent price intervals.
We can take this cycle as an important one if these three lines demonstrate the same tendency. We speak
about tendency as it is very difficult to make formal criteria to estimate the cycle's importance. This
diagram gives us some hints though we understand that these criteria are not mathematically complete,
the intuition is very important here. It is why we call these models "phenomenological".

Something tells us that Jupiter is very important for this financial instrument, the diagram confirms this
fact.

Please be aware that the "inversions" are possible in our diagram:

The existence of inversions points at the non-obvious and/non-linear reaction of the stock market to this
cycle. The black vertical line on this diagram shows the cursor position; we set it in the middle of 2006. It
is necessary to figure out what phase of this cycle we are now in.

When you decide that this cycle is important, click "+" button:
Another important cycle is Jupiter-Neptune cycle:

Click "+" button again.

Also, the Saturn cycle looks appealing:

Thus, we choose three cycles that we believe are able to move this financial instrument.

To prepare these cycles for the Neural Network module, send them into the clipboard:
You can play with "orb" parameter as well, let's set it on 15 degrees.

Now is the time to make a projection line based on these 3 cycles. 

Run Neural Network module.

We need to define what we want to forecast. Because our financial instrument has a trend, we recommend
to use the relative price oscillator: 

We can play with different variants.

The next step is to define "inputs" - what this forecast is based on. We just need to pick up these cycles
from the clipboard:

Train the Neural Network ("Training" button) and look at the projection line:
Here the red interval is Testing interval, we do not use the price points from this interval neither to
calculate cycles, nor to train the Neural Network. The "future leaks" are excluded.

The red curve is Neural Network projection line, while the black line is the Relative Price Oscillator for
our financial instrument.
You see that the red line reflects the major movements of the real price rather well. This gives us the
some confirmation that we are on the right track.

Now we are ready for the final optimization - ready to make the final forecast that is based on ALL
available price information. Click here to set LBC (Learning Border Cursor) to the last available price
point:

This is the forecast:

 
To be sure that I am not missing any important factor, I have created the Neural Net projection line with
more astronomical cycles added. They might be not so important, however it is good to see...

This is the forecast:

Compare this with the projection line produced by Spectrum based model; we will face the "reaction"
effect. The Spectrum model does not support fundamental cycles, and it looks like it is blind regarding the
long term forecast. This model is good enough to pick up the latest cycles and make short term forecast. If
we apply the Spectrum model to our instrument, we will get:

Our financial instrument has a big up trend within several last years while the Spectrum model tells that
the trend will be finished immediately (you can easily see that varying LBC position). The usage of
fundamental cycles allows to avoid this effect.

The difference between Spectrum and Astronomical models is like the difference between a person who
makes his/her decisions based on rumors and gossip and a person who prefers to know fundamental
factors. But, as I said earlier, for short term forecast, the Spectrum model is pretty good. (Why I consider
the astronomical cycles being fundamental is a theme for another article.)
These are some notes regarding this kind of models:

1. Do not set too many astronomical cycles. In our example, we have defined three cycles only:

These are major astronomical cycles that rule this particular financial instrument. 
2. Can we trust our model?
Let's rephrase this question: "Where we can make a mistake?". First of all, we can make a mistake
while choosing the planetary cycles. The second thing to consider is that the good coincidence
between a projection (red) line and the price (blue) can happen occasionally:

So the red interval (testing) should be big enough to avoid occasional coincidence between the
projection line and the price.

Example # 2

As one more example, let us look at one more financial instrument, TWM. This is Taiwan stock, and I
have spent many hours searching for its appropriate model. These are all my steps:

As a first attempt, I have chosen 14 astronomical cycles. I decided that all these cycles were important,
and I made a mistake. The projection line based on these cycles was reflecting a noise mostly.

So I deleted all these 14 cycles from my composite box (clicking this button):
Then I disabled all additional information in the Astronomy window and concentrated on most important
information:

Here you see three independent composite diagrams: red, blue and black. Be careful while checking all
planetary cycles involved. Think twice before clicking on "+" button to add this cycle to the Composite
box. It is like you are making the decision to buy a new laptop in a big shop. Non-correct decision - and
you will get a headache solving many different computer problems.
 I have selected these cycles:

The next step in verification of my hypothesis is creating projection line, here it is:
Practically for two years this model worked  very good. This coincidence is definitely not occasional. But
then, in the end of 2004, something has happened. It looks like the new factor/cycles started to affect this
financial instrument. The market still remembers its old cycles, but very often the reaction to these cycles
is opposite to what has been expressed by the inversion effect:

I got the same result applying another alternative model (Dynamic model).

Example # 3

This example allows to make the projection line for Dow Jones Industrial index. As a source, we take
monthly data for DJI from 1895 to March 2006; for the years 1789 - 1885 the specially developed
indicator that reflects the pulse of American economy has been chosen. These monthly data were
developed by the Foundation for the Study of Cycles. Bill Meridian has obtained these data in 1988 and
maintains them since that year.
I selected these cycles:
This is the Neural Net projection line:

You see that the red projection line describes the DJI changes pretty good. This is more detailed picture:

Why and when should we use phenomenological models?

I specially named these kind of models "phenomenological" because I have no idea regarding the formal
criteria of cycles' selection. Believe me, I tried a lot, see the documentation, there are eight different
criteria of choosing the cycles. But all formal criteria provide formal results, without adding a "hand"
work, we might lose something.
When pure math efforts are not enough, it is time to give more room for human intuition. This is the
reason why I spend a lot of time setting the parameters "by default". It allows to  the user of Timing
Solution software to see the structure of the model for some specific financial instrument easily. If the
user would spent one second changing some parameter, there is a strong chance that he/she might forget
and miss something really important. The default settings are like landmarks in models' creation. When
the user is familiar with them enough, he/she is ready to create his/her own models.
The accuracy of math methods applied in the program are guaranteed. To be correct, I must say that we
have got very good results for pure mathematical models. See Back Testing results. But all these models
are concentrated on short term forecast. When we are interested in long term forecast, math methods are
not enough. We have to include something else.A single human brain contains the information of human
evolution from the simplest live forms to the modern humankind. It covers several hundreds million years
of data!!! As an example, when we define our orientation in the physical space, we rely on the experience
of ancient live forms. Our movements, emotions, thinking are not a product of simple Aristotle logic,
their source is much more deeper. Thus, creating a forecast we should be armed with the modern math for
sure. However, we should remember as well that the price can contain some hints invisible in the frames
of the formal math. Simply we have not enough price history for that. Our Stone Age ancestors did not
trade (at least, there are no records regarding this) and did not have stock exchanges, though we use
nowadays their survival experience as well. Sometimes intuition and experience provide better hints - like
choosing Jupiter cycle as a fundamental one in the Example #1. We observe here not only the composite
diagrams, we keep in our minds as well the information that Jupiter is the largest planet in the Solar
system, it is very important in Chinese tradition.

Jupiter-Saturn 20 years cycle

written by Sergey Tarassov

Recently I have got several questions regarding Jupiter-Saturn 20 years cycle. It looks like some
discussion of its impact on the stock market has been conducted somewhere.Let us do it together. 

We start with the common sense consideration of the common market researcher. And here comes the
disappointment. Why? By default, the cycle is some pattern repeated in time. In other words, assuming
that some 20-year cycle exists (Jupiter - Saturn cycle is 19.9 years) we expect that the price history that
reveals itself now (winter 2008) has some analogy to the price history 20 years ago, i.e. in the year 1988. 
This is how the classic science and common sense understand cycles. However, look at this Jupiter-
Saturn  cycle in details. I have calculated the moments when Jupiter conjuncts Saturn in heliocentric
Zodiac and displayed them  together with Dow Jones Industrial history data from 1885 year (logarithm
scale used):
The conjunction moments are marked by vertical stripes. You see these conjunctions divide  the whole
history data file onto 20-year intervals. At this part, the cyclic idea works. The 20-year Jupiter-Saturn
cycle exists. It is not the same in regards to price patterns. The hypothesis is that the same price patterns
(or almost the same) should be present for all these intervals. 

I looked through all conjunctions and DJI around them and could not find any common sense analogy
here. See yourself. Is there anything similar between these two six year intervals after Jupiter-Saturn
conjunctions (years 1981 and 2000)?
I do not think so.

Or can you see any analogy between these three consequent 20 years intervals:
 

Does it mean that Jupiter-Saturn cycle on the markets does not exist? From the point of view of the
formal math, it does: there are not found regular 20-year patterns for DJI, so the cycle does not exist. We
may consider instead stochastic cycles (described in Chaos theory). Stochastic cycle is the cycle when the
entity (the stock market in our case) keeps its structure - habits and behavior. 

I could leave here (as many critics of financial astrology do). I almost did it. But something stopped me
from making this final conclusion. Actually we could consider instead stochastic cycles (described in
Chaos theory). Stochastic cycle is the cycle when the entity (the stock market in our case) keeps its
structure - habits and behavior. And - do you see where we are going from there? We have almost missed
the fact applying formal math approach, and now we are getting to the research of behavior and habits -
things that are the realm of astrology.  

I looked at this picture once again:

You see all these conjunctions divide the price history data on the intervals, and each interval has its own
character. 

Between the years 1901 and 1921, Dow looks like a variation inside 50-100 points interval;

1921-1941 years - a roller-coaster, plus some new entity appears: multi-years trends;

1941-1961 years - one more entity appears: a relatively steady growth. Also WW2 took place in the
beginning of this period.

You can easily continue  this analysis for all other periods. So it might be that instead of the theory that
Jupiter-Saturn cycle means the repetition of the price patterns we should consider the beginning of this
cycle (which is the conjunction between Jupiter and Saturn) as the beginning of a new period of Dow
Jones behavior. 
My main point of this article is to distinguish between math based and astrological cycles. A cycle
consists of the points that look similar In this particular case, the Jupiter-Saturn cycle works more as an
astrological cycle, not a mathematical one. In other words, each conjunction defines the rules that the
stock market will follow for the next 20 years. This is a "key" event that has effect for the next 20 years.
In regards to this point, the methods of Natal and Financial Astrology are close to each other. 

How to work with this cycle? The application of statistical methods (like Composite analysis) does not
provide results here (though you may try). I would prefer the old classical approach analyzing charts of
each conjunction separately. For a mathematician, all these charts must be treated as one and the same -
thus the cycles theory works, To an astrologer, each chart is different. And if looking for analogies, the
astrologer will find first the charts that are the most similar.

First of all we need to decide what chart type is better for this research. I believe that Heliocentric Zodiac
suits this purpose better. Next question is: "What we need to research first?" (i.e. what factors must be
considered first).

Classic astrology divides all astro factors by dignity in two groups: "essential" - mostly related with
planetary positions (or absolute positions in space); "accidental" - houses, aspects and other factors that
are based on planetary positions in respect to other bodies or locality). It is very interesting that I have got
a proof of the importance of this old definition in my researches. Essential dignities are prior to
accidentals.

So I consider first the sign where this conjunction is culminated. Maybe we better look for the analogies
on the market for the conjunctions in the same sign. Let us look at the last conjunction that has occurred
in the year 2000. It has culminated in Taurus.  We have one more conjunction in the end of 1940 year that
took place in 12th degree of Taurus. So, if we compare these two periods, we find more analogy there. In
40s, there was WW2; in 21st century, we have a global war against terrorism. See how DJI behaved in
40s: 

The second half of this period looks very promising, and it gives us some hopes for the next 12  years.

Classical Natal astrology has the time proven hierarchy of essential factors. You are able to research them
all, if you would like to. The more factors coincide for two compared periods, the stronger is the chance
of price pattern repetition. I have found interesting that in the conjunction charts for these two periods
(40s and 2000s) both planets, Jupiter and Saturn, are peregrins (i.e., weak ones, with no dignities).
I have specially restricted myself to consider essential factors only. I do that because I believe that the
methods of Natal astrology do not always work the same way for Financial astrology. To consider the
accidental factors, we simply have not enough stock market history data to understand how these factors
work for the stock market. Natal astrology applies them because it has a different subject (not the stock
market movements) and thousands years of historical observations. The application of these rules to stock
market forecasting is nothing more but the pure anthropocentrism.

Semi Automated Testing of Phenomenological

Models
I would like to bring your attention to this new algorithm of finding the best phenomenological 
model. The general idea of this technique is simple: we apply suggested models to the financial
instrument of our choice, and then analyze them. Previously, you could do it manually, for different
models. You would have to choose the models, train Neural Nets, test them and then compare the results.
Now, all you need to do is just choose your financial instrument and run the new Solution,
"Phenomenological.ts", and wait while the program applies 27 previously created models to this
instrument, trains and tests 27 Neural Nets, finds correlation coefficients for each model - and gives you
final results as a table.  It is a kind of simplified back testing for phenomenological models. We did it
with the intention to help users who have no time or proper skills for model's research.Then you may take
the best model (or several best choices) and make a projection line for your financial instrument in a usual
way.  Now, we suggest 27 models. These are mostly phenomenological models. The list includes several
Spectrum models as well; these Spectrum models have shown promising results for some financial
instruments (see "Naked Truth" section on the website). We continue working with the new models and
testing the old ones. It means that the list of suggested models will be changing in time. So, what do you
need to do? Follow these steps:

Step 1: Download any financial instrument

Step 2: Set the TRAINING interval as big as possible. The bigger interval allows to avoid the random
coincidence.

Step 3: Run the "Phenomenological.ts" Solution:

Below you will see three Case Studies. I applied this technology to Dow Jones Industrial Index and Corn
and Gold data. 

 
 Dow Jones Industrial Index Case Study

Download Dow Jones Industrial index data. I took the data from 1885 up to 2006 (33.000 price bars). The
LBC is set at the year 1963; thus we have more than 10.000 testing price bars:

Now, run the "Phenomenological.ts" Solution:

You will get the table below: 

Financial Instrument: Dow_from_1885.csv

Analyzed 27 models
LBC Info: 22607 train/10586 test
Target: Rel. Osc.(1,50,50 Close,Exp)
 NN (first NN (first NN (last LIN (first LIN (first LIN (last
Model
10801 pt) 5378 pt) 5425 pt) 10801 pt) 5378 pt) 5425 pt)
Dynamic Model TI=500 14.89% 9.00% 21.53% 3.33% -0.01% 7.43%
Dynamic Model TI=750 13.86% 9.60% 18.87% 4.59% 5.77% 4.10%
Spectrum Model
10.16% 7.44% 13.79% 7.36% 6.57% 7.61%
TI=1000
FAM Model Phase,
7.66% 2.87% 12.27% 8.70% 2.14% 15.27%
Orb=10, TI=1000
FAM Model Phase,
7.39% 3.16% 11.48% 7.77% 2.10% 13.20%
Orb=10, TI=2000
Dynamic Model
6.83% 3.69% 10.78% 3.88% 2.78% 5.83%
TI=1000
FAM Model Phase,
6.68% 0.41% 12.83% 5.08% -1.84% 12.13%
Orb=15, TI=1000
FAM Model Phase,
6.56% -0.68% 13.19% 8.03% 1.37% 14.50%
Orb=15, TI=2000
FAM Model Geo,
6.36% 11.17% 0.84% 5.22% 12.17% -2.40%
Orb=15, TI=2000
Terms/Faces Model
5.37% 0.99% 10.09% 4.91% 2.30% 7.72%
TI=All
Dynamic Model
4.65% 3.78% 6.18% -0.59% 1.06% -2.08%
TI=2000
FAM Model Phase,
4.41% 3.56% 5.20% 4.36% 4.06% 4.64%
Orb=10, TI=All
Seasonal Orb=15,
4.27% 2.84% 5.66% 0.13% -0.39% 0.47%
TI=1000
FAM Model Geo,
4.11% 4.32% 4.71% 6.83% 10.38% 3.52%
Orb=10, TI=2000
FAM Model Geo,
4.01% 8.84% -1.53% 7.36% 6.29% 8.57%
Orb=10, TI=1000
Ptolemy Aspects Model
3.68% 0.65% 6.44% -0.49% -4.40% 3.36%
Orb=15
FAM Model Geo,
3.58% 7.63% -0.56% 8.52% 6.93% 10.38%
Orb=15, TI=1000
FAM Model Phase,
2.43% 2.69% 1.94% 1.67% 1.35% 1.92%
Orb=15, TI=All
Terms/Faces Model
2.26% 0.39% 3.37% 8.14% 1.70% 10.14%
TI=2000
Seasonal Orb=10,
2.16% 5.25% -0.93% -0.12% -0.94% 0.51%
TI=1000
FAM Model Geo,
2.10% 4.59% 0.77% 5.86% 9.24% 4.74%
Orb=10, TI=All
FAM Model Geo,
1.81% -2.94% 7.94% 2.17% 5.40% 0.87%
Orb=15, TI=All
Terms/Faces Model
1.12% 1.13% 2.26% 9.38% 8.22% 8.14%
TI=1000
Dynamic Model TI=All 0.11% 1.89% -1.58% 2.39% 0.26% 4.72%
Spectrum Model TI=300 -0.93% 3.15% -5.43% -1.25% 6.45% -8.92%
Spectrum Model TI=50 -3.40% -0.35% -6.61% -0.91% 4.58% -7.06%
Spectrum Model TI=500 -5.18% -7.37% -3.54% -1.89% -2.08% -2.04%

It is a list of 27 models sorted in regards to correlation coefficients. (The correlation coefficient shows
how well each projection line fits the real price within the testing interval.) Red numbers mean a positive
correlation; blue numbers show a negative correlation. 

As you see, the best model for DJI is "Dynamic Model TI=500"; this is Dynamic model with the
training interval = 500 price bars.

You can easily create the Neural Net projection line for "Dynamic Model TI=500". Follow these steps:

There define the Training Interval (TI)=500 price bars:

Now you can see the length of training interval here:

You can try the same model with the training interval = 750 price bars as well, it gives very close results
(see the next line in the table above):  

Dynamic Model TI=750 13.86% 9.60% 18.87% 4.59% 5.77%

One of Spectrum models proposed by Ben Price also looks well

Spectrum Model TI=1000 10.16% 7.44% 13.79% 7.36% 6.57%

In other words, we can use some fixed cycles to forecast Dow Jones.

Next three best models are FAM Phase model and one more Dynamic model:

FAM Model Phase, Orb=10, TI=1000 7.66% 2.87% 12.27% 8.70% 2.14% 15.27%
FAM Model Phase, Orb=10, TI=2000 7.39% 3.16% 11.48% 7.77% 2.10% 13.20%
Dynamic Model TI=1000 6.83% 3.69% 10.78% 3.88% 2.78% 5.83%

I would like to add a few words on Phase models. Phase models are based on planetary phases, and very
often they work together with Dynamic models. 

The planetary phase means the degree of illumination of the planets by the Sun if we observe this planets
from the Earth's surface. Also, with a good accuracy, we can consider the phase of the planet as a degree
of gravitation of this planet. When the phase=0 degrees (for example New Venus = heliocentric Venus-
Earth conjunction), the distance between Venus and the Earth is in its minimum, while its gravitation
effect is maximum. When the phase=180 degrees (Full Venus = heliocentric Venus-Earth opposition), it
means the maximum distance between Venus and the Earth and therefore the minimum gravitation
effect.  

Thus we can consider the Dow Jones index as phase/gravitation dependable market.

Corn Price Case Study

Financial Instrument: CORN prices

Analyzed 27 models
LBC Info: 9351 train/5004 test
Target: Rel. Osc.(1,50,50 Close,Exp)

NN (first NN (first NN (last LIN (first LIN (first LIN (last

Model
5218 pt) 2613 pt) 2607 pt) 5218 pt) 2613 pt) 2607 pt)
Terms/Faces Model
31.01% 39.80% 18.36% 19.78% 32.93% 1.76%
TI=1000
FAM Model Geo,
29.62% 32.58% 23.97% 27.59% 32.80% 20.17%
Orb=10, TI=1000
FAM Model Geo,
28.55% 28.84% 27.09% 26.24% 26.58% 25.15%
Orb=15, TI=2000
FAM Model Geo,
28.12% 31.29% 21.90% 25.11% 30.42% 17.79%
Orb=15, TI=1000
FAM Model Geo,
27.30% 30.38% 22.41% 24.29% 24.62% 22.93%
Orb=10, TI=2000
FAM Model Geo,
22.38% 28.03% 16.05% 19.21% 22.16% 16.03%
Orb=15, TI=All
Terms/Faces Model
20.53% 21.31% 19.93% 13.85% 15.51% 17.95%
TI=2000
Seasonal Orb=15, 17.65% 23.07% 11.05% 19.10% 24.41% 12.72%
TI=1000
Seasonal Orb=10,
17.57% 20.44% 14.09% 19.05% 23.90% 13.19%
TI=1000
Terms/Faces Model
16.94% 18.23% 17.83% 14.75% 17.09% 13.71%
TI=All
Dynamic Model
15.94% 22.18% 9.38% 8.92% 12.60% 4.34%
TI=2000
Dynamic Model
12.80% 15.67% 7.99% 10.42% 9.79% 10.25%
TI=1000
FAM Model Phase,
12.25% 14.62% 8.04% 7.22% 7.46% 5.39%
Orb=10, TI=1000
FAM Model Phase,
9.13% 11.12% 4.72% 4.96% 5.10% 3.18%
Orb=15, TI=1000
FAM Model Geo,
9.06% 9.89% 8.58% 16.98% 20.73% 12.88%
Orb=10, TI=All
Dynamic Model TI=500 5.81% 8.26% 2.76% -4.92% -9.13% 1.44%
Spectrum Model TI=300 3.93% 1.78% 7.24% 3.35% -1.36% 8.57%
FAM Model Phase,
3.11% 13.37% -10.31% 1.08% 13.59% -15.96%
Orb=10, TI=2000
FAM Model Phase,
0.82% 12.05% -14.07% 1.38% 15.01% -17.07%
Orb=15, TI=2000
Spectrum Model
0.82% -2.44% 6.13% 3.55% 4.14% 3.08%
TI=1000
FAM Model Phase,
0.56% 4.02% -4.14% -6.43% -0.98% -15.10%
Orb=10, TI=All
Dynamic Model TI=750 -0.49% 3.60% -5.10% -2.45% -2.80% -3.16%
Spectrum Model TI=500 -1.31% -6.87% 6.15% 0.98% 1.70% 0.41%
Spectrum Model TI=50 -1.75% 5.71% -9.84% 4.37% 6.39% 1.95%
Ptolemy Aspects Model
-5.07% -4.34% -7.00% -3.70% -7.35% -0.20%
Orb=15
FAM Model Phase,
-9.30% -2.86% -18.62% -7.97% -3.70% -15.19%
Orb=15, TI=All
Dynamic Model TI=All -16.53% -13.74% -20.57% -14.70% -7.23% -24.29%

These are the best models:

NN (first NN (first NN (last LIN (first LIN (first LIN (last

Model
5218 pt) 2613 pt) 2607 pt) 5218 pt) 2613 pt) 2607 pt)
Terms/Faces Model
31.01% 39.80% 18.36% 19.78% 32.93% 1.76%
TI=1000
FAM Model Geo,
29.62% 32.58% 23.97% 27.59% 32.80% 20.17%
Orb=10, TI=1000
FAM Model Geo,
28.55% 28.84% 27.09% 26.24% 26.58% 25.15%
Orb=15, TI=2000
FAM Model Geo,
28.12% 31.29% 21.90% 25.11% 30.42% 17.79%
Orb=15, TI=1000
Terms/Faces Model TI=1000: this is the newest model; it will be available in the Advanced version of
Timing Solution. It is pure astrological model based on old techniques.

FAM Model Geo, Orb=10, TI=1000: this model is based on geocentric planetary positions. It looks like
for this market the planetary position in Zodiac is important.
You can easily calculate the Neural Net projection line this way:

Set training interval to 1000 price bars.

The phase and Dynamic models look good as well: 

Dynamic Model TI=2000 15.94% 22.18% 9.38% 8.92% 12.60% 4.34%

Dynamic Model TI=1000 12.80% 15.67% 7.99% 10.42% 9.79% 10.25%
FAM Model Phase, Orb=10, TI=1000 12.25% 14.62% 8.04% 7.22% 7.46% 5.39%
FAM Model Phase, Orb=15, TI=1000 9.13% 11.12% 4.72% 4.96% 5.10% 3.18%

Gold Price Case Study

Financial Instrument: GOLD

Analyzed 27 models
LBC Info: 3665 train/3864 test
Target: Rel. Osc.(1,50,50 Close,Exp)

NN (first NN (first NN (last LIN (first LIN (first LIN (last

Model
4079 pt) 2044 pt) 2037 pt) 4079 pt) 2044 pt) 2037 pt)
FAM Model Geo,
10.05% 16.05% 4.95% 2.85% 11.98% -6.29%
Orb=10, TI=2000
Seasonal Orb=15,
9.64% 0.32% 17.63% 9.56% 0.90% 17.09%
TI=1000
FAM Model Geo,
9.09% 15.82% 5.23% 7.51% 13.41% 2.87%
Orb=15, TI=All
Terms/Faces Model
8.65% -0.88% 11.61% 8.49% 2.70% 9.12%
TI=All
Seasonal Orb=10,
6.04% 1.93% 9.56% 9.08% 0.69% 16.39%
TI=1000
FAM Model Geo,
5.97% 8.36% 7.76% -3.13% 10.88% -10.41%
Orb=15, TI=1000
FAM Model Phase,
5.92% -4.02% 13.33% 4.38% -6.18% 13.43%
Orb=15, TI=2000
FAM Model Phase,
5.28% -7.68% 16.30% 1.39% -8.06% 9.81%
Orb=10, TI=2000
FAM Model Phase,
4.97% 0.19% 9.17% -2.08% -2.59% -2.00%
Orb=10, TI=1000
FAM Model Geo,
4.83% 10.91% -1.13% -0.38% 5.51% -7.14%
Orb=15, TI=2000
FAM Model Geo,
4.55% 3.73% 4.98% 3.72% 2.57% 3.15%
Orb=10, TI=All
Dynamic Model
3.93% -2.09% 8.52% 0.96% -1.66% 3.10%
TI=2000
FAM Model Phase,
2.91% -2.28% 7.98% -3.35% -0.23% -6.95%
Orb=15, TI=1000
FAM Model Phase,
1.88% 6.27% -1.48% 5.95% -4.45% 14.27%
Orb=10, TI=All
FAM Model Phase,
1.34% -4.91% 6.63% 0.17% -2.30% 2.32%
Orb=15, TI=All
Dynamic Model
0.88% 3.17% -1.16% 3.17% 4.76% -0.02%
TI=1000
Spectrum Model TI=50 0.09% -0.02% 0.46% 3.32% -7.07% 11.88%
Ptolemy Aspects Model
-0.90% -2.86% -0.34% -0.90% 1.57% -4.48%
Orb=15
Spectrum Model TI=300 -1.09% 2.54% -4.40% -4.36% -4.04% -4.68%
Dynamic Model TI=All -1.15% -4.30% 4.32% 2.70% -0.20% 7.66%
Dynamic Model TI=750 -2.40% -8.16% 1.36% 4.80% 3.57% 4.51%
Terms/Faces Model
-2.41% 2.43% -6.81% -3.45% 7.22% -8.93%
TI=1000
FAM Model Geo,
-2.97% 1.20% -2.90% -9.15% -1.92% -12.82%
Orb=10, TI=1000
Terms/Faces Model
-5.21% -1.89% -5.75% -9.96% -0.22% -15.19%
TI=2000
Spectrum Model TI=500 -5.87% -4.40% -7.19% -2.48% -8.88% 2.80%
Spectrum Model
-6.99% 1.12% -13.83% -0.34% 4.13% -3.21%
TI=1000
Dynamic Model TI=500 -11.31% -8.81% -12.48% 3.75% 6.93% -0.18%

For Gold prices, it looks like the planetary position in Zodiac is important.

Composite - Introduction
The effect of  astronomical cycles on the stock market is the most enigmatic phenomenon that I know. It
is enigmatic in many ways. First of all, my 10 years research of financial data definitely shows that the
most reliable projection line is provided by astronomical models. And this is the enigma for the scientific
community: they cannot accept this and they cannot prove that there is no such influence. This is
enigmatic for astrological community as well because very often the statements of classical astrology do
not work while being applied to real financial data. So I think that the best way is to study these
phenomena without any preliminary assumptions and any prejudice, to study them as they are. 

This is what we will do now - study astro cycles. We start this study with the most familiar astro cycle -
Annual cycle. The annual cycle is formed by the Sun passing through all signs of Zodiac. This cycle was
well known to humans for thousands of years. Actually, we use it to measure the time. Let us look how
the annual cycle may be applied to financial data analysis. 

Download Dow Jones Industrial data from 1885 to the year 2006. To reveal Annual cycle, click
"Astronomy" button. You will get this picture:

This diagram shows how DJI changes when the Sun goes through different signs of Zodiac. You see here
that sometimes the value of DJI is very high, while for some other periods it is very low. This is the solar
breath of the stock market, and its rhythm is caused by the movement of the Sun. 

This diagram allows to make some conclusion regarding DJI movement in respect to the Sun's position:

From the end of April to the end of June, the price usually goes down. From the end of June to the end of
August, we see the up trend followed by short though strong September correction etc.
The picture above is a "planetary portrait" of Dow index, or, more precisely, its solar portrait. However,
for practical needs, we are more interested in the information on real price movement in time.  You can
find it on the Main screen: look at it now to see how this Annual cycle appears in time:

This cycle is just one of many possible cycles. We can create composites for every planet and compare
these cycles to the actual price movements. Plus we can consider more complicated (and more
interesting) cycles, like cycles of the mutual movement for two different planets. For example, one
important cycle for DJI is Jupiter - Saturn cycle. Its period is 20 years. Therefore, having 120 years of DJI
historical data, we can try to determine the effect of this cycle on DJI behavior. To do that, set these
options in "Terms":

Here you can see the DJI movement (Y axis) in respect to the angle between Jupiter and Saturn (X axis). 
This is Jupiter-Saturn portrait of DJI: 
You can select four major periods on this diagram. 

Period #1 - the angle between Jupiter-Saturn is 50deg-90deg; the market is growing during this period.

Period #2 - the angle reaches 90 degrees (square aspect); the market changes the trend and  follows the
downtrend tendency. It reaches the bottom on 180 degrees.

Period #3 - the angle is 230-270 degrees providing the DJI more opportunity to grow. The peak is reached
at 270 degrees (another square aspect).

Period #4 - 270-310 degrees; a fast downward movement.

This technique gives us a general outlook of this cycle. The most important conclusion here is that this 20
years cycle exists. However, if you truly decide to make a forecast based on astrocycles, you need to
consider other cycles as well and then pick up the most important cycles only. This issue will be
discussed in the next lesson.

Now, some technical notes regarding Composite diagram:

Analyzing any astro cycle, always keep in mind the period of the analyzed cycle. The program displays
this information here:

You see here the period (19.9 years) of the analyzed cycle and a number of cycles considered (in our
example, we use 6.11 full Jupiter-Saturn cycles).

 Pay attention you can analyze many zodiacs here:

If you research the long term cycles (like Jupiter-Saturn 20 years cycle), maybe it makes sense using
Heliocentric zodiac. Geocentric zodiac causes many irregularities due to the annual retrograde motion.

Also I highly recommend to apply Phase Zodiac:

I have found that practically all financial instruments are affected at least by one phase cycle. I

recommend using single planets phase cycles, like Moon phases , Mercury phases

etc.

I believe that this table of periods for planetary phases is very useful, you may would like to remember it: 

Phase Geo Helio

Planet
period period period
365.3
365.3
Sun d (i.e.
d
Earth)
Moon 29.5 d 27.3 d
365.3
Mercury 116 d 88 d
d
365.3
Venus 584 d 225 d
d
Mars 780 d 687 d 687 d
Jupiter 399 d 11.9 y 11.9 y
Saturn 378 d 29.4 y 29.4 y
Uranus 370 d 84 y 84 y
367.5
Neptune 165 y 165 y
d
366.7
Pluto 245 y 245 y
d
The most used cycles are marked by the red font. 

There are a lot of different astro cycles out there. I often been asked how select the best cycles. Let us say
that you have decided to analyze some new financial instrument (FTSE100). Start with Spectrum diagram
- to get a general outlook on the cycles' structure. As you can see below, there are 2 peaks marked (among
the other ones),114 and 767 days cycles: 

It is very possible that these cycles are connected to some astronomical cycles (see the table, I chose
Mercury and Mars phases). This way you can reveal the major players for this market. 

However, there is no proven method yet of choosing the appropriate cycle for some financial instrument.
It is a brand new field for research on markets and economics (mostly because of the absence of proper
tools for the analysis, including a proper software; this situation is changing now, due to the efforts of
different researchers and TS users among them). So, now we can only try different planetary
combinations, using different types of Zodiac in attempt to find a good correlation to available historical
data.
It is a very interesting thing to see how the stock market responds to different astro cycles. Very often the
"pure" astronomical cycles are much stronger than the well known to economists Annual cycle. If you
study the financial data attentively, you will find that very often the strongest cycle is not the Annual
cycle, but a cycle that is close to it. As an example, for S&P500 index, one of the strongest cycles is 403-
days cycle (it is found by Spectrum analysis). Why is it so, why is it not the Annual cycle? No answer
now. We can only assume that the S&P500 index shows a very strong reaction to Jupiter synodic  cycle
(which is 399-days cycle). So, right now we are in empiric stage of the market cycle research, we simply
collect and record the cycles that have some effect on different financial instruments. The more financial
instruments and data we analyze, the more we know about the astro cycles affecting them.

Split criteria and Correlation criteria: how to

pick up the most important cycles
 In the previous lesson we have learned how to create a projection line based on astro cycles. It is our
main goal - to be able to create the projection line of the future movements for each and every financial
instrument. However, there is a very important question there: why should we trust our forecast? It leads
to another question, more relevant to our lesson's theme: how reliable are astro cycles if we use them for
trading? There are two sets of criteria in the program that provide the answer to this question.
  

Split criteria 

Let us consider again the most known of astro cycles, the Annual cycle. We have found already that there
is some connection between this cycle and DJI (it is what I mean saying that "the Annual cycle affects
DJI"). Look one more time at  the Sun's composite diagram:

Consider two significant moments here (they are marked by red arrows). We can state that there are two
major seasonal movements: September drop and after Christmas growth. But - remember that this is the
average picture only; it is based on 120 years history. During these 120 years, American stock market has
come through a lot of changes. So the seasonal cycle in the  beginning of 1900 worked differently than in
1950th and totally different than in the beginning of 2000.

More over, if we look at the price chart of DJI for September 2006, we will not see the big drop, it simply
does not follow the Annual cycle:

Why has it happened? My guess is that the "economical gears" change with the time, so does the stock
market as well. Globalization makes the national economy less dependant on a seasonal component than
50 years ago. Timing Solution allows you visually see the evolution of the Annual cycle.

Let us look at the September drop in details. There are 3 colored lines on this diagram: red, green and
blue ones. These lines represent the composite diagrams calculated for different independent intervals
("independent" here means that the program takes three different time intervals among the available data,
of the same length, and not overlapped). The red line represents the last 40 years of history, i.e., the
Annual cycle based on 1966-2006 DJI history. The blue diagram is based on 1925-1966 while the black
one is based on 1885-1925 data. 
If these three curves would point at the same price movement, we may think about high probability that
this movement will actually take place in the future. In reality we see that the red line based on the latest
40 years history does not show a strong drop, while blue and black curves point on it. It looks like the
September pattern is not so strong now as it has been before. However the DJI still "remembers" this
pattern, though the new tendency and new factors are coming to the stage (I would say it has started in
September 2004, partly in 2005).

Now, let us consider another pattern, after Christmas upward movement. Here you see all three lines
pointing at the same direction, and (what is very important) at the same turning point happening on
January 5-6, 2007:

The program is very flexible: you can analyze any amount of independent intervals among your data (use
"Split" option), for different cycles and different Zodiac types. It does not matter how many composite
curves you have; the most important thing is to watch the intervals (or zones) where all these curves (or
most of them) show the same price pattern.

The zones where all three curves (or any other amount defined by you) point at the same movement are
called predictable zones. To identify them easily, these zones are marked by red color stripes at the
bottom of Composite diagram:

When any planet (or the angle between the planets) reaches this zone, we should pay a special attention to
this astro cycle.

Therefore, when you study astro cycles, first of all you must watch how these three curves move together.
If they point at the same tendency, we can accept this cycle for further consideration. For example,
analyzing Dow Jones Industrial from 1885 year, we have found this Venus synodic cycle (phase zodiac):

  

As you see all three curves point at the same tendency. The discrepancy still exists, but the general 
tendency is visible. By the way, this cycle is not found by Spectrum analysis; very often the Spectrum
cannot reveal this kind of cycles.
Vise versa: if we watch Saturn synodic cycle with a period of 378 days, we cannot find any tendency
there:

So, we will not consider this cycle further. 

We call this approach split criteria, when split curves show us some tendency, we can accept this cycle
as a valid one in the terms of split criteria. You may use this cycle for your forecast.

The split criteria approach is a "qualitative" one. Some of you may find it time consuming. However, I
recommend you to play with the astro cycles actually. After some practice you will get a better feeling
and understanding of these cycles. Under this approach, you use your own judgment and evaluate a cycle
visually. There is another approach, a quantative one - when the computer calculates some parameters and
provides you the information for your decision. 

Correlation criteria 

Before discussing this approach, I would like to make it clear why we use correlation at all. Correlation is
not a final answer. Sure the higher correlation the better, However, as for today, there is still no theory or
idea that explains market moves in a most realistic way; we do not know the reason. Thus, the regular
way of academic science is not applicable here (like gather data, do this, check that, and you will get
something). We have to go by phenomenological (pre-scientific) way - gather the data, try one method,
compare its results to the reality, store the results, apply another method, etc. The stock market has so
many faces/habits, and we can only study these faces/habits. A time for a theory will come...

Back to astro cycles. I prefer to use several criteria in determining the influential cycles. The second
method is correlation criteria. The idea is pretty simple: we calculate the projection line based on
analyzed cycle and watch how this projection line fits to real price (to be precisely, not to price itself, but
to its oscillator). The correlation is calculated on the testing interval (red zone), this is important. (It is
important because the correlation on a training interval has no sense - it is high by definition.) The higher
correlation, the better for forecast - it means that the cycle with a higher correlation has more chances to
move the market.  

So, researching the Venus cycle, pay attention to a correlation coefficient: 

If this coefficient is positive, we can accept this cycle as an important one. The correlation 0.03-0.05 is
good enough. More detailed explanation regarding the correlation coefficient see in the program's
documentation. 

Thus I recommend two steps while choosing the cycles for your forecast: checking the split criteria and
checking the correlation criteria.

I would like to add only this: do not be discouraged by 3-5% of correlation. It does not mean a forecast's
success (it is not about the forecast quality). It means only that your cycle is responsible for 5% of all
market moves - among all other reasons that might move your market. Is it big or is it small? I think it is
big enough - it is just one cycle among many. By the way, the modern civilization, with all its cars, trains,
airplanes, rockets and all appliances that we used to have - has started with a steam engine. Do you know
its original efficiency? Find it yourselves, it will be a good surprise.

Composite - playing around

In this article some nuances of Astronomy module usage will be explained. 

Working with harmonics

For most financial instruments, we cannot use cycles of the slowest planets, because we have not enough
price history data to make a conclusion as to how these cycles work. As an example, consider one of the
longest historical data set available: Dow Jones Industrial index from the year 1789 till now. (The data
before 1885 have been developed by Foundation of Cycles Research and Bill Meridian.) In total, we have
218 years of historical data to research the American stock market. Unfortunately, we cannot use the
Neptune cycle for these data as Neptune's 165-year period  is too long compared to the available data. For
a proper research on Neptune's cycle, we need at least 500 years of price history. However, there is a way
out. We may apply some kind of analogy: let us assume that the impact of Neptune in Aries is similar to
its impact in Cancer, Libra and Capricorn (the signs of Cardinal Cross). The impact of Neptune in Taurus
is similar to Leo, Scorpio and Aquarius, etc. In other words, we research the impact of a slow planet
going by crosses.  

To research this cycle, set 4H harmonics: 

If our goal is a long-term forecast, it is better to work with Heliocentric Zodiac( to exclude the Annual
retrograde motion). This is the composite for Neptune 4H cycle:

As you see, there is some consistent pattern (split criteria) there, and this cycle provides a good projection
line (see correlation criteria).
Do the same thing to other crosses. This diagram shows Neptune's impact according to its position in
different crosses (cardinal, fixed, and mutable):

Consider another popular harmonics, 3H. It allows us to estimate the planetary effect according to their
positions in different elements. For example, analyzing 3H Sun composite for gold prices in 1975 - 2007,
we have received this diagram:

It gives us some hints regarding gold prices, like when the Sun is in Fire signs (Aries, Leo and
Sagittarius) the gold price goes up first two weeks and then it goes down. So we only need to know when
the Sun ingresses the Fire signs (it happens around March 21, July 23, and November 22).

Another possibility is the usage of fractal harmonics. For example, the Moon phase cycle is 29.5 days. Let
us assume that the Moon may affect some market with 59-days periodicity. In other words, we assume
that the cycle in question lasts two Moon phase cycles. To create such kind of a cycle, set this option:
It means that you will see the 720-degrees scale instead of usual 360:

The diagram represents how the market moves while the Moon makes 2 full cycles (i.e. 720 degrees). 

You can work with cycles of single planets and/or you can research cycles that are based on the angle
between two planets. Just a note: for gold prices, the angle between Venus and Mars is important:

Active Zones

The Active Zones feature allows you to get the answers to questions like this one: "Has the angle between
Mercury and the Earth heliocentric any effect on DJI turning points?".

Let me show how it works for DJI data from the year 1885 till now. Download the data and set these
options:

Click on "Zigzag" button to set the minimum swing for zigzag (that is used to calculate turning points).
Let it be 15%.
Now you can see an additional panel with red and blue stripes on the composite diagram:

These stripes correspond to the top (red) and bottom (blue) turning points in respect to the angle between
Mercury and the Earth helio (in heliocentric system, we use the Sun sign to designate the Earth).

As you see, there is a cluster of red stripes around Mercury-Earth opposition:

It means that this aspect may cause top turning points.

But you should be very cautious while working with this feature, as planetary motions are irregular. For
example, if you would research Mars-Sun geo cycle, these stripes are distributed like this:
There are practically no points around the opposition, but this effect means nothing as it is caused by
irregularity of Mars's motion.

Another application of active zones module gives the answers to the questions like this one: "When
within a year DJI may make a big move?". It is easy to answer this question, simply set these options in
"Active Zones" tab:

You will get this diagram for the Sun composite:

The red/blue stripes correspond to big up/down points in respect to the Sun position. This diagram
definitely shows that the big movements are more probable in the second part of the fall:
All these features allow you to obtain the full astro portrait for any financial instrument. Next lessons will
be devoted to calculation of the projection line based on these cycles.

Target - what forecast

"By default" the program uses Relative Price Oscillator to calculate the projection line. This is obvious -
to reveal cycles we need to eliminate trend component from financial data. Another important question is:
"what  period of oscillator we should use". 

Let's create Annual cycle, the program shows the period of oscillator here:

In other words, to calculate the 365 days cycle the program uses the oscillator with period 73 bars. 

If you  analyze Moon phases cycle (period is 29 days) the program will use shorter oscillator with period
5 days only:

So the program uses long term oscillator to to reveal long term cycles and short term oscillators to reveal
short term cycles.

As an example at the picture below you can see two oscillators, red - oscillator that has been used to
calculate Sun cycle and blue - to calculate Moon phases cycle:
 

If you would like to smooth the projection line we recommend to set ON this option in "Target Function"
tab:

You see the red and blue lines became smoother now.

If you plan make projection line for non trend indicators, say MACD, RSI, ADX, Volatility etc. you need
to click this button and set the indicator you want to research:
More information about this issue you can find here:
http://www.timingsolution.com/TS/Mini/8/index.htm

One more parameter is "Alpha"

This is simply coefficient between target oscillator period and astro cycle period. Like for Sun 365 days
cycle program uses oscillator with period

365 x 0.2 = 75 dyas.

Target: what to forecast

 

Timing Solution allows to forecast different indicators. It means that though you download the price
history, you can make a forecast not for the price only. Option traders are more interested in forecasting
volatility, and you can make a forecast for volatility or for true rang (the difference between high and
low). Some users are more interested in forecasting ADX index (average directional movement) to figure
out the trend's continuation perspective. It is possible to do all these things with Timing Solution. You can
do it through "Target".

Suppose you plan to work with some of the fast solutions (see the "Fast Solution" module).. Before
running it, look attentively at this dialog box:
I recommend you to research options available in  "Target" menu. These are different things that the
program will forecast. By default the program forecasts the relative price oscillator with parameters
shown above. The relative price oscillator is designed to eliminate a trend in analyzed data (more about
relative price oscillators see here: http://www.timingsolution.com/TS/FAQ/rpo.doc ). 

Check out all options available there:

For example, if the trend is not so significant in your research, you can analyze Close itself without
detrending:

To make a forecast for true rang (High-Low), use this item:

We calculate true range as a percentage.

Volatility:

ADX:

and many other indicators.

Now I will show how this feature works in different modules.

Spectrum: models based on fixed cycles

You can create a forecast mode based on fixed cycles for ADX index (the technology is described here:
http://www.timingsolution.com/TS/Study/E/4.htm and
http://www.timingsolution.com/TS/Study/E/class_spectr_2.htm )

Follow these steps in Spectrum module:

 

a) set ADX index as a target;

b) click "Calculate" to calculate spectrum for ADX;

c) click   to extract five (as an example) dominant cycles;

d) drag these cycles into Main Screen to get the projection line based on these cycles.

There is one recommendation regarding the usage of spectrum module. Sometimes we have a biggest
peak on weekly (7 days) cycle:
 

Be cautious with this weekly cycle. In most cases this is just the artifact caused by non trade weekends
(for daily data).

I recommend to increase the minimum period of calculated cycles, it is here:

O better set "Price Bar" metric to calculate the period of cycles in trading days:

Turbo Cycles module (Advanced version)

To set the target for Turbo Cycles module, click these buttons:
I recommend to set the target clicking both buttons "Past" and "Future".

This feature allows to extract dominant cycles for one indicator ("Past" button) and generate a projection
line using another indicator ("Future"). For beginners, I recommend to set the same indicators for "Past"
and "Future".

Neural Network module

You can define a target here:

In Neural Network technology it is called output. Pay attention that in Neural Net models you can define
several indicators to be forecasted at the same time (as on the picture above).

Composite (Astronomy) module

If you need to reveal astronomical cycles for any indicator say ADX, click this button:
As an example, see the Annual cycle for ADX index:

Also when you create the model based on several astro cycles using "Composite Box" module, you can
set the forecast target right in "Composite Terms" window:

This technology is described here:

 Composite Module - preliminary description
 This is the most impressive technology in Timing Solution. The composite module allows you to
construct the projection line based on several astrocycles. So, you can consider this article as an express
class that shows you the fast way to create the projection line based on astrocycles. Let us create the
forecast for some data. Let it be the latest data I have worked with: currency USD/CHF  (1973-2006).
This is the chart:

Click the "Astronomy" button: (By the way, I keep the name "Astronomy" instead
of "Astrology" taking into the consideration the chronic fear of the last word from the scientific
community. Ok, we can play with the toys they like.)

You immediately will get the Annual cycle diagram:

How to read this diagram? The colored diagram shows the price movement in respect to the Sun's
position. To calculate this diagram, all price history before LBC (learning border cursor) is used.

Can we be sure that this Annual cycle reflects the true price movement? Can we trust this cycle?

Common sense says that we can use as hints several independent witnesses and see whether they confirm
this Annual cycle. Where can we find these witnesses? We have them already: we can divide our almost
30 years of price history on 3 independent interval, each one being about 10 years long (do not be scared,
the program does this work automatically). Here they are:

You see there now three additional diagrams (red, blue and black curves). These diagrams represent the
same Annual cycles from the point of view of these three witnesses. Witness #1 watches the price history
within the time frame 1991-2001 years, it works with the latest available price history data. Witness #2
works with the data of 1982-1991, while Witness #3 observes 1972-1982. What do they say to us?

The common sense tells us that we need to consider those Zodiac zones where all three witnesses point at
the same tendency in price movement. These zones are marked by red stripes in the bottom of the
diagram. Here they are:

The red and blue arrows show the major trend directions in respect to the Sun's position. You can see that
the Sun is responsible for the major drives approximately 4 months a year (only!). Any other time we
have got mixed signals.
One additional fact that increases our confidentiality regarding Annual cycle is shown on the screen as
well. Look at this label: Correlation=0.1511

We did not use last 5 years of price history for the calculation of this cycle. This is Testing Interval
(2001-2006) - shown as pink region on the chart. This label says that the projection line based on Annual
cycle provides the correlation of 15% (actually, the program calculates the correlation between the
projection line and the relative price oscillator with period = 71 days, to eliminate the trend component).

We can look at our Annual projection line in the Main window:

    In Composite window we can set the color of our projection line or to hide it:

Ok, we may assume that this cycle is good enough and we decide to use it for our projection line. Click
here:
The program will immediately display one more window Composite Box. Here it is:

The Composite Box allows us to collect as many astrocycles as we like and calculate the summary
projection line based on these cycles.

Now it is a time to play with other astrocycles. I've found that Venus cycle works for these data (though it
is related to the annual, i.e., Sun cycle, it is still a different cycle). Set these parameters:

I got this Composite diagram:

Venus forecasts the price better when it is in the first half of Zodiac. I have added this cycle to the
Composite Box as well.

Look at the Main window. You can see here the thin blue line that represents the sum of  Sun and Venus
astro cycles:

The next cycle that might work for these data is the cycle of the angle between the Moon and Venus:

This cycle is added to the Composite, as well as the Sun - Neptune cycle.

Also, I would recommend to use the phase Zodiac. For example, see this Composite for Uranus phase
cycle:
This is the cycle that is close to the Annual cycle (period=370 days).

Look at the Composite Box now. We have selected 5 different astrocycles:

The program performs the huge work of revealing these cycles very quickly (I have spent more time
describing this than actually doing this). Mark them all. The program will optimize these cycles and
produce the resulting projection line. You can see it in the Main screen now:
Because this model is based on astrocycles, we can prolong it into the future as far as we like. If, for some
reason, we do not like the resulting projection line, we can go back to the Composite Box and disable one
or several cycles there. The program will do the recalculation and re-optimization and will give a new
projection line.

Sure we can manipulate with the screen image (magnify a part of the chart, shift it, etc.).

As I have said already, the program does this huge amount of calculation very quickly. My purpose was
to find the appropriate math methods to make this easier for you.

When you click "+" button, the program calculates the astrocycle and optimizes the content of the
Composite Box, trying to find the best input for each astrocycle. The information regarding the weight of
each cycle is shown on the screen (like Sun W 0.03465):

If you do not need this optimization, just disable "Auto Optimization" option in Composite window:

The program allows you to perform several scenarios of optimization (different optimizing intervals and
different algorithms). You can set these options yourself in the Composite Box window:
Here are these options:

MY FRIENDS, I NEED YOU ASSISTANCE. PLEASE TRY TO PLAY WITH DIFFERENT

VARIANTS. I STILL AM NOT SURE WHAT OPTIONS ARE MORE SUITABLE AS "DEFAULT".

ALSO I NEED TO KNOW IS IT GOOD TO SET "AUTO OPTIMIZATION" AS THE DEFAULT

OPTION. AS ALTERNATIVE, YOU CAN COLLECT ASTRO CYCLES WITHOUT OPTIMIZATION
AND PERFORM THE OPTIMIZATION ON THE FINAL STEP CLICKING "OPTIMIZE" BUTTON
IN THE COMPOSITE BOX.

One more very important issue is Target. It is what we would like to forecast and what is used in the
optimization process. Set the Target here (in Composite Box):

As an example, we can make a forecast for Relative Price Oscillator for (H+L+C)/3 with smoothing
window=50 bars:
or we can try to forecast ADX (analyzing the trend's strength):

In the end, I would like to make some general notes regarding the interface.

These options allow you to adjust the view of the Main window:

Also sliding this scroll bar:

you can make Composite window partially transparent. Thus you will be able to see the content of the
Main window through the Composite:
Composite Box - Projection line
Fast introduction 

This is one of the most impressive technologies in Timing Solution. The composite module allows you to
construct the projection line based on several astrocycles. 

As an example let's create together the projection line based on three astro cycles: the Sun cycle (its other
name is Annul Cycle), the Moon Phases cycle and the cycle of Mars phases. 

We do it for Dow Jones Industrial from 1885 till April 2009 year. 

After downloading the data, click "Astronomy" button:     .

Immediately we get the Annual cycle (Sun-Sun geo), it is shown on the Main screen:
Now, put this cycle into the "Composite Box" clicking this button:

It is there, and we can repeat the procedure for other two cycles. First calculate the Moon's  phases cycle
(the Moon - the Sun in Geo) and send it into "Composite Box":

Finally calculate the Mars phases cycle (Mars-Mars phase) and send it into "Composite Box" as well:
 

Look at the Main screen now. You can see two projection lines there:

One of them, the blue line, corresponds to the "Composite Box" projection line, i.e. this is a superposition
of three astro cycles (that we have created a minute ago). The other (the green line) is a projection line for
a single cycle. It is called "Current Composite", and it is the last cycle added to the Composite Box. For
our particular example, the "Current Composite" corresponds to Mars phases cycle.

We can hide "Current Composite" and display only Composite Box's projection line. Do it this way:
Now look at "Composite Box" window (the program displays it automatically when you click "+"
button):

You can disable/enable any cycle there, save your work into some file or open a previously created and
saved variant.

If "Composite Box" window is closed, you can open it any time clicking this button:

 
Simple backtesting 

The most interesting question is  how this combination of cycles really works in the future. Remember
that we always can obtain a good projection line that perfectly fits to price movements IN THE PAST (it
is just a test for your tools).  

Timing Solution provides you "no future leaks" technology that allows to get the answer to the question
above. Let's do it together:

1) Set Learning Border Cursor (LBC) on some date in past, Let it be the beginning of February 2004:

2) In a moment the program recalculates the projection line.

3) The data beyond LBC (February 2004) represent the REAL FORECAST. "Real" means that the
program "does not know" the price history beyond LBC (though you can see it on the screen). It does not
use the price history after LBC. The program is "blind" in respect to the future. (If you choose some other
position for LBC, you start a new case, and now the program uses the data before LBC to generate a
projection line AFTER (BEYOND) LBC.)

4) We recommend to vary LBC position several times to figure out how the projection line works after
LBC. Look at the "Composite Box" module, it shows how the Composite Box projection line fits the
price. The correlation coefficient tells you that; "by default" it is calculated using the price history after
LBC:
5) Remember that you can set LBC at any place clicking RIGHT mouse button and choosing  "Set LBC
at ..." item:

Also in Options->View, set this option ON:

The most important cycles

This is a very important and the most difficult question - what cycles are more meaning than others. 
I always start with the Annual cycle: . 

Then I check  the phases of inner planets (Mercury and Venus): . 

After that I check phases of Mars, Jupiter, and sometimes of Saturn. The phases of slow planets Uranus,
Neptune and Pluto are very close to the Annual cycle, so I do not use them.
If you have 30-40 years of price history, I recommend to check Jupiter cycle, it is close to a well-known
Juglar cycle. 

What cycles are better to use? There is no simple answer. I recommend to look through  Lesson 7, you
can find there some useful information.

Let me show one example. The downloaded price history is Dow from 1885 year, and LBC is set at the
beginning of the year 2008. It seems to me that for the whole year 2008 Mars heliocentric cycle has
worked very well. See yourselves (a red curve):

During 2008 and in the beginning of 2009, the correlation between this projection line and DJI is 0.7099 -
this is a very high correlation. The analyzed interval (2008 - the beginning  of 2009) covers a bit more
than the half of Mars Helio cycle's period.
Does it mean that Mars Helio cycle always works for Dow?. The answer is NO!  The time interval 2008 -
the beginning of 2009 - is too small to make this conclusion. The random mistake is too high here.

To demonstrate this to you, let us set the LBC in the beginning of the 1999. The program uses now 10
years of price history to calculate the correlation between DJI and our projection line; it is more than 5
Mars Helio cycles:

You see that the correlation for Mars Helio cycle is negative now. In other words, for the last year Mars
cycle works very well, though it did not work well for 10 last years. 

Does it mean that this cycle is no use? Not either. May be this cycle has started to be involved in the last
year, and before that it has been inactive. In other words, this (and many other) cycle is not providing the
same results always, it really works from time to time. There are more persistent cycles, they just work
most of the time. So I recommend to start with the persistent cycles.

This is one working example. Let's consider Mars phase cycle:

LBC is set at the beginning of 2008

 

Looks like this cycle works in 2008 year. Can we get more confirmation regarding the workability of this
cycle?

Yes, we can. Set LBC on the beginning of 1999. You get this:
 

The projection line is still working, correlation 0.2 is good. 10 years cover about 5 full Mars phase cycles,
it is enough to evaluate the cycle's importance.

In other words you vary the  LBC and watch how this cycle correlates to the price chart. The whole
procedure looks like this: you click the right mouse button on different places of the price chart and watch
how the correlation coefficient changes:
 

If this cycle "passes" this examination, consider it as a working cycle and put it into your "Composite
Box"

"Garbage in - garbage out"

Be very picky while choosing the cycles. Do not use too many cycles in your Composite Box, use only
several the most important ones. Adding more cycles that are non working, we add more Chaos to your
model. In this case, you should not be suprized getting nothing in the end.

I also do not recommend to use "Auto selection" button: 

It picks up dozens of astro cycles. Usually the projection line based on these cycles works good in the
past and does not work in the future. This button appeared in one of the previous versions of the software;
at that time I thought it might be useful. Then practice and research showed its useless, I even deleted it
once, but still some users wanted to see it. So, it is in the program, though I do not recommend using it.

Optimization

There is the additional feature "Optimization" in the "Composite Box":

There are four possible optimization algorithms in the program:

Weights optimization finds the best weights for all cycles that are present in the Composite Box. Genetic
optimization finds the best combination of these cycles, it disables cycles that do not improve the
projection line (in other words, the projection line is not changing with or without those cycles).

If you conduct the final projection line, i.e. the projection line that is based on ALL available price
history, click this button:

The program will set LBC on the last available price bar.

Also I recommend these classes:

about correlation –

What is the Correlation Coefficient?

This is the definition from Financial Forecast Center (http://www.neatideas.com/cc.htm).

What is the Correlation Coefficient?

The correlation coefficient concept from statistics   is a measure of how well trends in the predicted
values follow trends in the actual values in the past.  It is a measure of how well the predicted values
from a forecast model "fit" with the real-life data.

The correlation coefficient is a number between 0 and 1.  If there is no relationship between the
predicted values and the actual values the correlation coefficient is 0 or very low (the predicted values
are no better than random numbers).  As the strength of the relationship between the predicted values
and actual values increases so does the correlation coefficient.  A perfect fit gives a coefficient of 1.0. 
Thus the higher the correlation coefficient the better.

For practical usage, you should know that:

1 - Means ideal coincidence between some data.

0 - No correlation. Two sets of data are not related.

-1 - This is anti-correlation, which means that the predicted values "mirror" the actual values (or one data
set is the "mirror" for another one).

These are examples:

Positive correlation (=0.5); these two curved lines show the same price movement (most of the time). In
other words, price goes up or down for both lines:

No correlation (0.07); these two curved lines show totally different movements (if one goes up, the other
may go up or down and there is no regularity seen):
  

Negative correlation (=-0.4); we observe the "mirror" effect (when one curved line goes up, the other one
goes down in most cases, and vice versa):

What correlation is good enough? The more the better. Usually, the models that we analyze provide 0.1-
0.2 correlation. Sometimes it is more than that, but these results are not stable. To be sure that this result
is not accidental, it is necessary to have a sufficient amount of price bars for calculating the correlation.

This table shows the sufficient amount of price bars for different correlation coefficients (Student's t-
distribution):

Amount of price points

Correlation to be sure that this
result is not accidental

0.1 390

0.2 100

about non future leaks technology, training and testing intervals –

Training and Testing intervals. Learning Border Cursor (LBC)

When you download any price data file, you will see that all available data are divided into two intervals:
Blue interval is Training Interval, Red interval is Testing Interval. The border between them is Learning
Border Cursor - LBC.

You can set the LBC wherever you want. To do this, just click on this icon: and then click the left
mouse button at the place where you want to set LBC.

Also you can set the LBC clicking RIGHT mouse button and choose this item:
 

Also you can set LBC clicking on this button: . In this case, you will get the window to set LBC on
any price point manually:
     

Back Testing Concept (how to avoid "information leaks")

When you create any forecasting model, the program takes the points from TRAINING interval only. It
does not use the price points from TESTING interval, these points serve to estimate the model’s
performance only. 

Look at this example:

This is one of the models to forecast Dow Jones Industrial (DJI) index. This model is based on fixed
cycles plus Neural Net. The Black line is the oscillator for DJI, the red line is the forecasting curve
calculated by the Neural Net. It shows good fitness on the blue (training) interval. This is not surprising,
because the program uses these points to train our Neural Net.

The fitness on red (testing) interval of the example is not too good. Here the Neural Net works in the
forecasting regime. The price points on the testing interval are necessary to evaluate the real forecasting
ability of the applied Neural Net model. Here we compare two curves - the data line and the projection
line.
So, remember this: the real forecasting ability of any model can be estimated on the TESTING interval
only. Thus we can avoid so called "information leaks".

The Neural Net knows and "sees" only the price data before the Learning Border Cursor when it creates
the models.

For some tasks, it is necessary to use another interval; it is called VALIDATE INTERVAL, you can
define the length of the validate interval here (in “Main Window View”):

Now the Main window looks:

 
 

It is divided on three intervals A – training, B- validate and C – testing. The ABC notification is used
everywhere in the program.

For example, in Astronomy (Composite) module this means:

the correlation between projection line and price calculated on TESTING (C) interval is 0.1259.

Final Optimization

Final optimization is when you use ALL available price points to make the forecasting model. When we
do this, there is no price points left that can serve as a testing interval to do Back Testing, because now
the program uses all of the price points to create the final model. Thus, final optimization is recommended
only when you trust your model.

To make the final optimization, move the LBC to the last available price bar (by clicking on this icon 
).

Here is how the forecasting model looks like:

Compare this picture to the diagram above. There is no price data on the red interval, when you do final
optimization. You have here only real forecast.

Turbo Astro module

 

Turbo Astro  module is a very simple module that allows calculating quickly the projection line based on
astronomical cycles. You can also calculate the projection line based on astronomical cycles through
"Astronomy" module. However this new module allows to perform this task very quickly similar to
Turbo Cycles http://www.timingsolution.com/TS/Study/Turbo_Cycles/  module tat allows very fast
calculation of the projection line based on dominant cycles. All "Turbo" modules in Timing Solution
mean fast and easy version of possibilities presented in other modules of the software.Let's start.
Download some price history. As an example, I chose S&P500. Then click "Advanced"->"Turbo Astro".
In an instant, you will get Annual cycle (the Sun cycle) for S&P index:

Now calculate another astro cycle that may affect S&P. Let it be  Mars synodic cycle (the period of this
cycle is a bit more than 2 years).

Uncheck Seasonal Cycle and set ON for Mars Synodic item. You immediately get the projection line
based on Mars synodic cycle:
 

Set ON for Seasonal Cycle and Mars Synodic to receive the projection line based on these two cycles:

Include Mercury synodic cycle in the same manner. The projection line becomes more detailed:

Going further, try to calculate the committee for this projection line. The committee allows  to see several
variants  of the same projection lines. (More about committee technique is here:
http://www.timingsolution.com/TS/Mini/12/index.htm )

To calculate committee you need to do just two mouse clicks:

 

Easy and effective! Isn't it?

Now the main question: how to pick up astro cycles? What cycles are important and what cycles are not
important?

I recommend to run Spectrum module, the peaks on spectrogram correspond to the strongest cycles
presented in S&P500 price history.

Just watch the period of astro cycles and choose only those that have peaks APPROXIMATELY on the
same period:
 

Like here the spectrogram shows the peak on 752 days cycle, while we have Mars synodic cycle with
period 780 days. The astronomical cycles are irregular, so the small discrepancy between periods revealed
by the spectrogram and actual astronomical periods is quite possible.

BTW I forgot to include 584 days Venus synodic cycle; try to do it yourself. This cycle works very often
for different financial instruments.

Finally go to Options:

and play with these parameters:

  - color legend for committee;

  enable/disable projection lines in committee (SM means "stock memory";  see

here: http://www.timingsolution.com/TS/Mini/47/index.htm )
 amount of overtones and minimal period for the overtone. More overtones
means the more detailed projection line, and more noise as well.

That's it!

Stock Memory (SM) in Timing Solution

 

Now practically everywhere in Timing Solution we use Stock Memory (SM). What does it mean? In
brief, stock memory is a number of whole cycles. However, it has different flavor in different modules.

Let us start with the Spectrum module.

Here we use Multiframe algorithm to calculate the spectrum diagram. Stock memory parameter here is
12. It means that:

we use last 10x12=120 bars of price history to calculate 10 bars cycle;

we use last 50X12=600 bars to calculate 50 bars cycle;  

we use last 100x12=1200 bars to calculate 100 bars cycle.

In other words, calculating some cycle we should use 12 times more price bars than the length of that
cycle. If the stock memory would be 10, we need 10 times more price bars to calculate the same cycle.

This is a very obvious approach: to reveal long term cycles we need to analyze more price history. This
type of spectrum treats equally short and long term cycles.

From the other side, we have to recalculate this spectrum when the new price history comes. 

When we use "drag and drop" technology (see here http://www.timingsolution.com/TS/Study/E/4.htm )

to calculate the projection line based on cycles, the program asks us to input stock memory here:

 
This SM parameter differs from what has been discussed above. Here it shows how many price history is
used to adjust the analyzed cycle. (The cycle is revealed already, and now the program creates the
projection line based on this cycle.) The stock memory parameter here shows how long the cycles live in
time before disappearing.

Varying SM here, we calculate committee diagram:

The committee diagram gives us the bunch of projection lines. The projection line with small SM (red
line) reflects the cycles that live short time (3 full cycles), while the blue projection line with SM=12
involves longer cycles:

 
 

We can say as well that Stock Memory works as a filter for cycles. Usually the projection line with
smaller SM is more choppy - because smaller SM provides smaller degree of filtration; it increases the
amount of occasional cycles involved into the process. The bigger SM means that this filter is more picky,
it allows smaller amount of cycles to form the projection line.

The same technology as in the first example is applied when we calculate the projection line based on
astro cycles ("Astronomy" module). For example, to calculate the Annual Cycle, we may use 3 years of
price history, or 5, or 7, 12 - whatever you define here:

Turbo Cycles module in Timing Solution

 

(Advanced version) 
This module allows to create quickly a projection line based on fixed cycles. The peculiarity of this
module is that it allows to perform this work extremely easy. This module works fantastically fast
because I used the new algorithms here.  
Let's start with some example. I have downloaded the price history data (S&P 500 daily) and run this
module ("Advanced"->"Turbo Cycles"). Immediately after doing this, I have get this projection line for
S&P500 (a red curve in the Main screen):

The program shows the most active cycles that worked recently. For this example, the program shows
five most active cycles: 13.8, 19.07, 51.44, 36.05 and 25.26 bars. The red projection line is a composite of
these cycles

If you need to get the final forecast (the forecast based on the model that uses the WHOLE available price
history), simply set Learning Border Cursor (LBC) on the  last price bar clicking this button

; in a second the program will perform a huge amount of calculations

and will update the projection line.

Now let me explain what the program does during this second.

First of all, to generate the projection line based on some cycles we have to find these cycles. So the
program does it; its multiframe spectrum algorithm performs this task perfectly. You can see the cycles
activity in the upper part of the window. The peaks on this diagram (its other name is spectrogram)
correspond to the most influential cycles:
Look how the spectrogram is changing when you change the position of LBC.

Next step is presented in the middle part of the window. The program extracts the most important cycles:

It displays a period for each cycle and some other parameter, "fitness". This parameter is a forecasting
ability of this cycle. ("Fitness" for multiframe spectrum corresponds to Bartell's significance test for
classical spectrum analysis.) The higher fitness value, the more significant cycle is. 

To generate the projection line the program uses 5 of the most powerful cycles (it is set by default). You
may exclude any of them or add more making a double click before each cycle: 

The program immediately updates the projection line taking into account a new cycle (42.88 bars cycle
shown).

This part of the window contains parameters you can vary:

Critical fitness - allows to choose the cycle by fitness criteria. If you set this value to 50% you will get 1-
2 dominating cycles. I recommend to vary this parameter in the range of 5-25%. 

Overtones - allow to include sub harmonics to the main cycle. For example, if we analyze 100 bars cycle
and use four sub harmonics, the program will analyze 50, 33.3 and 25 bars cycles together with 100 bars
cycle.

SM1 and SM2 parameters. These are special parameters for multiframe spectrum algorithm. Try to vary
them  in the range of 3-20

Remember that setting SM1 parameter to 2-3 gives the spectrum very close to MESA (maximum entropy
spectrum) , while setting SM1 higher than 30 gives the spectrum that is very close to classical Fourier
transform. Multiframe spectrum lies between these two; it is the best compromise between the noise
(Fourier) and the concentration on short term cycles (MESA).  

SM2 parameter is responsible for forecast horizon. If you set this value small (1 - 4), the program will
concentrate on a short term forecast; increase this value to create a middle term forecast.

Under "Advanced" tab, try to vary only these two options:

Target - this is what we try to forecast. For example, you can try to forecast RSI, ADX, volatility or any
other index. See below the screenshot of the forecast for RSI (the bottom part shows RSI index itself):
Max amount used dominant cycle - shows how many cycles the program uses to generate the projection
line. As I said above, you can include/exclude these cycles manually. Though I do not recommend to use
too many cycles.

Working with this module you mostly  vary Overtones and SM2 parameters and add/exclude new cycles.
These parameters are the most influential. The working desktop looks like this:

Also pay attention that when you change the parameters marked by red font (Critical fit. and SM1) 

the program recalculates the periods of dominant cycles automatically.

Dominant Astro Cycles module

This module in Timing Solution allows to consider astronomical cycles from a totally different point of
view. In all modules discussed previously we have considered the astro based cycles as some constant
entity. In other words, when speaking about the Annual cycle (which is the Sun astro cycle) we discussed
either the typical September drop or Christmas rally. We assumed that the astro cycles always work the
same way.Dominant Astro Cycles module does not assume some constant pattern for any astro cycle.
This module simply looks for the period of time when this cycle has some impact on stock market
behavior. The behavior pattern  of astro cycles may be totally different now; as an example the Annual
cycle now may work totally different than ten years ago. In general, both modules start with the definition
of the cycle to be considered. Then, usually the program looks for the pattern for that cycle and creates
models based on these patterns. While in the Dominant Astro Cycles module, there is no need to look for
these patterns; the program simply looks for the time when some particular cycle was active in regards to
the stock market activity. Let's start to work with this new module. After downloading price history
(better daily data) run "Advanced"->"Dominant Astro Cycles" module and click "Calculate" button there:
In a moment you will get this diagram:

You see the bunch of stripes  there, each planet has its own horizontal colored stripe. The meaning of the
colors is this: the blue color means that this cycle has no impact on the stock market behavior, while the
bright red regions represent the time periods when this cycle correlates highly to the price movement.

Thus for the Sun (=Annual)  we have these periods when this cycle has been especially strong:
 

Be advised that behavior patterns of these cycles are different at different time spans. and the red stripes
simply represent the moments when the market behavior is described very well by the planetary cycle.

How to use this information?

First of all pay attention to the most resent strong astro cycle (i.e. watch red stripes). For example  now
Mars cycle becomes being very strong, while during the Great Financial Crisis the cycles of inner planets
(Sun, Mercury, Venus) have played the main roles on the stock market field (from the end of 2007 to the
end of the year 2010, though now (July 2010) Mars cycle is strong) :
 

Second, try to find some historical analogy, for example upcoming Mars cycle sends us to the years 1998,
2002 and 2004; check what was happening to the stock market at these years:

 
 

Third, you can calculate the projection line based on the most resent dominant cycles. Simply define here
the cycles you want to take into account (Mars in our example) and click this button:

In a moment you will get this projection line based on Mars dominant cycle:
Try to include the Sun cycle (which always strong practically for all markets), and you will get this
projection line based on two dominant astro cycles, the Sun and Mars:
I recommend to vary these two parameters, Stock Market Memory (SM) and the amount of overtones:

The first parameter (SM) indicates how long cycles live; you can find more about stock market memory
here:

http://www.timingsolution.com/TS/Mini/47/index.htm  The more overtones you use the more detailed

projection line you get.Also try to play with different Zodiacs: geocentric, heliocentric and planetary
phases.

 Phenomena module
 
This module allows to display practically all astrological phenomena related with planetary position. To
run this module follow "Tools"->"Phenomena" menu or click this button:

After that you will get this window, choose phenomena you need to calculate and click "Calculate"
button:

In this example I will calculate planetary position for Sun, Mercury, Venus, Mars, Jupiter and Saturn  in
Tropical Zodiac:
Thus you can see these zones together with price chart.

To see exact ingress dates I recommend to set Prolong option to "On":

 

Try different options there to display different tables. For example choosing "Planet Direct/Retrograde"
you can display direct and retrograde zones:
 

Planetary positions in different faces:

 

Sun or any other planet is located in faces ruled by Venus, Mercury etc.

Decanates:

Duads (modern and classical), Terms (Egyptian and Ptolemy):

 

Planetary phases:

For intraday data Moon position in degrees of Zodiac:

 

Planetary position in Mundo Zodiac (transiting planets in transiting houses):

 

You can create your own intervals like this (divide Zodiac on 93 equal sectors):

 
 Phenomenological model for Hang Seng
Composite Index
This article is the illustration of some approach to simplified creation of the astronomy based
phenomenological models. As an example, we will make the forecasting model for Hang Seng index.
The price history from the year 1970 is provided by John Ng. 

First of all, let us look at the Spectrum diagram: it may give us some hints regarding this market's
habits:
  

This is multiframe spectrum; you can see a very strong 640 days cycle. Look at lime stripes at the
bottom; they correspond to the astronomical cycles. The closest to this peak cycles involve Mars
and Sun-Venus relationship (actually, this is Venus phases cycle). Sometimes these stripes do not
exactly correspond to some astronomical cycle, it may be caused by nonlinear effects.

Let us create now a forecasting model based on these cycles. Run Neural Net module and click here
to define these cycles:

 
You will get this window:

This is a special window to create models based on astronomical cycles, or so called FAM type
models. FAM stands for Floating Angle Model. This type of models is designed to catch all astro
sensitive points for your financial instrument (in our case, for Hang Seng index). FAM model does
not take into account when this financial instrument has started (thus eliminating the debates on
true natal charts); it simply records some initial parameters coincided with moments when astro
events had some specified impact on this financial instrument.  

In this window, you can see three tables that correspond to three different types of zodiacs:
Geocentric, Heliocentric, and Phase zodiacs. Red diagonal bars correspond to the pure cycles - like
Mars cycle, instead of Mars-Jupiter cycle that involves two planets.

You can choose any cycle typing the value of the desired orb for this cycle:
As the example. we choose Mars cycle with the orb=10 degrees, it means that this model analyzes
each 10th degree of Zodiac. The same result can be obtained by double clicking on the appropriate
cell (no typing).

I choose 5 cycles in Geocentric zodiac involving Mars: Mars itself, Mars-Jupiter, Mars-Saturn,
Mars-Uranus and Mars-Neptune

Also I select Venus cycle in Phase zodiac. There are 6 cycles in total to consider. The whole
planetary portrait of our market is:
You can send this "portrait" to your friend and receive a similar one by e-mail:

 We have chosen the "players" for our model. Now we need to define what we would like to
forecast. Let us take the oscillator with period 50:
Click on "Training" button, and after 15.000 steps of training you will get this:

The red line represents the projection line obtained through these cycles. This line provides the
forecast from the end of 2000 (red region).

It looks like this model provides a rather good forecast for 2003-2006 years.

 
However, for 2001-2003 it has not been that good:

The most important issue in creating the phenomenological models is defining the correct planetary
profile. There are no complete instructions yet as how to do that. You have to use all available tools.
Here we have started with the Spectrum module. It gave us some information about probable
cycle's length. Other good hints can be provided by Astronomical module. Do not use many astro
cycles, just a few most important cycles usually give better projection line than a huge model based
on all known astro cycles. In this particular example, the most informative planet is Mars. The
phase of Venus (584 days) is another strong cycle to consider. 

By the way, I have met this cycle doing research for many other financial instruments. For
example, for British Pound/USD, this is the strongest cycle:

Answers on Users Questions

Here are some questions asked by one Timing Solution user:

Using the Hang Seng Phenom. article as a template for forecasting other instruments I have come up
with a few questions:
 
First, when I run the Spectrum module I can see the astronomical cycles in green (right above the
horiz time axis).  There are three situations that occur:
       1.  You find an astro cycle (Geo, Helio or Phase) that seems to catch the spectrum peak quite well. 
You select this by double clicking, the orb will fill in the box and the FAM model for the sensitive
planet(s) will be available for the Neural Net.  Question:  Often the peaks have more than one astro
cycle association.  I assume that we really only need to select one astro cycle per peak to avoid
redundancy.  True??? 
       2.   Now you see one where there is no green bar below a significant peak so there is nothing to
select (in terms of an astro cycle).  Since this peak represents a strong cycle do we send that spectrum
peak to the Neural Net as simply a fixed cycle?  How is that done exactly?
       3.   You note that as you use the cross hairs across a peak the days cycles show in the upper right
and next to that you see something like "2H Mars-Neptune."  Thus, there is an association with the
2nd Harmonic-Helio-Mars Neptune.  Correct?  With this methodology do we simply select Helio Mars
Neptune and let the Neural Net work it out with the FAM input?  Or do we need the ability to input a
2nd, 3rd, 4th, etc harmonic into the Neural Net? 

Second, can you address the issue of appropriate orb and daily vs. weekly vs. monthly data based on
what we are trying to predict.? Maybe FAM compensates somehow, but I was surprised that in the first
Phenomenological article you used an orb of 15. You found that Jupiter, Saturn and Neptune were the
"drivers" and they become the 3 inputs into the Neural Net.  As slow as these planets move I would
have imagined the need for a significantly smaller orb--like 1 degree.  In the second article on the
Hang Seng Index you used data since 1970.  It was not stated whether this was Weekly Data or Daily
bars?  [My instinct says that for this long of a period you would use weekly data]  The  "portrait" ends
up with Mars-Zodiac and Mars-to-outer-planets plus a Venus-Phase input [ "players."]  Whereas,
above you used orb=15; here you used orb=10.  This was confusing for me as I would have thought
the orb would get larger as you moved inward-as far as planets are concerned.  Still even with an orb
of 10 that seems large compared to the movement of Mars, Mars-Jup, Mars-Sat, etc.  I would have
thought that Mars orb would be 2-3 degrees and Venus orb would be 2-4 degrees. 

I know that we are suppose to jump in and experiment to find what seems to work best (and then share
our observations and back testing results).   By the same token, is it possible for you to publish some
parameters that might give us appropriate combinations or ranges of parameters so that we don't spin
our wheels too much? 

These are good questions, they are related to the most important issues regarding the
phenomenological model. So, my answer is divided  on three parts: general notes, practical
recommendations and theoretical issues.

#1 General notes

First of all, I would like to mention that it is the PHENOMENOLOGICAL model. It means that we
have no fixed rules here applied for all cases. We have recommendations only, and we should check
all possibilities. This is due to specific status of astro finance research based on astrology. "Up until
now, astrology has not been a science at all - not even an erroneous one. It has been a craft or
technology, which is quite different." (Robert Hand "Essays on Astrology"). So, instead of applying
laws and rules, we can only PLAY with all possibilities. And I simply try to give you the
template/recommendations/descriptions of typical situations in this game. This is a main difference
between phenomenological and Back Tested models: BT models need a lot of calculations to get the
optimal parameters. For me, it would be the easiest way to provide the module that calculates
dominant planets for any financial instrument automatically. But it will be a fake. In this case, the
formal approach can kill  the essence of these models. The computer does calculations faster than a
human; however, a human is a lot smarter than a computer.

How did I PLAY in this particular case? I have started with the thing that strongly impressed me:
the Spectrum diagram. Here it is for our data: 

Sure I have tried to create the Spectrum based projection line. The results were not that impressive.
OK,  may be the astronomical cycles will help? The nearest to 640 days are all Mars cycles and
Venus phase.

So, I tried some cycles with Mars involved (Mars, Mars-Uranus, Mars-Neptune):

The results (i.e., projection line) have become better. Let's add other planets:

 It has been a good move. Results are more promising! The next step I would like to recommend for
playing is Orb, like this:
Try to add another planetary cycles. When you will spend some time trying different cycles and
orbs, you will get a feeling that you know your guy (i.e., your financial instrument to be forecasted)
better. It is one of the reasons why we are starting the research inside TS Yahoo group. Learning
more about the cycles relevant to each financial instrument, we will be able to make templates for
major groups of stocks/futures/indices.

#2 Practical recommendations

Question: I assume that we really only need to select one astro cycle per peak to avoid redundancy. 
True??? 

I do not think that this approach provides a good results. I tried. May be, it works for other
financial instruments...
The problem is that the Spectrum catches the regular cycles only, while the planetary positions and
planetary cycles are not regular. Add to this much more important fact that the planets impact the
stock market in NON LINEAR manner (see about it in the next topic). So, I would recommend
using Spectrum as a hint, but not as a final arbiter. Maybe, the usage of composites is more suitable
to reveal the dominant planetary pairs. In case of Hang Seng, we have one very strong cycle, it is
the main hint given by Spectrum. But once again, you need to experiment yourselves.

Question: Since this peak represents a strong cycle do we send that spectrum peak to the Neural Net as
simply a fixed cycle?  How is that done exactly?
Do this:

a) Extract the cycles you choose:

2) Put this cycle into the clipboard:

3) In Neural Net module, take this cycle from the clipboard:

Thus, in this Neural Net, we have added chosen cycles to existed events (for example, astro FAM
cycles).
One observation: it looks like there is incompatibility between astro cycles and regular (math)
cycles. I have found that the results become worse when I add astro cycles to the regular cycles. The
following table reflects my notes for cycle's compatibility:

Spectrum
(regular) Geo Cycles  Phase Cycles Dynamic Model
cycles

Spectrum
  Not Compatible ??? ???
(regular) cycles

Geo Cycles      Not Compatible Not Compatible

Phase Cycles       Compatible

Dynamic
       
Model

But this should be tested more for different financial instruments.

Question:  You note that as you use the cross hairs across a peak the days cycles show in the upper
right and next to that you see something like "2H Mars-Neptune."  Thus, there is an association with
the 2nd Harmonic-Helio-Mars Neptune.  Correct?  With this methodology do we simply select Helio
Mars Neptune and let the Neural Net work it out with the FAM input?  Or do we need the ability to
input a 2nd, 3rd, 4th, etc harmonic into the Neural Net? 

The FAM model for 2H, 3H, 4H is in my plan. This issue needs additional work/time. Extremely
complicated math stands behind it.

Question regarding the orb. In this example we used daily data, while in the first articles it was 2
examples with monthly data. It explains the choice of 10 and 15 degrees.

By the way, "orb" for FAM models is something different than the orb used in astrology. You are
right from the point of view of classical recommendations (when you know the exact time to cast
the chart, etc.). FAM model's orb means the range where we are looking for sensitive points. The
program considers each degree of Zodiac and looks for the sensitive point inside this orb. The main
thing defined by this orb is that there is just one sensitive point within this orb. (I did also a
possibility to catch several sensitive points inside the orb; the results did not change). 

In this particular case, I recommend to PLAY with this orb, like this:

and optimize Neural Network under these conditions.

Practically the PLAY with the orb may look like this:

We set orb=15 for all cycle and have got this projection line:

For orb=10:

For orb=5:

The program did these three projections within several minutes.

 

#3 A little bit of theory

The astronomical cycles can be not corresponding exactly to the peaks of Spectrum diagram. The
reason is non-linearity. I have created two model examples to explain how it works.

First, I have created the price data that exactly follow the New Moon.  We have a wave 6 days
around the New Moon:

Here is the Spectrum for this data:

We definitely see here 29 days Sun-Moon cycle and related overtones.

Let's make these data nonlinear. Now the wave will be positive when Mercury is preceding the Sun,
otherwise (when Mercury follows the Sun) it is negative:

In other words, we have now the more complicated movement that depends on three planets.

Look at the Spectrum for these non linear data:

We do not see the 29 days cycle at all, instead we have two cycles, 24 days and 39 days. The original
29 days cycle has been split on two cycles.

It is a simple example of non-linearity.

Missing Link - Multi-Scenario Approach

Creating the forecast model for Hang Seng, we have found that this model provides the good
projection line for 2003-2006 years:

and not so good for 2001-2003 years:

Why has it happened? I believe the stock market usually has at least 2 scenarios of behavior to
follow. May be it is related to the domination of different groups of traders.

In this case, I would like to recommend creating an alternative model. I have a very strong
suspicion that for Geocentic FAM model the alternative model is Dynamic Model. In the upgrade of
March 24, 2006, it is possible to create the more selective Dynamic models.  Let's create the
alternative Dynamic model for Mars related cycles. It is here:

It uses the same cycles as FAM model in our example, but describes another modus vivendi of these
cycles. Now this model works good in 2001-2003:
But after that it works not so good. I think it is a good practice to analyze two projection lines.

 Creating Astro Model for Euro FX

You will find in this article the description of long term and middle term models for the pair Euro/USD.
As a price event for the long-term model, the Hurst oscillator is applied: RPO (45, 90, 0, sym). The
middle term model uses RPO (5, 50, 50, exp). The research is based on futures Euro FX and Dollar Index
data.

While writing this article, my main concern was related to the following issues:
- Compare price fields for the indicators that are used as price events;
- Create valid middle- and long-term models to forecast Euro/USD;
- Evaluate by alternative methods the consistency of the suggested models;
- Compare the effect of different astro factors for one and the same financial instrument and
different indicators;
- Find the best training interval.

The process of finding the best model for any financial instrument starts with “Phenomenological
Solution”. This solution allows quick testing of models that have already proved their effectiveness in
forecasting. We will work with the best of these models.

How to do that? Set the LBC at January 1, 2000 and start the phenomenological solution for Hurst
indicator (take Close as the price field). Here are the results:

Financial Instrument: FX Euro.csv

Analyzed 21 models
LBC Info: 2048 train/1615 test
Target: Rel. Osc.(45,90,0 Close,Sym1)

Ptolemy Aspects Model Orb=15 24.39% 16.72% 32.08% 21.54% 13.49% 30.06%
Spectrum Model TI=1000 22.60% 22.32% 22.51% 15.56% 16.37% 13.65%
Terms/Faces Model TI=1000 18.83% 19.34% 24.69% 17.97% 22.85% 22.31%
FAM Model Phase, Orb=15, TI=2000 18.73% 6.61% 28.85% 19.52% 8.99% 27.90%
FAM Model Phase, Orb=10, TI=2000 18.64% 9.52% 25.90% 20.03% 10.54% 27.84%
FAM Model Phase, Orb=10, TI=1000 15.86% 1.19% 35.15% 17.64% -0.29% 40.58%

The best models are: Ptolemy Aspects, Spectrum, Terms/Faces, and 3 FAM models for Phase Zodiac. All
these models except Spectrum provide better forecast on the second half of the testing interval. We will
not discuss Spectrum in this article as our subject is Astro models. Note that among Astro models the
correlation on the training interval for Ptolemy Aspects model and Terms/Faces model is more even than
for FAM models. It is significant advantage as it may be an indication of lesser amount of inversions.
However, the correlation is only about 20%; this is not good enough.
Let us do the same phenomenological solution for the Hurst oscillator once again, and let us choose the
price field as (High+Open+Close)/3 instead of Close. Here are the results:

Financial Instrument: FX Euro.csv

Analyzed 21 models
LBC Info: 2048 train/1615 test
Target: Rel. Osc.(45,90,0 (H+L+C)/3,Sym1)

NN (first NN (first NN (last LIN (first LIN (first LIN (last

Model
1616 pt) 806 pt) 812 pt) 1616 pt) 806 pt) 812 pt)
Ptolemy Aspects Model
26.04% 15.62% 37.37% 23.54% 15.09% 32.67%
Orb=15
FAM Model Phase,
21.40% 7.37% 34.21% 23.35% 9.26% 36.21%
Orb=15, TI=2000
Terms/Faces Model
20.63% 23.98% 24.71% 18.38% 25.85% 20.87%
TI=1000
Spectrum Model TI=1000 20.30% 17.35% 22.89% 15.76% 16.02% 14.42%
FAM Model Phase,
19.39% 1.15% 41.58% 19.98% 0.69% 43.21%
Orb=15, TI=1000
FAM Model Phase,
17.89% 10.34% 24.04% 20.73% 11.54% 28.49%
Orb=10, TI=2000

The best models and the correlation are almost the same. My conclusion is that the Price field is not
important for the effectiveness of the model. It means that it does not matter what price field is explored,
at least for the long term forecasting model; it is a personal preference of the trader.

The current version of Timing Solution does not allow working with Ptolemy Aspects and Terms/faces
models. We will continue our research for FAM Phase models through Astronomy (Composite) module.
To avoid future leaks, we will analyze the training interval only.

We start with the “Algorithm” window. As we do our research for some particular oscillator, it makes
sense to enter this oscillator in the “Analyzed Index”. Choose “Simple Index” as Algorithm:
Open “Report” window. Check there the option “Add to Composite Box” and choose “Corr and Predict”
as a filter:

Do not overload our Neural Net with a huge amount of events for analysis. We do research for FAM
model in Phase Zodiac; therefore, check this type of Zodiac and uncheck “Geo Longitude Zodiac”.

Click on OK button to do the calculations. We will get this list:

Choose any aspect from the list and watch its influence to our indicator (we will
see it as the correlation and Predictable Zones). Let us take the best aspects; to
my opinion, these are Mars, Saturn, Neptune and Pluto phases and the angles
Mars - Saturn, Mars – Uranus, Mars – Neptune, and Mars - Pluto.

Then we need to find orbs and phases and train the Neural Net trying to get the
best possible result on the testing interval. Unfortunately, there is no other
technology now than “trial-and-error” method. I do it this way: add planets one
by one, train the model and watch the changes. I estimate the results in regards
to increased/decreased correlation and smoothness of the projection line. Only
after that I play with the orbs.
This method of adding planets into consideration one by one has one significant flaw: we may miss some
important factors due to non-linear nature of the planetary interaction. Also, some future leaks are
possible (though they are minor), because practically this method means the optimization on the testing
interval.

After some time (not too much), I have found this model:

I trained it on 2000 price bars (this interval is better than 1000 price bars; see the results in the
Phenomenological Solution report). This is the forecast:
When we create a forecasting model, one of the most important questions is how to evaluate the quality of
the forecast made for different time intervals. I did forecast for different LBC settings. Timing Solution
software makes possible to see all these forecasts in one window. See the picture below; each forecast is
shown there by a line of a different color:
 the yellow line represents the forecast when LBC is set on January 1, 2000;
 the blue line for LBC on January 1, 2001;
 the violet line is for LBC on January 1, 2002;
 the teal line is for LBC on January 1, 2003;
 the red line is for LBC on January 1, 2004.
As you see, all these forecasts are similar. We may conclude that our model is rather reliable.
We can repeat this process and create a similar model for RPO (5,50,50). The forecast based on this
model reveals the midterm trends for our market. The correlation for the same time interval (6 years) is
33%, and we have here a lot of swings.

This forecasting model is based mostly on inner planets. Thus, we need to find the proper time interval to
train our model, and this interval should not be too big (no more than 9 years).

Timing Solution has a special option to do that: open the Neural Net module and choose there the option
“Find the best Training Interval (fixed LBC)”. Set the LBC on January 1, 2006 and do the back testing of
the model. These are the results:
 We can locate here 3 clusters with the positive growing correlation (these clusters are circled on this
picture). Let us check the stability of these results: we do the back testing of this phenomenological
model, and the back testing criterion will be the correlation coefficient calculated on 65 price bars (i.e., 3
months time span). We start with LBC set on January 1, 2003 and will switch this LBC 11 times, for 65
price bars each time (or 3 months). These are the results that I have got:

Mode: Neural Net

Price Events: Rel. Osc.(5,50,50 Close,Exp)
Criterion: Correlation 65 bars after LBC
Model middle term euro.hyp middle term euro.hyp middle term euro.hyp middle term euro.hyp middle term euro.hyp middle term euro.hyp
NN Topology 32 hidden 32 hidden 32 hidden 32 hidden 32 hidden 32 hidden
 500 before LBC 1000 before LBC 1500 before LBC 2000 before LBC 2400 before LBC 2800 before LBC
Training Mode
train 15000 steps train 15000 steps train 15000 steps train 15000 steps train 15000 steps train 15000 steps
+/- Statistics +14/-10 +14/-10 +15/-9 +19/-5 +15/-9 +18/-6
Average (r,dev) r=0.130 dev=0.2061 r=0.177 dev=0.2498 r=0.173 dev=0.2639 r=0.320 dev=0.1778 r=0.207 dev=0.1637 r=0.316 dev=0.1485
LBC: 04.01.2000 r=0.649 dev=0.034 r=0.357 dev=0.058 r=0.326 dev=0.056 r=0.353 dev=0.056 r=0.328 dev=0.053 r=0.469 dev=0.044
LBC: 04.04.2000 r=0.304 dev=0.200 r=-0.170 dev=0.288 r=-0.407 dev=0.271 r=0.108 dev=0.296 r=0.461 dev=0.213 r=-0.257 dev=0.230
LBC: 05.07.2000 r=0.251 dev=0.416 r=-0.276 dev=0.347 r=-0.438 dev=0.890 r=-0.288 dev=0.779 r=-0.495 dev=0.866 r=-0.615 dev=0.881
LBC: 04.10.2000 r=-0.623 dev=0.321 r=-0.461 dev=0.332 r=-0.835 dev=0.449 r=0.660 dev=0.225 r=0.737 dev=0.244 r=0.596 dev=0.210
LBC: 05.01.2001 r=0.655 dev=0.072 r=0.811 dev=0.114 r=0.823 dev=0.050 r=0.896 dev=0.048 r=0.882 dev=0.044 r=0.833 dev=0.048
LBC: 06.04.2001 r=-0.528 dev=0.162 r=-0.200 dev=0.085 r=-0.427 dev=0.392 r=-0.728 dev=0.267 r=-0.312 dev=0.271 r=-0.381 dev=0.238
LBC: 09.07.2001 r=0.346 dev=0.067 r=0.097 dev=0.052 r=0.707 dev=0.041 r=0.549 dev=0.051 r=0.801 dev=0.019 r=0.702 dev=0.021
LBC: 08.10.2001 r=0.365 dev=0.067 r=-0.493 dev=0.404 r=-0.135 dev=0.062 r=0.618 dev=0.025 r=-0.216 dev=0.099 r=0.068 dev=0.047
LBC: 09.01.2002 r=-0.411 dev=0.260 r=-0.790 dev=0.153 r=-0.611 dev=0.143 r=-0.735 dev=0.094 r=-0.715 dev=0.104 r=-0.679 dev=0.064
LBC: 11.04.2002 r=-0.733 dev=0.355 r=-0.123 dev=0.378 r=0.480 dev=0.350 r=0.722 dev=0.303 r=0.371 dev=0.247 r=0.281 dev=0.373
LBC: 11.07.2002 r=0.651 dev=0.088 r=0.742 dev=0.131 r=0.817 dev=0.064 r=0.837 dev=0.103 r=0.873 dev=0.103 r=0.883 dev=0.109
LBC: 10.10.2002 r=-0.287 dev=0.054 r=0.846 dev=0.259 r=0.225 dev=0.099 r=0.572 dev=0.047 r=0.617 dev=0.034 r=0.663 dev=0.026
LBC: 13.01.2003 r=0.743 dev=0.018 r=0.754 dev=0.052 r=0.752 dev=0.072 r=0.668 dev=0.029 r=0.817 dev=0.036 r=0.867 dev=0.017
LBC: 14.04.2003 r=-0.064 dev=0.067 r=0.266 dev=0.444 r=0.762 dev=0.409 r=-0.139 dev=0.398 r=-0.528 dev=0.316 r=0.271 dev=0.248
LBC: 15.07.2003 r=0.491 dev=0.248 r=0.677 dev=0.076 r=0.430 dev=0.192 r=0.626 dev=0.149 r=0.885 dev=0.071 r=0.900 dev=0.095
LBC: 14.10.2003 r=0.053 dev=0.032 r=0.406 dev=0.165 r=-0.131 dev=0.193 r=0.073 dev=0.143 r=-0.548 dev=0.163 r=-0.521 dev=0.150
LBC: 15.01.2004 r=0.908 dev=0.109 r=0.869 dev=0.035 r=0.776 dev=0.031 r=0.816 dev=0.027 r=0.817 dev=0.032 r=0.735 dev=0.036
LBC: 16.04.2004 r=0.844 dev=0.093 r=0.706 dev=0.093 r=0.791 dev=0.022 r=0.769 dev=0.022 r=0.426 dev=0.058 r=0.733 dev=0.024
LBC: 16.07.2004 r=-0.295 dev=0.085 r=-0.412 dev=0.091 r=-0.030 dev=0.016 r=0.143 dev=0.045 r=0.250 dev=0.016 r=0.395 dev=0.012
LBC: 15.10.2004 r=-0.349 dev=0.033 r=-0.541 dev=0.124 r=0.000 dev=0.116 r=0.610 dev=0.055 r=0.084 dev=0.055 r=0.542 dev=0.060
LBC: 14.01.2005 r=0.629 dev=0.241 r=0.565 dev=0.158 r=0.385 dev=0.088 r=0.228 dev=0.041 r=-0.080 dev=0.053 r=0.693 dev=0.020
LBC: 18.04.2005 r=-0.604 dev=1.628 r=-0.791 dev=1.825 r=-0.870 dev=1.944 r=-0.918 dev=0.955 r=-0.938 dev=0.756 r=-0.924 dev=0.548
LBC: 18.07.2005 r=-0.338 dev=0.089 r=0.735 dev=0.112 r=0.274 dev=0.199 r=0.498 dev=0.045 r=-0.427 dev=0.051 r=0.599 dev=0.033
LBC: 17.10.2005 r=0.471 dev=0.208 r=0.668 dev=0.219 r=0.484 dev=0.185 r=0.744 dev=0.064 r=0.880 dev=0.023 r=0.742 dev=0.031

The best results are provided by the models trained on 2,000 and 2,800 price bars.

However, we need to remember that the available data file is not enough for the proper testing – Euro
price history starts in 2000; before that, up to the year 19999, we have applied Dollar Index data.

I would like to point out as well that the correlation for these two models (trained on 2,000 and 2,800
price bars) is very close to the correlation for the same model trained just once, for LBC at January 1,
2000, and for 6-year time span.

His Majesty Back Testing 

The Back Testing (BT) is devoted to answer the main question of forecasting: "Can we rely on this
forecast?". It is not an easy question. Not easy - because it has a hidden agenda. There is the answer itself
there, and there is the mass psychology involved. I develop the software for financial analysis more than
10 years already, and I often face two opposite opinions regarding this issue. The most popular opinion
among the beginners is:  "Look at these guys, their system provides 80% accurate forecast and up!". More
experienced people often say to me: "I have already spent 20K bucks on books/software/seminars for and
about trading, and I am disappointed". I think the truth is somewhere in the middle. The market forecast is
possible, however the percentage is not so big. This is a cold wind of reality that we have to accept. You
need to decide yourself what you are looking for - the unremarkable truth or fairy tales about super
trading systems with super accurate forecast. The Back Testing at least gives us a base for such a
decision. The Back Testing is the most advanced module in Timing Solution software (TS). It is based on
the approach that is totally different from other software packages: they make a forecast based on
Technical Analysis (and there are so many programs that can do this) while Timing Solution allows to
perform the Back Testing for a projection line. This is a totally different project, and this is much more
complicated than Technical Analysis (TA)  Back Testing. The Status Quo stated by TA adepts can be
formulated by these words: "for financial data series, the forecast is impossible, so our main goal (i.e., TA
goal) is to find a strategy of reacting to stock market movement now". Thus, according to this concept, we
need to find the optimal combination of TA indicators to optimize our profit (profit factor, win/loss ratio)
and minimize or exclude our risk (drawdown). As an example, we may use buy/sell signals generated by
the intersection of fast and slow moving averages to create a trading system. The back test allows to
evaluate the performance of this system. Using other or more advanced TA indicators, we can get another
trading system, etc. This is a usual way and one possible approach. Its capabilities and restrictions are
described in the book by Robert W, Colby "The Encyclopedia of technical market indicators". Another
approach is creating the projection line for the chosen financial instrument. We can create some model of
the stock market, adjust this model to available price history data and observe how this model forecasts
the future. Instead of TA indicators, Timing Solution creates forecasting models. The program is able to
deal with different types of models: it can be a cyclic model, or a model based on astronomical cycles or
any astrological phenomena, or one of  the auto regression models (AR), and many others. The benefit of
this approach is that it allows to see the future further than just one price bar. Due to the differences
between these two approaches, the technology of verification of the models' performance differs
significantly from TA Back Testing.

Simplest verification of your model

Before explaining the advanced technology of Back Testing procedure, I would like to discuss some basic
principles you need to follow while verifying the models that you create with Timing Solution. You can
easily find in the Internet statements like this one:  "I have found a very good forecast model, here it is":  

Is it really so? There are several questions that you always need to ask. The first question is: what price
history was used to calculate this curve? Asking this question, we try to find out whether the author of
this model keeps some amount of "untouched" price history data invisible for this model. That part of the
data can serve as a first test of the model; a good model at least should be good on that time interval.
Second question is: what will happen to this model if we apply it to another time interval? It is a second
test of the model; we try to model the situation when new price history is coming. 
In other words you should follow two main principles: a) verify model on "untouched" price history data;
b) repeat this procedure on different intervals.I will demonstrate how it practically works. I have created
some Neural Net model "X". I would like to know the prognostic ability of this model. This is just some
model I am working on now, the eve of November 14, 2007. See how this model forecasts now
(November 2007):
I used all available price data to create this model. There is no "untouched" data to check the model, so I
skip the first question. Now let us check this model using another price interval. I do not need to find
some other data file to do that. Actually, I can use the data that I have already and select some parts of it.
In order to do that, set the Learning Border Cursor (LBC) at some data point. Let it be the end of the year
2004 (do it through right mouse click):

Now randomize Neural Network clicking this button:

Thus we ask the Neural Network to "forget" the knowledge that it already has from the first piece of data
(which was all available price history). Train the Neural Network once again. It uses the same model for a
different data set.This is forecast that I have got, and it is not so good after LBC:

When I did the forecast for the first data set (all available price), I had no data to compare. And now I can
see how the model performs.Then I set LBC on the beginning of 2001 year, randomize Neural Network
and train it again. This is what I have got this time:
LBC set on 1998:

I recommend to vary LBC several times.  Do not worry about "bad" looking projection lines (like our first
forecast above), 80% accurate forecast exists on advertising articles only. However, the better models
show more often "good" projection lines than bad ones. 

 Definitions

Before any discussion, let us agree on some definitions.The price history is divided on two intervals,
Training Interval and Testing Interval. The border between them is called Learning Border Cursor or
LBC:

When I run the Neural Net module of Timing Solution, the program calculates the projection line for any
model. It looks like this:
To train the Neural Net (NN), the price history from the training interval is used. The program does not
use price points from the testing interval. This approach allows to avoid future leaks (which may occur
when we use the same price history data to train the Neural Net and estimate the model's
performance).Thus the performance of the model on the testing (red) interval allows to estimate the real
workability of the chosen model. It shows how it will work in a real life. In Back Testing theory, the
testing interval is called out of sample. There are simple rules in Back Testing procedure regarding the
testing interval:

1) Do not use price points from the testing/(out of sample) interval to optimize the model;

2) To estimate the model's performance, use the points from the testing (out of sample) interval

The Timing Solution Back Testing module applies these rules automatically.

The next thing is a number of samples. It is a very important parameter. The idea is very simple: we can
get a very good projection line for one LBC position. See this example:

This projection line fits the real performance rather well: it follows major trend and has just a few
inversions. However, applying this model to real trading, we can easily face the fact that this model does
not work. Why? The answer is obvious: this is just some occasional fact, for this particular model and
specific conditions (partially defined by LBC position). This is very important to understand: if you are
looking for a reliable model, it should work under various conditions. Thus, it is necessary to apply this
model for different LBC positions. It gives us a scheme of the true Back Testing process of the forecast
based on different models.. The scheme looks like this:

Here is the illustration for some typical example:

Step 1: The program trains the Neural Net using the price points from the yellow region (see the upper
picture). After training, it checks the Neural Net performance using the points from the red region. In
other words, the program creates the Neural Net projection line using the points from the yellow interval
and then it observes how well this projection line fits to the real price data from the red interval. These
two intervals (yellow and red) are independent, so any "future leaks" are excluded.

Step 2: We shift the Learning Border Cursor (LBC) to several price bars ahead. Therefore, we shift the
yellow and red regions as well and repeat the whole procedure again (the optimization and the
performance evaluation).

Step 3: Shift LBC once more and do the same again.

The amount of LBC shifts used for Back Testing is called "a number of samples". To be sure that this
model is really working, we need to use as many samples as possible - at least 50. If you observe just a
few projection lines, there is no guarantees that this model works; it might be just a game of His Majesty
Chaos. For example click here to see three nice projection lines received during the Back Testing
procedure. To your surprise, this model dos not work! To get an objective picture, you should use at least
50 LBC shifts. Usually we use 200-500 shifts. This sample size allows us to make some conclusions
about the analyzed model, I agree that this is a very time consuming task. However, it has to be done, and
Timing Solution is the only one program that performs this task properly.One more important thing is to
decide how we will estimate the model's performance. And here I would like to remind you that we need
to use different criteria to analyze the projection line, different from the criteria used in Technical
Analysis. Timing Solution allows to work with them. For example, we can calculate the correlation
coefficient between the real price (or any price oscillator) and the  projection line using 20 price bars after
LBC ("20" is just an example):

The bigger correlation means that this projection lines fits the price better.

Or we can adjust our model to predict the next day movement - Up or Down. Or we can analyze the price
movement several days ahead (like comparing Close today and Close in five days). The program gives
you many possibilities here. The choice is yours.

 Example: Spectrum Model

Spectrum Model is a forecasting model based on fixed cycles. The idea of this approach is pretty simple:
we use fixed cycles to create the forecasting model. When we do the analysis, the first question comes as
to what are the cycles to use for our research and which ones are more important than others. The best
way to answer is using a spectrogram (periodogram) to reveal these cycles. It looks like this:
The peaks here indicate the most powerful cycles for the chosen financial instrument (it is Euro/USD
daily). The program extracts these cycles and uses them as inputs for Neural Net module. The program is
able to perform this procedure automatically. Here is the sequence of operations that will be performed:

1) calculate spectrum;
2) extract the most powerful cycles;
3) define these cycles as inputs for the Neural Net module;
4) train NN to get the projection line based on these cycles;
5) estimate the model's performance using price bars from the testing interval (out of sample);
6) shift LBC and repeat steps 1 to 5.

Before doing anything, download the price history data and set LBC somewhere. I have downloaded
Euro/USD from the year 2000 up to the year 2007 and set LBC at the end of  the year 2005. Thus we
have 2 years of price history to test our model.

Run this:

The window will appear where you should set the main parameters for Back Testing:
Let's start filling out this form.As an output, I use the relative price oscillator with the smoothing period
of 50 bars (we will forecast this oscillator):

To define the forecasting model, click this button:

You will get the list of models. For each model, it is necessary to define some parameters like the length
of the training interval etc. Also you can easily create your own models using Model Editor or through the
Neural Net module. Here I have chosen the Spectrum NN model:

Under the criteria, point out how you will estimate the performance of this model:

I will calculate the correlation on 10, 20 and 30 bars after LBC. However, you can define any other
criteria.Here you should define the amount of LBC shifts:

For a real Back Testing, "16" is not enough for sure. This is shown just to demonstrate the general idea.
After some minutes of calculation, you will get this report:
 It shows that the average correlation of this model on the training interval of this length is 0.22 (which is
good!). The correlation was positive 8 times against 2 times when it was negative. If you prefer, you can
get the detailed report with pictures illustrating the projection lines. Click here to see it.

Just to give you an impression, see how the results change if I use 50 LBC shifts:

The Back Testing is a powerful feature that gives you a useful information regarding the model's
performance.

Universal Language of Events (ULE)

Timing Solution as an additional decision making tool for traders is based on one simple idea: explore the
correspondences between market movements and some processes or phenomena we are familiar with.
Why? - only because there is no a theory that explains market movements and is confirmed by practice.
We have only collection of consistent data and some attempts to understand it through methods either
Fundamental or Technical Analysis. Fundamental Analysis explores the correspondences between the
market movements and fundamental factors (which are registered observations of economical life
phenomena). Technical Analysis works with price charts and seeks for their inner relationships
represented by TA indicators (which are speculations on price charts parameters). Timing Solution is a
software designed to fill in the gap between the two; it analyzes past data, compares them to some known
phenomena and simulates the relations between these phenomena and market data. We can do it, and we
can do it easily - due to Universal Language of Events (ULE), the core idea of this software. When I have
met Alphee Lavoie 10 years ago, one of his first questions was: is it possible to calculate and register the
dates when some astrological event has occurred and watch the market performance at those dates? This
was possible, and we did it. This idea has been realized in the SuperSearch module of Market Trader
series. At that time, we did a recording of many different astrological events. Then the idea of
Astrological Language was born and developed later into Universal Language of Events. ULE has one
very important feature: it is designed to deal with different events, not only with astronomical or
astrological ones. As an example, now we can include price events as well. This module has a huge
potential, and when some processes will be found that prove to be corresponding to markets' activity, we
can add them to ULE and use for analysis.As of today, astro events are the biggest group in ULE. It is not
accidental. From one side, the movement of celestial bodies is a kind of a fundamental factor independent
to our will or our activity. From the other side, it is one of the well-studied physical processes. The
equations of planetary movement are used not only by astrologers. They have been studied and developed
by the greatest scientists of the past (remember Sir Isaac Newton, Ticho Brahe, Kopernicus and Kepler?)
and are applied now by rocket scientists, astronomers, physicists, etc. So, if there is any correlation
between market performance and the astro factors, at least we can be sure that the astro part is calculated
and recorded with great accuracy. (And we believe that such correlation exists - due to the assumption
that market movements reflect mass psychology that is described very well by astrological factors.)So,
ULE is built from small bricks - different events. We can find when any of these events has occurred in
the past and record the market condition at these moments. (Here and further in these lessons I call
analyzed set of data as "analyzed market", "market" or "financial instrument"; it means the consistent data
that we analyze with the help of Timing Solution. It could be data set on some stock, index or futures; I
tried several times sun-spot activity data and temperature files for some locations as well.) As I said
already, the huge part is made by astro events. I tried to include astro parameters that reflect a real process
- such as planetary positions in Zodiac (space), angles between the planets, planetary speed, planetary
phases; these astrological events coincide with regular astronomical events and are described by proper
equations. Also, I have included pure astrological parameters - such as retrograde/direct movement,
planetary positions in houses, Moon Nodes and other.If you are familiar with Astrology already, you will
easily understand how to work with this module (either SuperSearch in Market Trader or ULE in Timing
Solution). If you are not, do not panic. You have no need to learn the whole great astrological lore, at
least not now; it is enough for you to know the name and general meaning of any astro event included
into ULE and be able to work with it. "Work with it" means being able to make the choice of necessary
parameters and interpret the calculated results. You can trust the accuracy of calculations, Timing
Solution and Market Trader do it well (plus the users of our astro software have checked it already many
times:)). Later, and believe me, it will come - you will be fascinated by this Astro world, and you will
read and learn a lot. But now - it will be enough to be able to work with these bricks of ULE. It is a very
valuable ability: it will help you later to create your own models for projection lines and now it will help
you to evaluate different ideas. At least once a week I get a question like this: "What do you think will
happen to the stock market when Mars ingresses Leo next time? Will it go up (down)?".  When I ask in
turn why this should happen, the best answer is something like this: "It has happened when Mars has
ingressed Leo in September 1996". What do I think? Nothing. As my teacher, friend and partner Alphee
Lavoie has said once, "The financial astrology is the precise science". Trading with astro cycles, we need
to see the whole picture, all "pro et contra" of our statements, not just one side.So, what would I do? I
would run ULE (or SuperSearch) module. And there I would open the tab for the astro event in question,
do the calculations and get all the moments when this event has occurred in the past. (By the way, "past"
means my price data file, the historical data for the financial instrument that I do research for.) Then the
program helps me again: it compares the event dates to the market conditions and does the statistical
analysis. So, the unpleasant and boring job of calculating all ups and downs and comparing them to
control groups is produced by the computer. I will do the honored job of thinking and making
conclusions. And you can do it, too.  After learning this material, you will be able to check any astro
related statements within seconds. Therefore, you will deal with astro finance info on a new level - you
will have no need to trust or believe somebody or something, you will find the value of their statements.
Next level will be making such statements yourself.Let us start working. We begin with one practical
example. This is a question that I have got recently from one of my correspondents: "What happens to
Dow Jones Industrial Index (DJI) when Saturn is changing its movement mode from direct to
retrograde?" (For your information, see the glossary at the end of this lesson; it explains astro terms used
here.)There are several ways to answer this question. We may guess (which is not my way). We may
apply general astrology considerations (which I would not recommend; the general astrology's symbolism
is designed for the needs of the personality; the core ideas behind it definitely work though sometimes
their application is too vague; it is a theme for a special discussion and not a topic of this lesson). I prefer
to do the thorough analysis.Do it together with me. We have here an object - DJI index. We will make a
conclusion regarding its movement in respect to the outer factor - the movement mode of Saturn.So,
download the data. I have DJI from 1885 to 2006 year, 120 years of history!  To do that you should click
this button 

and chose this file: 

Now, do these steps:

#1: Click "Calculate" button. The program will do all calculations related to astro events that may occur
within our data file. It will save us time later, when we will look for the particular events and work with
them. Then click this button:

Doing this, we set the Learning Border Cursor (LBC) to the last price point available. This way we tell
the program that we will use ALL available price history to analyze this astro phenomenon.
#2: Activate this to get the access to Universal Language of Events (ULE) components:

and then click "Edit Model" button.

#3: The "Model Editor" window will appear:

This is the central window for ULE. There are many tabs there; each of them corresponds to some astro
event or a group of events. You define everything there. Every tab is like an astro sentence. I recommend
spending some time to get familiar with each tab.

Let us record our event, "the transit Saturn changes direction direction from retrograde to direct".

#4: Choose the tab that corresponds to the phenomenon we are interesting in. Click here for a change in a
movement mode:
 

#5: The form will appear. It describes things related to the planetary movement mode: the mode itself,
speed and acceleration types. You can do it for one planet only or for a group of planets. This one tab
gives you ability to do a lot of research.

For our example, fill it this way:

We have recorded this astro event, "transit Saturn is moving retrograde".

#6: Click "+" button to add this event to the list (it is necessary, the program works only with the events
in this list; we do now a simple scenario consisting of one event only; you can add other events later - it is
a way to create a model):

  

#7: It is almost done. Click "Calculate" button in the Main window:

#8: Now in the Main window you should get something like this:
  

The black line represents our data; the red zones correspond to the periods when transit Saturn is
retrograde.

#9: OK, we did it. However, we were interested in the MOMENTS when Saturn becomes retrograde. It
looks like we have made a mistake. If you would do it manually, you could be very upset as it means a lot
of work done in vain. With our software, it is not a problem, you can fix it easily: choose "Change
direction .." option, click "Replace" button and calculate it once again:

Now you should get a bunch of vertical lines instead of red stripes. These lines correspond to the
moments when Saturn becomes retrograde:
We have got 116 lines within our data file. Now, we need to take them one by one and watch how the
stock market (i.e., DJI) moved around these moments.

#10: Or, we can do it easier - running the "Efficiency Test" module:

We will get this diagram:

This diagram shows an average price change around the moment when Saturn becomes retrograde.
Thus you can see the average movement of DJI ten days before and ten days after Saturn becomes
retrograde

What conclusion can be made? There is upward movement there; however, it has started before Saturn's
change of direction, at least 10 days earlier.

#11: Continue researching the impact of this phenomenon. Let us consider the bigger time span. Set the
analyzed interval as 20 days and click "Recalculate" button:

#12: Here is the new Efficiency Test:

We can locate two clusters here:

Before Saturn going retrograde, the DJI goes up mostly, though there are some insignificant fluctuations.
However, the next day after this phenomenon occurs, the DJI loses its energy to grow. The stock market
needs some time to "recover the breath".
#13: We are able not only register the existence of the upward trend before Saturn becomes retrograde;
we can evaluate the strength of this trend as well.

Let us compare the DJI value 2 days before Saturn becomes retrograde to its value 20 days before this
event. As you remember, it has occur 116 times within our data file. How many times there was increase
in the value of DJI? And how many times did it go down? 

We can get the answer to this question very easily: A-push left mouse button on "A" point (20 days
before retrograde); B-drag the cursor while holding left mouse button from point "A" to point "C" (2 days
before retrograde) C - release mouse button. The program looks through each one of these 116 moments
and compares values 2 days and 20 days before Saturn becoming retrograde.

Here is the result: 

You see that the price went up 77 times, while it went  down 39 times only. Plus, these results differ from
the results provided by the control group (see the figures in brackets). So, I would say that the existence
of upward trend for DJI, at least 20 days before Saturn going retrograde, is obvious.

However, you should be extremely cautious in making conclusions like this. The tricky part here is
related to the control group issue, a very important thing in Statistics. The control group helps to eliminate
natural trends. (Here is the example of a natural trend: a person is getting married; the main reason for
this marriage is that they love each other. It is nothing surprising if the person is in the age 25 - 40. What
if the person is 92? The control group for this age will show that this is an extraordinary event.) There are
many ways of forming the control group. I chose the simplest one: we consider fictive event that happens
totally randomly and watch how this event (so called "null hypothesis") affects the stock market.

You see the control group figures in brackets:

It means that the control group shows that DJI may go up 66 times against 50 down. In other words, the
up movement is more typical for DJI under these conditions.. So we need co compare these values.

In any case, the DJI went up 77 times against 66 times caused by general trend. This tendency is rather
strong. Click here to read more regarding this issue.

#14: Analyze the second cluster, downtrend movement. We will get this:

DJI went down 58 times against 53 caused by other reasons than Saturn's change of direction So the
downtrend movement is not so strong. 

These 14 steps above represent the method of analyzing any astronomical/astrological phenomena. Learn
the whole sequence. It is one time effort, the routine is pretty obvious, and you will get used to it very
quickly. (In brief, it is just downloading the data, choose the proper tab, record the event itself, calculate
it, and do the Efficiency Test.)Let us do one more example: analyze the effect of the New Moon. In
Models Editor (you know now that this is a central window dealing with ULE), define this event:
Here is the Efficiency Test for the New Moon:

It shows the  upward trend starting about 5 days before the New Moon. But this tendency is mostly due to
some other reasons than New Moon effect: 878 against 834. The New Moon input is not significant. If
you would decide to trade using this factor only, you are in risk. (Those who are familiar with astrology
will not be surprised: the Moon is not an active player, it is rather a trigger, it gives the last touch to the
big picture formed by the other players.)

By the way, an interesting thing is that the Full Moon does not provide any consistent results.

One more example before the end of this lesson: the Sun ingresses any Cardinal sign:
This is the Efficiency Test for this event:

It means that the DJI starts its uptrend movement 3 days after the Sun ingresses Cardinal signs (Aries,
Cancer, Libra and Capricorn); the probability of DJI going up for the next 6 days is 62%. 

Note: sometimes we have a discrepancy between the arrow on Efficiency Test diagram and the statistical
info:
Here we explore this downtrend arrow, while the statistics shows that the price went up 63 times against
47. It means that our downtrend movement takes place in the uptrend environment; it might be a strong
one, however it is at least only one strong down among these 47 downs, not enough powerful to change
the trend. 

Now, your homework. See here.

Resume: We have learned to record astro events and analyze our data in respect to these events. Now you
are able to evaluate any astro info published in books, magazines, newsletters and in the Internet.

 Homework to Lesson #1

These are screenshots for different astro events that you can create in Timing Solution. Sure it is not a
full list, these are just some examples. I suggest you trying them all and making Efficiency Tests for them
all. In a week from now you will find the screenshots of my tests and my interpretations for these
exercises. I strongly suggest you doing this, we will go quickly. The second lesson provides some trading
tips related to this material, and then we move to the next module of the program. There will be no time to
discuss again the ULE or tabs in the Model Editor/SuperSearch. The answer to these question are
performed for Dow Jones Industrial index from 1885 to 2006 years. This historical information is
available in your program.

Here are your exercises:

1)  The angle between the Sun and Mars is 330 degrees:

See the answer here.

2) The middle point between Mercury and Venus makes a conjunction to the Sun. In other words,
the Sun is located exactly between Mercury and Venus:
See the answer here.

3)  Venus phase, or New Venus. We are considering phase Zodiac here, New Venus corresponds
to zero degree of Aries:

See the answer here.

 
4)  Mars declination reaches its maximum:

See the answer here.

Mars declination reaches its maximum:

Here is the Efficiency Test:

We have downtrend movement two days before this event (55% down):
and week after that the upward movement starts (61.5% up):

 ULE - Universal Language of Events

This module allows to create more advanced models analyzing everything that occurs in time and
researching the effect of these phenomena on the stock market. We have developed a special platform to
deal with different events. As an event, you can take:

  the price a day ago, two days ago, three day ago, etc.; then  use these events as inputs for Neural
Network. This is how an auto regression model is created;
 a structure of the price bar (its Open-High-Low-Close, true range (High-Low), Open-Low and
other parameters). Collecting this information about the price bar proportions for several days
back, we may "cook" the projection line based on these events. We have tested this model. See
here the example of Back Testing procedure for Japanese Candle stick model;

 price events like "true range is high", regular cycles, wavelets;

  gravitation and tidal forces;

 Moon phases, planetary aspects, planetary speed as well as other astrological/astronomical

phenomena. This variety is enormous. See the description of this module and the corresponding
lessons on the website.  

As an example, let us say that we have decided to calculate the Moon tidal force and draw it together with
the price chart. Follow this:

You will get access to the models' library. Choose there the event you need to calculate:

and tell the program to do the calculation:

 
This is the Mood tidal force displayed together with FTSE100 index:

Within a couple of minutes, we have created this new "indicator". You can easily conduct the statistical
research for this indicator. Also, it is easy now to check any related statement, like this one: "when the
tidal force of the Moon is high, the volatility is high as well" or: "the high tidal force tends to turning
points of FTSE100 index".

The Moon tidal force is well discussed in many sources in regards to so many different sides of our life.
What about the Mars tidal force? No problem; you can do a research for it as well. All you need to do is
clicking this button:

You will get the Events Model Editor window. Here you can set the parameters of the events in regards to
your research. Choose there Mars and click "Replace" button: 
(Remember that it will work only if you were doing previously a research on the tidal force of any other
planet. If you did something else, you have to go back, choose the corresponding category of events the
"Gravitation and Tidal Force" item; see below for more details about this module.)

After the calculation. you get the diagram with Mars tidal force.

You can also draw the tidal forces for a combination of different planets. To do that, click "+" button for
each new object. Adding Mars, Venus and Mercury's tidal forces events 

and calculating these events, you may get a diagram like this:
Here you see all three tidal forces of these three planets. 

You can construct the more complicated events, like "tidal force index" as a sum of all tidal forces
involved. Set L1+L2+L3 events formula:

Here L1 - Mars tidal force, L2 - Venus, and L3 - Mercury tidal force. L1+L2+L3 is the sum of these tidal
forces:

 
 

Apply this index to different financial instruments to see how they correspond. Also, you can adjust this
formula to any particular financial instrument setting some specific weights for these terms:

Here I increased the weight for Mercury tidal force five time. This index looks now:

Here I am not telling you to use this index for your financial instrument. I am showing you the way how
to find a proper index for your stock.
I recommend to investigate Model Editor Window. There are a lot of events there. This is a heart of
Timing Solution software. These events are used to generate the projection line with Neural Network
module. Though there are a lot of events used there, we constantly add new events.

For example, you may decide to create "Sun aspects index" that indicates the Ptolemy aspects of the Sun
to other planets, set these parameters and calculate:

You will get your index.

Or if you want to research the culminations of these aspects, set this:

This is a very powerful tool. You can use it in two ways: checking the statements/hypothesis suggested by
other authors or creating your own indicators and researching their usefulness for your financial
instrument. If you will not make money with it, at least you will not lose your money following the
unchecked statements of some doubtful sources.

When you create your own indicators, the most important issue is to figure out how you can rely on these
indicators. These buttons allow you to calculate the statistical portrait of analyzed indicators. This is an
easy way to find the statistical confirmation for the statements like this one: "when the value of X
indicator is high, the volatility of Y financial instrument is high as well":

Simple Trading Strategies based on ULE

You have learned in the previous lesson how to deal with the factors that might have an impact on the
stock market. And you have learned how to make conclusions, at least regarding their quality. Now you
can add some real digits to your conclusion. It is important as we can use this knowledge in real trading.
Let's consider one example:

#1: This is the corn prices file from 1949 to 2006. When you download this data, set the limits to the
forecast horizon; suppose it is 1500 bars:

Thus we inform the program that we would like to make the forecast for corn prices for 1500 price bars
ahead.

#2: Now do the same study as discussed in the previous lesson. I have found that the price goes up a week
before the Sun ingresses the Earth signs (Taurus, Virgo, Capricorn). You can set this event in Events
Editor this way:

and chose this option:

 
#3: Calculate the Efficiency Test clicking on this button:

It looks like this:

It definitely shows that the price goes up more than one week before the Sun ingresses the Earth signs.

#4: Let's consider the trading strategy: "buy 6 days before the ingress -> sell at the day of ingress":
  

If we would do that, this strategy would give us 110 winning trades against 61 losses. Not too bad, but
let's try to improve these results.

#5: Click on this button:

    

and you will see the best strategy for corn:

The best strategy is "buy 9 days before -> sell 4 days before". It gives us 118 winning trades against 53
losses. However, the Efficiency Test shows at least one strong down during one of these days. So, we can
follow this strategy though it is a bit risky. Let's diversify this risk, putting a sell signal further from this
risky point. Highlight the next item in the list:

We buy corn 10 days before the Sun ingresses the Earth sign and sell it exactly at that day. This strategy
promises 68% winning trades.

I called this model "a simple strategy" because it cannot be considered as a trading system. This strategy
provides trading signals only once in 3 months. Any other time you cannot do trades. So, the model based
on only one astronomical factor has no practical sense. In reality, we have to consider hundreds of these
single factors.

However, you can memorize this info and use it when the time is appropriate. Do the next step - keep this
info in your trading calendar.

#6: Click this button:

You will get the list of buy/sell signals for the future (beyond available price history):
This is the power of astro trading: if you know (or find out) the single factors that are working for your
financial instrument, you know days, months and years ahead when they will occur.

#7: Timing Solution has an additional tool to visualize the risks. Look at the up/down stripes in the
bottom part of the Efficiency Test window:

The red stripes correspond to upward price movements, the blue ones indicate downs (with the strategy
"buy 10 days before -> sell when ingress"). Thus we can see how winning and losing signals are
distributed in time, how they are balanced. If you prefer long positions, you would like to see here more
red stripes. If you do short trades, you would like to see here more blue stripes.  

Look at this scale:

In the year 2001 and the beginning of the year 2002, this strategy would provide us 4 losing signals in
row, i.e. the price went down. These stripes allow us to see the periods when the old market pattern does
not work and the new tendencies appear.

 Working with ULE

I would like to start this class with one example that proves to non believers that astronomy cycles have
an impact on the stock market. I will conduct it in an academy manner (how I was taught in the
university). It means that the arguments for non believers are expressed by a dry language of numbers and
statistics. The math related issues will appear in italic font to make this reading easier for those who
would prefer to skip these parts and still be able to get the general idea.
The most beauty of this approach is that it gives you the additional information regarding possible ways
of price movement; this information can be prolonged into the future as far as you need. This not a
suddenly occurring fundamental  factor which comes from the News and mixes all cards and nobody
knows when this factor will come up again. This is not an annual cycle either - that thing is well known to
anybody knows. This is something special, only our users may know it.

I state that the difference between Venus and Jupiter declination has its impact on Dow Jones Industrial
index, and this fact is proven with the 98% probability. This fact has been tested for DJI data from 1885
to 2006 (it covers more than 120 years of DJI history).

The declination shows how far the planets are located from the Equator's plane. Let's run the ULE Model
Editor:

Fill out the form this way:

Add this event to Events Box clicking "Add" button. If you have had some events in the Event Box
already, click "Clear" button to clear it:

Now go to the Main Screen and click "Calculate" button:

Look at the screen now:

This is the picture for the difference of Venus - Jupiter declination for the last 8 years and the next 3 years
(it is written in June, 2006). I remind you that manipulating the mouse you can choose any piece of the
chart to see the details.

For 120 years DJI history, this diagram looks like this:

I state that this diagrams reflects the movements of DJI index, it describes 9.5% of movements.
Now I show how to check how this diagram fits to the DJI index. Click this button in the Main Screen:

You will get this window:

What the program does? It calculates the correlation between the price oscillator with 50 bars period and
the Venus-Jupiter declination diagram. The  line   shows that the correlation between
the price and Venus-Jupiter declination is 8.5% (See in doc the explanation regarding the correlation
coefficient). Practically it means that we can use this diagram to predict the price movement. But we need
also to keep in mind that this indicator explains 8.5% of price movements only

To provide the statistically complete verification of this fact I used the t-statistic criteria (Student
distribution). For correlation coefficient 8.5%, sample size = 33.000 price bars we have t=13.88. It
means that with probability 97.59% this fact is not occasional.  Also this correlation cannot be explained
by seasonal artefacts, because the average period for this cycle is about 400 days and it is pretty
irregular.

To be more practical, we need to keep in our minds just this diagram:

It is not a forecast, it is a portrait of one of the players that pushes the ball 8.5% of the total game time.  
 

A la Bradley Model

Now we discuss something that is one of the true treasures of the financial astrology. I refer here to
Donald Bradley and his work. I am really fascinated by the great ideas that he has been able to express in
a such condensed form. The most amazing thing is that he has done all his calculations and diagrams
manually, before the era of total computerization. I can only guess what he would be able to do
nowadays. 

Anyways, let us try to follow the steps that Donald Bradley would perform if he would have Timing
Solution software.

We will look at the aspect of conjunction between the Sun and Mercury. Using ULE, you can record this
event this way:

Look at the Main Screen to see how this aspect "sounds" in Time:

This diagram shows the degree of the strength for this aspect. The aspect reaches the maximum of its
influence at the culmination:
So you can see all phases of this aspect.

Let's make our model a bit complicated and consider the event: "the Sun conjuncts ANY planet (except
the Moon) with ORB=15 degrees". Set the form this way:

This event sounds more interesting, because sometimes the Sun makes the aspect to several planets at the
same time (like in the beginning of 2006):
Now we are ready to create a more complicated event: "Planets make positive aspects between
themselves" (here we consider as the "positive aspects" conjunctions, sextiles and trines though for
conjunctions this statement is not 100% correct):

This event is much more interesting:

Now we are close to our final goal. Let us create the event "Planets make negative aspects to each other"
and consider it together with the previous one. Remember that ADDING this event to the "Events Box",
click "Add" button, not "Replace":

So, there are two events in the "Events Box" now: L1 -Positive aspects and L2- Negative aspects. Let's
calculate them:
The final step is to calculate the balance between positive and negative aspects. To do this, you need just
subtracting negative (L2)  from positive aspects (L1).

Do not forget to click button.

Calculate these events:

You can see here the balance between positive and negative aspects. The higher diagram the more
positive aspects are in the sky, the lower - the more negative.

Clicking this option, you can change the diagram view:

Also you can save this model and open it next time using this set of buttons:

  

You can create very complicated models with this module. For example you can modify L1 event above
using as positive aspects sextiles and trines only, leave L2 as it is (for negative aspects of square and
opposition), and add two new events: L3 - a conjunction with "good" planets (the Sun, Venus, Jupiter,
Neptune) and L4 - a conjunction with "negative" planets (which are Mars, Saturn, and Pluto). 

ULE provides you fantastic opportunities to try and actually feel the power of cycles - without using any
sophisticated modules (like Neural Net). It is a very flexible tool. I would not suggest using Universal
Language of Events for forecasting. However, it is a base for any model. To be able to create successful
models, you have to know the ULE very well. I have included into it everything that I know at this
moment regarding the movement of celestial bodies. The good thing is that ULE is not a closed system. It
is opened to new types of events, and can be extended any time.  

Homework to Lesson #3

This time we have just one exercise. However, it consists of many details, and you will learn to work with
Bradley models, create them, modify and use in different situations.
1)    This is the diagram from Donald Bradley's original book, Stock Market Prediction. It shows
how the Jupiter-Uranus cycle affects the stock market.

Check this fact and analyze it using ULE in Timing Solution or SuperSearch module of Market Trader. 

According to this diagram, its maximums coincide with trine and sexstile aspects, while the deepest
downs correspond to conjunctions, squares and oppositions. So, we have here two groups of events (they
all are aspects, though their effect on market differs).
So, let us define the aspects of the first group: aspects that correspond to the highest points. It means the
event "Jupiter makes a sextile or trine to Uranus", we mark this event as L1:

I used a very wide orb here - 30 degrees. (I know the regular values for orbs of different planets, I choose
30 degrees intentionally: it provides a nice looking picture. You can play with lesser orbs, and see
yourselves what you get.)

The next step is to define events for the bottoms of Dow diagram that coincide with conjunctions, squares
and oppositions. It will be L2:

The final formula should look as "Positive aspects (L1) minus Negative aspects (L2)":

After the calculation, this cycle looks like this:

We can check how this cycle fits the real price movement clicking this button:

We get this window:

As you see, this cycle describes almost 4% of price movement. This is a very good addition to annual
cycles that usually provides about 10% correlation.

This figure:  means that this fact may occur with the probability 94.88%.
It does not mean that we explain 94.88% of price movements, it is only about the fact that this cycle does
affect the real changes in DJI with the probability 94.88%, and the input of this cycle is approximately
4%.  
There is something else we can do. We can play with weights for positive and negative aspects. For
example, I have an idea that the input of negative aspects on DJI is more than we have considered. Let's
say, it is 50% higher. Add a coefficient to this formula:

calculate this cycle and see how it fits the price movement. It fits a bit better:

In this example, the confusing part is the influence of the aspect of conjunction. We are in better position
than Mr. Bradley as we have now twice longer Dow Jones index history and we have this software that
allows to perform our calculation millions times faster, I believe.

So, let put different aspects into different "boxes".

L1 - sextiles and trines;

L2 - squares and oppositions;

L3 - conjunction.

We can assign different weights to different aspects (here I give to the conjunction a positive weight
(70%)):

This model describes the real price movements better (correlation 5.29%):
 

Now you know how to deal with Bradley models. As you see, there is nothing complicated, just use
Universal Language of Events (or SuperSearch module).

You can do the same to other financial instruments.

ULE - Algebra of Events, Part I 

When I was a student, the Chaos theory was very popular among my peers. What we liked the most was
the idea that the whole world can be understood as the interaction of events. If we assume that every
event is a word, the world is formed by the words' combination (grammar). This grammar was found to
be context-dependent. And the fascinating part is that every word (event) changes its meaning according
to the context. Speaking differently, our world is formed from events that depend on the context.

In the previous Lessons, you have learned to record the words - astro events. Now, we will learn to read
them in the context. The time for grammar has come. Let's go!  

Let us consider this situation: "find what happens to Dow Jones Industrial Index when the Sun is located
in Leo and the Moon is in Pisces at the same time". If you have studied the previous lessons, you will
easily create two events: L1 - the Sun located in Leo and L2 - the Moon ingresses Pisces:

Now remember this rule - if we want two events happening together, we should multiply them. It means
that you will type this in "Events Formula": L1*L2 (use * symbol for the  multiplication).

Do not forget to click confirmation button, thus you inform the program that you have finished the
typing of the events formula:
Now go back to the Main window and click "Calculate":

Look at the Main screen now:

You see the red regions where the Sun is located in Leo and blue stripes that correspond to the moments
when the Moon ingresses Pisces.

The black stripes on the upper part of the screen correspond to the moments when the Moon ingresses
Pisces while the Sun is in Leo.

Please be very attentive now: we are dealing here with two different kinds of events: 
the Moon ingresses Pisces - this is a triggering event; it happens in some particular moment of time, just
a moment;
the Sun located in Leo - this is the context as this event lasts in time (takes some time, not just a
moment)..

Clicking this button, you can easily calculate the Efficiency Test for this combined event:

 
It looks like this:

It gives us some clues as to what might be happening to DJI when the Moon ingresses Pisces while the
Sun is in Leo.

One useful hint: you can display this Efficiency Test in the real time, just choose the culmination date
here:

Now lets modify the context event L1, trying different variants for research:

We will consider the event "Moon ingresses Pisces and ...

1. and Venus is in Pisces in Heliocentric coordinates:

2. and Mars is in cardinal Signs, Geo:

3. Venus or Mars are in Air Signs (Aries,  Leo, Sagittarius):

4. Mercury is retrograde
 5. Mercury is direct and fast:

and many many other conditions... We are able to do it thanks to this very powerful tool. We can do it
really quickly. What does it give to us? At least, the ability to check any hypothesis or any rumors/hints
and then research the actual effect of all these astro factors in different combinations. When you will go to
any lecture/seminar, take the laptop with you. While the lecturer will change the slides, you will be able
to verify her/his statements. When you read a book, let your computer run the search on the discussed
subjects. You will be able to make informed decisions, not just following celebrities. And you will gain
your own sense of the markets in respect to the astro events.

Next part of this lesson is advanced, so you can skip it in first reading.

OK. Let us modify our task once again. Now we are looking for the impact of the Moon in Pisces on the
stock market in context of the Sun in Leo and retrograde Mercury at the same time.

To the event above, just add one more event, L3 - Mercury is retrograde - and type L1*L2*L3 formula:

You will see at your price chart one more row with the stripes for Mercury being retrograde and different
resulting lines (compared to the previous diagram) that correspond to the moments when all three events
occur. Then you can calculate the Efficiency Test for this combined event. 

At the end I would like to show you how we can solve one very practical task using this ULE module.
Assume that the Moon's position in Zodiac has some impact on stock market volatility and this depends
strongly on the seasons. Let us do analysis for the Moon influence in August (more exactly, when the Sun
is located in Leo).

Create this formula: L1 - the Sun is in Leo, L2 - the Moon is in Aries (not ingress, its position):  

In the Main window click "Calculate" button and after that click "R" button:
You will get this window:

Here you should define the relative true range (as % (High-Low)/Close) that shows the variation of the
price during the trade day. Clicking "Calculate" button, you ask the program to estimate the influence of
our event (Moon in Aries + Sun in Leo) on the true range.

How to read these results (the information window in the bottom part of the screen)? Read this carefully:

Events Interval=0.59  (N=243 Var=0.96) line means that while the Moon is in Aries and the Sun is in
Leo, the average value of true range is 0.59%; 243 trade days have been considered to calculate this
statistic.

The next line, Events Interval=0.54  (N=33335 Var=0.98), means that the average value of true range
for all available price data (DJI 1885-2006) is 0.54%.
It means that while the Moon is located in Aries, the true range is a bit higher than the average value
(0.54% against 0.59%). 

Next step is to modify the formula using the event "the Moon is in Taurus". I have got this result:

The Moon in Gemini and Pisces seems producing the most quiet periods:
Gemini:

Pisces:

On the contrary, the Moon in Sagittarius and Aquarius provides the most volatile periods: 

Sagittarius:

Aquarius:

In the following classes you will see how this task can be solved in more elegant way using the
Composite module. However this approach gives you the universal tool to analyze situations like the
Moon's influence on the market when Mercury is retrograde, the Moon's influence on Mondays and many
others.

The same manner you can research Volatility index:

or ADX index exploring the Moon's influence on the trend's stength:

Also you can work with other indicators like RSI, MACD, Stochastic and many others.
I believe that now you will easily explore the New Moon impact on volatility in August. Let it be your
homework.

ULE - Algebra of Events, Part I I

Now you are able to record different events and make their combinations. We can do it due to a unique
feature that exists only in Timing Solution: Universal Language of Events (ULE). It allows to create
rather complicated combinations of events very easily. However, there are some small things and nuances
related to the usage of this Universal Language of Events. We discuss them in this Lesson.    

Let us start with one practical example. I received a question by e-mail regarding Dow Jones Industrial
index's behavior around the New Moons. The hypothesis to be tested was about analyzing not all New
Moons - only those that occur while there is no aspect between the Sun and any other planet (except the
Moon, of course).

How would you deal with such event? It is not a problem as you have Timing Solution. Create a series of
events first. Start with the New Moon (which is the Moon conjuncting the Sun); watch for the
culmination (no aspect in orb):

It will be L1 event.

Next step is to record the event when the Sun makes the aspect to other planets (except the Moon). (I
forgot to mention that the question was specifically about conjunctions; however, you may consider other
aspects as well.) Let use the orb = 10 degrees. Fill out "Aspects" tab this way:

It will be L2 event.

Let calculate both these events:

Here we can see red vertical lines that correspond to New Moons and blue zones in the bottom that
represent periods when the Sun conjuncts other planets. However, this is not what we really need; as you
remember, we would like to find the moments when there is no aspects to the Sun from the planets.

In this case, Not function helps. Type this formula in Model Editor:

Here L1- New Moon; L2- the Sun aspects other planets. Thus, NOT(L2) corresponds to the event "the
Sun does not make aspects to other planets". This final formula describes exactly what we are looking for.

Now we are ready to do the Efficiency Test for this event. Here it is:

 
It looks like four days after this combined event Dow Jones index stays flat (I analyzed DJI 1885-2006).
There is no energy for further movement, though in five days the bulls come back to the stock market.

Another example regards to stellium. The stellium means several planets in the same Zodiac sign or
house. There was an Internet discussion of what may happen this November (2006), when many planets
will be in Scorpio.

We can deal with this problem in two ways. The first one is pretty obvious: find all moments (or periods)
when the stellium in Scorpio takes place and look what has happened then. Create this simple event (any
planet in Scorpio, either being there or ingressing it):

Calculate it:
This red diagram shows how many planets have been in Scorpio in regards to available DJI data. The
program automatically adjusts the height of vertical lines: the higher the line, the more planets are in
Scorpio at the same time. It gives you ability to choose the desired number of planets for the stellium. I
have found four moments of DJI history when six planets were located in Scorpio.

It has happened in the year 1978, and the DJI has moved this way:

1970:
1889:

and 1885:
It will be in 2006.

What can we say? From one side, among these 4 occurrences in the past history, three times there was a
drop (in 1978, 1889 and 1885). However, I would not make any comments as surely this information is
not enough to make any conclusions.

There is more advanced feature in the program devoted to stelliums. It provides more flexible way of
dealing with the stellium.

Choose "Stellium" tab. You will get this

Here we define the event when at least 4 planets are forming the stellium. The width of this stellium is 20
degrees (this is my choice).

Stellium Center option allows to locate this stellium at some specific area of Zodiac. In our example, we
set the stellium center as equal to 10 degrees, which means 10 degrees of Aries. Thus, this event reflects
the moments when at least four planets were located between 0 Aries and 20 Aries.

If we do not use the "Stellium Center", it means that these four (or more) planets are located in any place
of Zodiac, within 20-degree area.
 

There are so many possibilities to record different events and their combinations. I recommend you to go
through all tabs of Model Editor and play with their options. You will get used to its logic very soon, and
you will be able to evaluate different astro related statements very quickly. The following are some last
notes related to this topic.

To calculate the moments of planetary rising/culmination/setting/anticulmination, set these options:

You can find very seldom phenomena, such as Grand sextile:

By the way, for the whole DJI history, it had occurred only once - in 1937:
 

At the end, I would like to remind you again that it is possible to record many different events in the
program and combine them in different ways, creating more complicated events and models. However,
this system is open - we constantly add new events here as our knowledge about stock market behavior
and factors that may affect it is growing all the time.

 SuperSearch/ULE Examples: 
Here you will find some examples of creating SuperSearch/ULE events. I have included there the
questions that I have got from the users of the program.

1) Planets in Perihelion, Aphelion, Perigee, Apogee:

You will get this list:

Perihelion/Aphelion  - the planet is at the closest/furthest distance from the Sun (heliocentric coordinates)

Perigee/Apogee  - the planet is at the closest/furthest distance from the Earth (geocentric coordinates)

2) Jupiter reaches its Maximum (Minimum) declination:

You can do this for any other planet as well.

Also, you can find the planet's Maximum Geo/Helio latitude:

  

3) a)  take a planet and search for specific times (to the hour say) since say 1900 to 2005 that it was at say
25 degrees Leo or 23 deg Taurus or 17 deg Sagittarius.

b)  group these results into a) seasons of the year. b). zodiac houses.
 

In other words we need to find the moments when any of planets passes 25th degree of Leo or 23rd of
Taurus or 17th of Sagittarius points. Also, we would like to see when this phenomena occur in some
specific time of the year - some month or season. It is easy to do with the program: you will have to create
several astro events and combine them altogether. 

Let's define the first event L1 any planets passes 25th degree of Leo. Pay attention that from 25 to 25
means finding the exact moment when it happens. Some planet crosses this point in the sky, this is an
instantaneous event as opposite for the planet being in 25th degree of Leo (which lasts for 60 seconds). It
is important for further research.

Fill out this form:

Similarly, create 2 more events.

L2 - planets pass 23rd degree of Taurus:

 
L3 - 17th degree of Sagittarius:

We want to find the moments when ANY of these events took place. Type in the Events Formula 
L1+L2+L3 

Do not forget to click: and then the Calculate button (see below).

The upper screen shows these moments marked by vertical black stripes:
 

To get the statistics for these events, click the button as below:

The program displays the Efficiency Test for this combination, and you can work with it in a regular way.

If you would like to research the effect of these phenomena in some specific time of the year, let us say in
the month of August, you need to create one more event, L4 - now is August.
and add this event to the formula above.

The final formula should be L4*(L1+L2+L3). Multiplication means that these two events L4 (August)
and L1+L2+L3 (planets passing different degrees) should happen together:

As always, do not forget to click:

Now you see the result with a possibility to do the statistical analysis of this combined event:
Varying L4, you can define different possibilities, events like "planets pass these sensitive points above
while Mercury is retrograde". In this case, you should define L4 as:

Or this combination may occur when the transit Sun is in the first natal house:

and many many others.

Let's consider the more complicated case: find the moments when planets pass these sensitive points
(L1+L2+L3) while the Sun is located in fifth house OR Venus is in the second house.

We need to create two additional events: L4 - the Sun in the fifth house and L5 - Venus in the second
house.

The formula (L4+L5) means that we look for the moments when the Sun is in the fifth OR Venus is in the
second houses.
All these events together are described by this formula: 

Let's modify our model. Let define L1 (in Leo) and L3 (in Sagittarius) as "GOOD" sensitive points, while
L2 (in Taurus) is a "BAD" sensitive point.  When planets pass the "good" sensitive points, the price goes
up, while on "bad" sensitive points it reacts by downtrend movement (we might find this or similar
information in some book or newsletter). 

Here I define the event "planets crossing the 25th degree of Leo" a bit differently:

Here we set 5 degrees orb for this event. The same is done for L2 and L3 events.

Now we have L1 and L3 as a good guys a and L2 - bad guy. This formula reflects this fact:

Thus we have created the indicator based on sensitive points: 

If you really decide to create a working indicator, the "Correlation" button is recommended:
You can estimate the real performance of the analyzed indicator. See here for  more details.

 Astro indicators in Timing Solution

With Timing Solution, it is possible to calculate any of the most popular astro indicators. Now
(September 2007) there are 17 variants of different astro indicators. You will find among them the
indicators well known and described in different sources (such as Berg, Ganue, Barbo and Hoff indicators
and their variations) as well as the indicators suggested by the users of the program. In this article I will
do a brief overview of these indicators and show how to customize them for any financial instrument. My
goal was to analyze how these indicators forecast the turning points and volatility. The Dow Jones
Industrial index data from 1885 to August 2007 were used. To analyze volatility, I used the data from the
year 1980. The orb for anything planetary-related in this research is 2 degrees. 

Let us start with the description of these indicators.

1. Planetary Pictures Geo (0..180) scale. To calculate this index, the program takes all angles
between the planets in geocentric using 0..180 degrees scale. This index shows how many
planetary pairs have the same angle separation. I did not find any correlation and price for this
index. It does not work for DJI.
2. Berg indicator. It is calculated the same way as the previous indicator, the only difference is the
use of heliocentric planetary positions. It shows some impact on volatility, especially when the
value of this indicator is small (less than 10).

3. Planetary Pictures Geo (0..360) scale. It calculates the angle between planets using 0...360
degrees scale. It shows how many planetary pairs have the same angle separation (0..360 degrees
scale). No effect found.

4. Planetary Pictures Helio (0..360) scale. It works similar to Berg indicator (Index N2)

5. Sum of angle separation (-180...+180) Geo. It calculates the sum for all angles between the
planets. The program assigns a positive value to the front position, while the back position has a
negative value. No effect found.

6. Sum of angle separation (-180...+180) Helio. This indicator definitely correlates to the top
turning points. When the value of this indicator falls into -400 to +400 range, the probability of a
top turning point is high.

7. Sum of absolute separation 0..180 degrees scale Geo. It calculates the sum of the angles between
planets using 0..180 scale, back and front positions have the same value. The value in the range
-500..-1000 is related to a bottom turning point.

8. Sum of absolute separation 0..180 degrees scale Helio. The value in the range -150..+300 is
related to the top turning point.

9. Sum of absolute separation 0..360 degrees scale Geo. No effect found.

10. Sum of absolute separation 0..360 degrees scale Helio. No effect found.

11. Amount of midpoint conjunctions Geo. To calculate this indicator, the program takes all
midpoints between the planets and counts the amount of midpoints that have the same longitude.
The value between +55 and +120 is related to the top turning point.

12. Amount of midpoint conjunctions Helio. No effect found.

 13. Amount of midpoint oppositions Geo. The value between 0 .. +10 is related to the bottom turning
point.

14. Amount of midpoint oppositions Helio. No effect found.

15. Index of cyclical variations Geo. It calculates the amount of waxing angles minus the amount of
waning angles. It is a strong indicator. The value between +20 and +35 is related to the top
turning points, while the value -9..-21 is related to the bottom.
Also sometimes this index correlates with the trend:

16. Index of cyclical variations Helio. It may forecast bottom turning point when its value is in the
range -8..-16.

17. Hoff index. The negative value of this index correlates very well with the trend.

I have added several new models to the program based on this research. Timing Solution users will find
these new ULE models in the upgrade of September 12, 2007. Here is the list:

1) A model to forecast top turning points.

2) A model to forecast bottom turning points.

3) Trend index based on "Index of cyclical variations Geo"

4) Trend index based on Hoff index.

You can run these models here:

Remember that you can use these indicators as hints only. 

  

The most common mistake

Before any discussion, I would like to talk about a very common mistake that takes place when somebody
applies/invents any astro indicator. 

Let us consider planetary pictures heliocentric indicators (What follows below, can be applied to any
indicator). This indicator simply shows the amount of planetary pairs in heliocentric system that have the
same angle separation. 

There is no mistake yet. It comes later. 

If my goal would be to sell you this indicator, I would start an advertising campaign with something like
this: "Look at the price chart and the indicator displayed together:
You see that the big values of this indicator (see the red curve at the bottom) correspond to the major
turning points on the price chart ".There is still no mistake. The calculation is OK for the chosen time
interval, and the conclusion is OK. You may be impressed and buy this indicator. And - it is not OK when
you apply it for your trading. Does it sounds familiar? I have seen it so many times in the letters from my
users. What is wrong? Where is the mistake?It is there. I would call it misrepresentation (maybe,
unwilling or unintended). If the picture above is the only piece of information regarding this indicator, we
are not actually able to figure out how this indicator will perform. See yourself.Let us take next two
consequent intervals that follow the picture shown above. Here are the price chart and that same indicator
together, though without any selection:

 
Could you please make the same conclusion regarding the indicator and the price turning point NOW? I
do not see any connection between the price  and the analyzed indicator.I could easily do the same thing
for volatility or any other index - taking just one good example and making a conclusion that "the high
value of our astro indicator tends to increase/decrease volatility (or whatever we research)". Choosing the
appropriate time span, we can approve/disapprove anything.To understand  how any astro indicator (or
any indicator) works, it is necessary to analyze many subsequent intervals without any selection. The
detailed statistical analysis shows that often these indicators work totally different from what we are
expecting from them. For example if we modify the above mentioned indicator using the geocentric
system (not heliocentric), we will find that its high value tends to appear together with TOP turning
points, not bottoms. Thus the high value of this indicator can serve as a sign (with some probability, of
course) for the upcoming TOP turning point.In this article I will show you how to analyze and create the
astro indicator using Timing Solution software.

Technology description - analysis

In Timing Solution you can create practically any known astro indicator. Look at "Astro Indicators" tab.
You will find there 17 the most used indicators including Ganue, Barbo, Hoff indicators and the
indicators based on Planetary Pictures (Berg), calculated for Geo and Helio systems.

You may display any or several indicators together with the price chart:
Let us perform the statistical analysis for any of these indicators. Our goal is to get the objective picture
of how this indicator actually works. Let us analyze "Index of cyclical variation":

This indicator shows a balance of waxing and waning angles between the planets in geocentric system.
Click this button:

to open the statistical module. You will get the scattered diagram:
 

On X axis the program shows the value of "Index of cyclical variation" for all price bars, while Y axis
shows the appropriate value of Volatility index. Actually you can analyze any index here (I tried RSI,
ADX and other):

I have analyzed Dow Jones Industrial index using the data from the year 1980 to 2007. The program
draws more than 7000 points on this diagram. For us the most interesting thing is the existence of the red
regions. You can see on the diagram two red clusters that provide us a valuable information regarding the
effect that this index has on volatility. 

Cluster N1 shows what happens when this index is high. If our astro indicator is higher than 7 (which
means that there are more waxing angles between the planets than waning ones), the volatility is high
enough: 0.53-0.7%. We can accept this fact as a statistically verified one - the big amount of waxing
angles between the planets leads to the high volatility of the Dow Jones Index.

You can see there the second cluster. It corresponds to the negative value of this index, and it shows the
small values of volatility, no more than 0.34%. In other words, when there are more waning angles
between the planets, the volatility is low. 

You can play with the statistical parameters (especially with Chi Square and Min amount of points in the
bin):
It allows you to understand what clusters are the strongest ones.

Technology description - synthesis

Now we have a tool that allows us easily find out how any astro indicator affects the stock market. Look
at the table below. There I put the results of my analysis of 10 different indicators. These 10 indicators are
the most influential for volatility. The values there are the values of the indicator that correspond to
high/low volatility:

Indicator Volatility High Volatility Low

L1=Sum of angle separation (-
+800..+4000 -600..-4000
180..+180) Geo
L2=Sum of angle separation (-
+600 ... +1500 -300 ... -1300
180..+180) Helio
L3=Sum of ABSOLUTE angle
+600 ... +1000 -1000 ... -2000
separation (0..+180) Helio
L4=Sum of angle separation 
+800 ... +2300 -800 ... -2300
0...360 Geo
L5=Amount midpoints
0 ... +30 +30 ... +60
conjunctions Helio
L6=Amount midpoints opposition
+20 ... +30
Geo
L7=Amount midpoints opposition
+10 ... +20
Helio
L8=Index of Cyclical variation
+7 ... +40 -7 .. -21
Geo
L9=Index of Cyclical variation
+4 ... +15
Helio
L10=Hoff Zodiacal Index +2 .. +42  

How did I get this information? For example, the first line of this table is received from this diagram:
 

These values for all 10 indicators are statistically verified. Therefore, I can take each one of them as the
meaningful event and add them to the ULE module of the program (ULE stands for Universal Language
of Events, I include there things that play some role for the stock market):

Now let us create the final formula that summarizes our newly found knowledge about these indexes
(indicators). 

Consider the first line:

L1=Sum of angle separation (-

+800..+4000 -600..-4000
180..+180) Geo

The message that we get here is simple: DJI is volatile when the first indicator is in the range between
(800, 4000) and (-600, -4000). Volatility grows when the indicator is closer to (800, 4000); it decreases
when the indicator is negative (-600, -4000).

Let us write this condition together: L1 - this is the analyzed indicator. To write "Volatility is high when
the indicator between 800 and 4000", use this expression: Range(L1,800,4000).

Next we need to write this:  "Volatility is low when the indicator is between -600 and -4000". Do the
subtraction:
Then perform the same procedure for the next indicator:

L2=Sum of angle separation (- -300 ...

+600 ... +1500
180..+180) Helio -1300

Add it to the first one.

Finally you will get the formula that involves all analyzed terms. See how this indicator looks (red - our
indicator, blue - actual volatility):

Of course it is not an ideal, I would not recommend it to you as your major trading tool. However, its
quality is a lot better than that of any indicator by itself.

While you are working with this complicated formula, I recommend to set this option OFF to hide all
terms that our indicator consists of:
 

How to create an indicator to reveal turning points

The technology is exactly the same as above. The only difference is that instead of Volatility index in the
scattered diagram use a detrended zigzag index:
Here the top part of diagram corresponds to the top turning points, the bottom - to the bottom turning
points. Thus the upper red cluster can be interpreted as this: when the analyzed index is in the range -300
to +500, the up turning point is more probable.

Planetary Time in Action

Any technique begins with some very simple and clear idea. The idea of planetary time (PT) came to me
from one of my Russian astrology teachers, Mrs. Augustina Semenko. This idea gives a room under one
roof for pure scientific techniques like spectrum analysis and pure astrological techniques.Augustina was
a unique woman. In communist Russia, she worked as an astrologer in the biggest aircraft manufacturing
company (Tupolev, TUs). It was practically impossible in Russia several decades ago, but this talented
woman did it. The story says that there was some aircraft ground testing going and the guys faced with
some hard and dangerous malfunctioning in the machine. Augustina (an admin assistant at that time) went
to the chief officer and asked him a question whether they had had the same problem a couple of weeks
ago. They were surprised how she could know about that as it was a classified information. It really was
exactly as she said! Plus Augustina suggested them to do a major fixing of some particular device,
otherwise the big problem with this aircraft should occur in a week. Does it sound like a fairy tale to you?
The guys thought the same. They said,  "No kidding, we do not believe in that!". However, there was a
fire on that plane in a week and it burned out. When the guys came back to her, Augustina told them
about another date when the same dangerous situation might occur again. This time they accepted
Augustina's advice and saved the aircraft. Afterwards she did charts for the testing flights.
When I have met this woman twenty years ago, I have been very surprised by this fact. Working in a
scientific facility, I understood that sometimes we face with effects that do not look like other physical
processes we are used to deal with. I do not know when exactly this story has happened. However, I can
show you how the idea behind it might work now, in March, 2007.A week ago Mercury has ended its
retrograde motion and started the direct one. Today (March 13, 2007) it is located at 27th degree of
Aquarius. Let us look together on Mercury's trajectory:

As you see, Mercury crosses the 27th degree of Aquarius three times this year: January 30, March 2 and
March 13. This is the astronomical fact. If we assume that the planets somehow affect our life, we can
state that something should occur in our lives three times in regards to Mercury's effects. In other words,
if something Mercury related has happened on January 30,  it is quite possible that this (or similar, or
reminding us about the first one) event has to occur on March 2, and a final reminder should appear on
March 13. The degrees related to particular retrograde motion of Mercury form its "shadow". Mercury
will leave its shadow on March 27, 2007, starting a totally new life cycle (a Mercurial one). Remember
that "shadow" starts when Mercury is still direct, covers the whole retrograde area and ends when
Mercury is direct again. The picture shows Mercury's shadow between 25th degree of Aquarius and 10th
degree of Pisces.The observation of retrograde Mercury gave to my teacher Augustina the hints regarding
that aircraft's malfunction in early 1970s. As I said, I do not know the dates to provide you with the exact
information. However, if it would occur on January 30, 2007, the same malfunction could occur again on
March 2 (as a reminder of this problem), and the next dangerous date might be March 13. It is like
Cosmos says to us, people, something, we do not hear; Cosmos says it again giving us chances to act or
make our choices, and then It sets the final verdict for this problem. (By the way, that fact has surprised
me so much that I have started to study astrology in depth. It also helped me to make a final decision and
switch from scientific programming at the Institute of Nuclear Research to astrological programming.)

Later, when I met my American astrology teacher, Mr. Alphee Lavoie, I have heard about this technique
again - only in respect to Jupiter. These three touches of Jupiter help to solve problems related to
wellness, well-being, and material abundance (such as getting a job).

 Technique Description

Now let us switch from burned aircrafts to our theme - stock market. If cosmic memory affects aircrafts,
it should affect the stock market as well. As we have seen, Mercury gives three reminders demanding you
to pay attention or giving you chances to do what you should do. The same is true for other planets
(except the Sun and the Moon). Look at these zones:

These colored bars show the periods when Mercury, Venus and Mars are retrograde; in other words,
during these periods the planets try to "teach" us something. Let me show you one thing. In Timing
Solution choose this item:

and drag the mouse across the screen. You see sometimes that the program shows three vertical lines:
These lines correspond to the moments when Mercury is located at the same Zodiac position inside its
shadow. The general idea of this technique (an astro charting tool) is that we are looking for the moments
that somehow are related to each other; it may give us some tips regarding future market movements.
What is good is that these moments are pointed by planetary positioning and do not depend on our
subjectivity. (This module is "a charting tool". It does not provide neither any evaluation in numbers nor
the projection line which is possible by means of other modules of the program like ULE and Neural
Net.)

Click here to see how these Mercury "shadows" appear and disappear while we drag the mouse.

I believe that this issue is worth of detailed research in respect to every planet. Here are some hints
regarding Mercury. It looks like the Mother Nature tells us about some problem while Mercury is direct.
When it becomes retrograde, this signal is much more stronger, and finally, on the next direct movement,
we receive the final estimation of this situation in respect to our action (the aircraft burned out).

These are Mercury's doings in summer 2006:

The first signal with 1.25% drop took place on June 27 (Mercury was passing 29th degree of Cancer).
Then, in the middle of July, Mercury reminded us about this situation again while being retrograde. It
caused three terrible days for the stock market. In the beginning of August, Mercury has passed this
degree again. The draw down was not so dramatic. Looks like "students have done their homework":
Dow Jones Index has recovered and gained 7 uptrend months.

Changing the properties of this charting element, you can change the planet. Remember that this
technique is oriented to the planets having a "shadow" (regions located around the retrograde zones):

For example, there is no Mars shadow now (in the middle of March, 2007), as it is far from its retrograde
zone, so the program shows the current Mars position only:
However, Saturn has its shadow now:

If Saturn tells us something, we would expect some action on June 10, 2007.  What might it be? See the
hint from the first Saturn's reminder:
The second hint is a giant drop on February, 27 which is visible in any price chart scale. 

So, do your homework and make the conclusions yourselves. I recommend to check all these hints for
important events in the stock market. You can use not only planets themselves, try different planetary
combinations as well (like analyzing the angle between Venus and Jupiter in geo and helio coordinates).

Another variation of the same idea is presented by "Planetary Returns" technique: it shows all dates when
some planet has passed a certain position (caused by other reasons, not only by retrograde motions). Here
is how it looks:

This picture shows the moments when the Moon is located in certain position.

One more technique is called "Planetary Equidistant Lines":

Drag the mouse from one point of the price chart to another (let say, from point A to point B):

The program calculates the Sun's (or any other planet's) position at point A and the angle difference
between the Sun's position in points B and A. In our example, the Sun has passed 33 degrees 52 minutes
between these two points (the Sun at point A is in the 20th degree of Scorpio). Thus, the program shows
all moments in respect to the Sun position with the step of 33 degrees 52 minutes starting from the point
A. (The next line is set at 2*33.52=67.44 degrees, etc.)

Click here to see how to draw these lines in Timing Solution

Sometimes these lines look very funny. As an example, see these lines calculated for Mercury:
    

This irregularity is caused by Mercury's retrograde motion. 

The initial point A is in the beginning of  November 2006; Mercury has become retrograde in 22nd
degree of Scorpio, this position of Mercury has a shadow. The second point A is 13 degrees of
Sagittarius; the distance between these points is 21 degrees. We calculate the second step point the same
way; this is 21.48 Scorpio + 2*21.17=4.22 degrees of Capricorn. We come to a shadow zone again doing
step 5.

While working with this module, it is very important to find the "key" planetary combination that catches
turning points. For example, working with Dow Jones Index for the last 2 years (2005-2007), I have
found that the angle between the Sun and Jupiter provides good results; as a basis I used two major
turning points (July 17,2006 and  February 20,2007):
Here the first turning point (a bottom) occurs on July 17, 2006; the corresponding angle between the Sun
and Jupiter is 104 degrees. For the next major turning point (a top) on February 20,2007, the angle
between the Sun and Jupiter ha changed on 178 degrees. Adding/subtracting this angle, we can get the
dates for other key points in the future and in the past: in the past - to see how well the stock market
"remembers" this combination, in the future - to use this info for our trading. However, not all turning
points are described by this model.  

This method is very similar to another astro charting tool:

It draws the equidistant vertical lines, equidistant in time, like this:

The difference between this method and the next one in the same menu that we use different time metrics.
In the example above, vertical lines are distant from each other for 360 days - we use Julian Time to
calculate the distance between two lines. When we work with "Planetary Equidistant Lines", we do
exactly the same but instead of Julian Time we use Planetary Positions as a measure of the time.
Because the planets move non evenly and sometimes become retrograde, these lines are located
irregularly.

Going into Depth - Planetary Time

Working with Composite module in Timing Solution, I have understood that we can work with planetary
angles exactly as we do with usual Julian time. Suppose the Universe uses the watches that point
Mercury's position instead of even minutes that measure the time by means of the atomic clock. The
world that uses the planetary time looks very strange sometimes: time there might flow sometimes in the
opposite direction (when Mercury is retrograde) and forces us (or gives us a chance - what would you
prefer?) to go back to some events of our lives. This is the irregular time, and we have to re-live some
periods of this planetary life several times (three times). If we return to the example with the aircraft in
the beginning of this article, we can say that these points are belonging to the same planetary moment
(while we have three different events in Julian time):
From the point of view of the planetary time, the Universe takes these three events as just one event, thus
they should be similar to each other. 

Surely this is a mathematical construction, nothing else. But some well known astrological techniques
look in this strange World very logically. For example, the planetary lines in the planetary time Universe
look as simple straight lines. So, the trend lines in this Universe will look in our normal World like
planetary lines. 

Moreover, the planetary time concept makes possible the application of such sophisticated math
techniques as spectrum analysis. Timing Solution allows to calculate spectrum (i.e., find the cycles) in
this planetary time. As an example, look at this periodogram for corn prices calculated in Venus geo time:
You can see that there are at least three strong cycles in corn prices; however, these cycles exist in Venus
geo time. Here are these cycles:

1) 44.4 degrees Venus cycle;

2) 364.2 degrees Venus cycle, and

3) 900 degrees Venus cycle.

These cycles provide us some hints as to what angles are better to use in "Planetary Equidistant Lines".
Also, it makes the phenomenological approach (used in Timing Solution) more accurate and scientifically
logical.

For example, Timing Solution software can extract cycles from periodogram and generate the projection
line based on these cycles. However, these cycles exist in planetary time while the results are shown in
our usual time that we used to live in.

March 15,  2007

Toronto, Canada

Sergey Tarasov

 
Universal forecast = Universal Language of
Events + Neural Network
All the above was just discussing models and different modules of the program. Now we discuss the core
idea of Timing Solution: getting a forecast. This process consists of two parts: a) creating a model that
serves as a base for the forecast; b) making the forecast. It is easy to create a model, due to our Universal
Language of Events (see above). Let us discuss the part "b". Timing Solution software does it by applying
Neural Network technology. You do not need to be a professional in Neural Nets. It is quite enough to
remember several things mentioned below. 

Click the mouse here:

You enter the part of the program where you will be able to create a forecast based on any
event/events. Whatever model you apply, the forecast is made by Neural Net. It is a special math
technology that studies how your chosen model has performed in the past and uses that knowledge to tell
what is more likely to happen in the future. Let us discuss the major items of Neural Net forecasting while
creating a projection line based on Ptolemy aspects of transiting planets. This procedure will take about 5
minutes of your time. Follow these steps:

1) Run Neural Network module

2) Click here (to define the outputs - things to be forecasted):

3) As an example, let us forecast the detrended oscillator with the period of 50 bars:
We often cal it RPO50 - relative price oscillator with the period of 50 bars. Detrending is necessary for
Neural Network as it works better with detrended indicators (it looks for real connections of the price
movement and the things that form your model; the existence of some trend confuses this search).

4) Click here:

Thus we define the Ptolemy aspects that are used to forecast RPO50 (our inputs). Let us do it for the orb
of 15 degrees.

5) Now it is the time for Neural Network to start a learning procedure. Click here:
6) In seconds you will get something like this:

As you see, the projection line (a red curve) describes the RPO50 (a black line) very good inside the blue
(training) interval.

7) Follow these steps to put Neural Network's projection line into the Main window and hide the results
panel:

(We do hide the Results panel because it covers the Main window. Do not worry, you are able to see this
panel any time).

8) Here it is, our projection line (i.e. forecast) in the Main window:
Learn these steps as they are used for any model. 

Now, let me summarize major items that you need to know about Neural Nets and forecasting with
Neural Nets.

Before creating any Neural Net forecast, you need to understand clearly the difference between the two
things: what you would like to forecast and what this forecast is based on. In the terms of Neural Net
technology, things to be forecasted are called OUTPUTS while what this forecast is based on is called
INPUTS.
Here are some samples of forecasts you can make with Timing Solution software. You can make a
forecast for:

1.  Relative Price Oscillator (OUTPUT) based on Spectrum model, i.e. based on fixed cycles
(INPUTS). In other words, the software's Neural Network obtains the set of nice looking sinus
curves and cooks from them not so nice looking price oscillator;
2. Volatility (OUTPUT) based on astronomical cycles (INPUTS); 
3. RSI, Relative Strength Index (OUTPUT) based on auto regression model (INPUTS). Here the
auto regression model means that we use previous price information (for example 10 trades ago -
auto regression order) to get the new price. Price several days ago is INPUTS, it has already
happened. Price today (or tomorrow) as a thing that what we would like to forecast is OUTPUT.

Remember, these are just some samples. You can forecast practically anything, the only condition is
having a consistent data set and finding a good model.

Understanding inputs and outputs is very important. I would recommend to read attentively the related
parts of Timing Solution Documentation:

Object Oriented Neural Network - Outputs (what we are forecasting ...)

Object Oriented Neural Network - Inputs (what forecasting is based on ...)

Let us discuss them a little bit. We begin with Outputs. Click on this button: . There is a big
variety of possible indicators you may to forecast with this software. As an example, you can forecast the
moves of the Relative Price Oscillator to catch short term swings:
Here is how this oscillator (red bottom curve) looks against the real price:

To catch the turning points, the Detrended Zigzag is the best:

Here it is (the purple line):

After the indicator to be forecasted is defined, it will be added to this list:

    

Now we need to define INPUTS, or the base for the forecast. Click this button: 

Or, for some models, you can use a "quick" button: .

You will get this dialog window:

  

Here each button is devoted to different categories of inputs. I recommend to read the documentation
regarding this issue.

When OUTPUTS and INPUTS are defined, we are ready to TRAIN the Neural Network. Click this
button:

Now look at Main Window; you will get something like this:
Here the red curve is Neural Net projection line, while the black line shows Detrended Zigzag
(OUTPUT). You can disable buy/sell signals here:

Give Neural Net some time for training, and the red line becomes closer to Detrended Zigzag line:

You can choose any part of the price chart to see the projection line for any time interval:
When you decide that the projection line is good enough for your purpose, click this button:

To see the Neural Net projection line in the Main Window, push this button to remove the Neural Net
results panel:

and then click:

Now the projection line is in the Main Window:

You can manipulate this projection line; for example, display it together with the price chart:

At the end, I would like to mention that there are three levels of the forecast in Timing Solution: 

1) It could be fully automated. See ready solutions in the module of the program called "Timing
Solutions". With ready solutions, you do nothing except choosing the solution once. It is a fully
automated process that provides you the general information regarding the market conditions. Ready
Solutions are done for major indices mostly, and these Solutions are based on extended Back Testing of
the different models. 

2) Fast Solutions are just half automated. There you have more options to choose from and to customize a
set of standard procedures to your particular data. But there are still a lot of calculations that the program
provides itself, automatically.

3) To control the whole process of forecast creation, run the Neural Net module. It is a way to customize
and fine tune any model to your financial instrument.

 Turning Points Analyzer (TPA)

The main idea of this module is finding the price levels where the price movement changes its trend. To
do that, we create the zigzag and look for these levels by analyzing different proportions of zigzag
swings. Actually, this idea is very close to Elliot Wave Theory, but our goal is to provide the universal
tool that allows to reveal hidden patterns in zigzag. 

Let's consider the zigzag created for IBM shares. This picture shows 8 months interval:

Here you see that the turning point D is the last known turning point. This is TOP turning point, so we are
looking for the end of downtrend movement. We need to know the height of D-E swing. In technical
analysis the D-E swing is called a retracement. Our target is to find the height of this retracement swing
to anticipate the next Bottom turning point E.

The simplest approach to find the length of down D-E swing is to analyze the proportion between all
preceding up and down swings using all available price history and performing the statistical analysis for
these proportions. If we know the most probable proportion, we can find the height of D-E down swing
using the height of previous C-D up swing.

Now, let us do it together. After downloading the price history data, hit this button:   

You will immediately get this screen:

Pay attention to two subjects here:

a) last tuning point August 19, 2002 is top, it means that we are looking for the bottom turning point;
b) the colored stripes in the right part of the screen correspond to the most probable levels where the price
can change its trend from the statistics point of view. 

The red stripes correspond to the more probable levels, while the blue ones - to the less probable.

The first parameter that I recommend to vary is the critical zigzag height:
The program automatically recalculates statistical criteria and updates the Main screen, Thus you can
observe all possible support levels very quickly, though always watch the last turning point, whether it is
a top (and we are looking for the next bottom) or a bottom (looking for the top).

Next important option is "Force":

Set it "ON", and you will get this:

What does the program do? It sets the last completed turning point as a bottom (September 30, 2002) and
conducts the research looking for the next top. Formally the point Sep. 30, 2002 is not a bottom because
we have enough uptrend movement to confirm it. We set this point manually: "If  Sep. 30, 2002 is a
bottom, what would be the most probable level for the top?".

As a variation you can research time intervals between turning points and find the most probable dates for
them:
  

You can also analyze more complicated schemes, like research proportions between down swing D-E and
up swing A-B (not swing C-D):

Use this option for this purpose:

Each and Every 7th Wave...

Technical notes regarding Turning
Points Analyzer
  

The recent addition to Timing Solution - Turning Points Analyzer module - released a lot of discussion
with users of the program. This small article is an attempt to answer some questions and comment some
notes that I have received.First of all, I would like to share with one unexpected observation. Working
with high probability histograms, I always had a vague feeling that this activity is somehow connected
with my 20 years of scientific work in the Institute of Nuclear Research (Russian Academy of Sciences,
http://www.inr.ac.ru). It was a feeling that I have seen it already somewhere.Finally, I have found why.
The understanding came to me one day. Looking at high probability diagrams in Timing Solution that
reveal possible turning points (like this):

I have figured out that they have a strong resemblance to Spectral Lines which can be observed at
physical experiments:

These are universal things. These bright vertical lines are subject of interest for physicists and chemical
scientists as they can be explained by quantum energy levels for electrons in the atom (the Niels Bohr's
discovery, 1913). If these levels help scientists to develop and confirm their theories regarding the
chemical structure of stars far away, they might help traders to make their money. At least, it gives some
ground to traders' obsession with ideas like Fibonacci levels and different types of waves. Sure, there is a
lot of work to do on testing and confirming these theories. In Timing Solution, the bright red zones on
high probability diagrams give us an idea where the next price reverse point might occur.

So, back to traders' needs. 

Working with Turning Points Analyzer, the most important thing is to understand what wave is most
informative.

Let say that we are looking for the end of some uptrend movement. In other words, we need to figure out
what will be the height of BC up swing (the examples are for corn prices, 1949 - 2006):
The simplest variant  is to obtain the height of the upward BC swing using the height of the previous AB
downward swing. This is the closest wave, and it should be definitely considered.

The high probability diagram shows that for this sample of data we should pay our attention to the price
level corresponding to the proportion between the upward BC swing and the downward AB swing equal
to 1.16 (it is the brightest red line on the high probability diagram and the highest sharp peak):

The interesting issue is that the market sometimes has longer memory. Sometimes the distant swing has
strong impact as well:

 
In this example, we analyze each 7th wave. In other words, we analyze proportions between upward BC
swing and 7th downward swing A7-B7 (7 swings back). The statistics shows that this pair provides
valuable information for corn:

The histogram shows that we have a cluster around 1. It means that the height of BC upward swing is
often equal to the height of downtrend 7th wave back. Other levels are 1.9 and 0.8. I don't know why the
corn remember his 7th wave. But I have some guess...Timing Solution allows to do this research in a
moment. You can check yourself any informative waves. The waves are defined here (Order parameter):

I recommend to check all waves. Each financial instrument has its own informative waves and its unique
spectral lines picture.One more observation. Sometimes the "quiet" zones on high probability diagram can
be useful for a trader as well: 
The white zones indicate that there are no turning points here, and the price will continue its trend
movement.One very important issue is the risk management. For example, if you would like to make you
trading decision based on 1.16 level turning point:

you need to remember that we talk here about the probability. There is a high probability that the turning
point will occur there. However, besides the cluster in the region 1.16, there are many other levels where
the trend has changed before, and these points are distributed almost randomly. You need to keep these
"dark horses" in your mind, otherwise they can ruin any smart trading strategy. It is interesting to see how
phenomenological theories (such as Elliott Waves and Fibonacci levels and any other level or wave idea)
become connected to solid mathematical grounds nowadays. It is true that only backtesting can provide
statistical base for these (and any) ideas. And it is also true that we need phenomenological models (based
on some observations). Statistics gives the solid ground while Phenomenology gives understanding.
Together they work.

 Entering DayTrade Swings 

In this article I want to introduce an important concept I'll generically call "the trigger". In trading
parlance a trigger is a clear event that has you entering a trade - it is the last step in a trade setup.
What precedes the trigger in a trade setup could be something like price pivoting on a
support/resistance level, one of the many TS price forecasts, planetary aspect timing, market
geometry timing like the 128 technique, etc. In other words, the first part of the trade setup has you
anticipating a price swing - the trigger confirms it and gives you an entry price and time. The
examples presented are for daytrading, though the concepts are applicable to higher timeframes.
I'll be using the DJ Index for several reasons. As it updates every two seconds, it can be used as a
proxy for any of the many DJ index tradeables like the DJ mini futures, DJ full futures, the ETF
Diamonds, the DJ single stock-futures, and options on the DJ mini. Why would you want to do this?
Because the index has far less "noise" then any of the tradeables. As such it improves whatever
method you're using. And of course we all know that the index and the tradeables can never
diverge more then a few ticks for when they do they are immediately arbitraged. At $5 a tick, low
margin, and trading volume around 200,000 contracts a day the DJ mini futures are great for
daytrading.Last year I asked Sergey to add an indicator to TS called Smooth Momentum (SM). It
has several uses, here I'll profile it as an entry trigger. A very important point is that this trigger
method will not work well on timeframes under three minutes - as a general rule, the smaller the
timeframe, the more market noise. 

 Load your data; five or four minute timeframe is recommended

 Plot SM using the default values
 Move it to the price window (use the "Main Window View" button to move it to the Main
Panel)
  Zoom in on one trading day

To create the trigger we connect pivots on the SM indicator - below I drew a trendline connecting
pivots A and B. When SM breaks that trendline (see the red dot to the lower right of B) you have an
entry trigger to go long. In this example, whether you drew the trendline on price itself or on SM
you would have about the same result. But often SM will let you draw trendlines that are not
apparent on the price chart and also give you earlier entry before the swing starts, when price often
moves so fast its hard to get in.

Below I've placed the SM trendlines for this trading day. Only the green trendline break didn't
result in a profitable trade! While this is a crowded screen, you can easily review from left to right
and note how the trendlines were drawn on SM. Each red dot represents a trendline break, and a
trade entry opportunity. A few of these SM Trendlines you couldn't draw using price alone, like the
red, brown or magenta.
Word to the wise: this SM trigger method can be applied to the NYSE advance-decline line.

While on certain days you can "clean up" just using this trigger method, you don't want to use this
method by itself. For the DJ Stock index I would recommend you also use the Support Resistance
methods outlined in my article titled "Planetary Lines Intraday". You can replace the MACD
Histogram with Smooth Momentum, using it the same way as MACD is used in that article.
Additionally, you can use an intraday price forecast modeled after Sergey's Spectrum - Neural Net
approach, which he published a few months ago. The idea is first see when forecasted trend changes
are to occur and then trade then only if you get a SM trendline break. The two together up your
odds significantly. Next I'll preview a few other TS methods that can be used to form an opinion
that a trend change or swing is forthcoming, an opinion that is confirmed and traded using SM
trendlines.To anticipate a change in trend you can use the "Time Lines....Planetary Equidistant
Lines" drawing tool. Below I've selected "Moon...Moon". I simply connected the high at S1 to the
low at S2. The first vertical line to the right of S2 is calculated by TS and it caught the next trend
change. The next vertical line out catches the breakout from a triangle chart pattern. Of course
you'd have your SM plotted in the main window and trade when the SM trendline is penetrated by
SM.
Next I'll preview a slightly more advanced use of  "Time Lines....Planetary Equidistant Lines".
Below I connected S1 to S2 - but in "regular" use we normally wouldn't use the S2 pivot - we'd use
the higher high a few bars to its right. What I do is look at Smooth Momentum (plotted in the sub-
chart below). SM shows a higher reading for the pivot at S2 then it does for the higher price a few
bars to the right. So I use the higher SM reading for the pivot - this often gives more accurate
trend-change overtone lines. The idea is that planetary cycles result in momentum swings, and
using the highs and lows of momentum is a more accurate reflection of the planetary cycle then
absolute price values.
Another good method to use for anticipating a change in trend is the 128 method. This was added
to TS by my request and here's a good opportunity to show how its used as most are probably
unfamiliar with it. On the below chart you first connect two highs, then the low between them. The
dashed red lines are anticipated trend change (or range breakout) times. Well - its usually not this
good. To help avoid losing trades you would only take the trade if a SM trendline were broken. So
the trend-change prediction shown below is the setup, the SM trendline break is the confirming
trigger. Note that you can use the 128 technique spanning several days. Just select "Bar", instead of
"Time", in the upper menu. Finally, while I'm showing a High-Low-High sequence below, of course
it can be used on Low-High-Low.

The final setup method I'll present deals with planetary hours. Don't forget that to use them you
must select them in the options box PRIOR to clicking "Calculate". We've been using Thursday
March 22, 2007 in the above examples. Thursday is the day of Jupiter, so I'm interested in the
Planetary Hour of Jupiter, along with Venus. Why Venus? In effect Jupiter and Venus are related,
as the major and minor benefic. So on Tuesday, the day of Mars, you'd use Mars and Saturn, the
two malefics.  Monday would be Sun and Moon, the two Lights. You would create (and save) your
ULE query as shown below. I also want to see intraday aspects to Jupiter on Thursday (on Friday,
the day of Venus I'd use the same two Planetary Hours and the same aspects, but to Venus instead
of Jupiter). Don't forget to modify the Events formula and to click the red checkmark. 
Below is the result of our ULE query. The low of the day occurred during Venus hour, the high
during Jupiter hour. Almost every aspect correlated to an effect in the market. 

Below are the results of the query in TS's main window. I've added the Smooth Momentum
indicator. The idea of course is to trade any SM trendline breaks that occur at about the same time
(usually just after, not before ) as a planetary hour or aspect event.
To summarize, there is tremendous value in using triggers to help reduce losing trades. The trigger
presented here, Smooth Momentum Trendlines, is an excellent candidate. A trigger should be used
as the last step in a trade setup, where the initial parts of the setup give us an opinion about the
market. In TS that opinion could be formed from Planetary Line/Divergence, Price Forecasts,
Moon Stepping technique (as shown in this article), the 128 technique, and Planetary
Hours/Aspects.

Fibonacci/Pitchforks/Trend Lines/Gann Angles

 

and other charting tools

Though Timing Solution is not a technical analysis software, we have added to it a set of charting tools.
They are situated on the left side of the Main window - because they are tools that are not statistically
verifiable. See this set of buttons; you are able to draw the most popular charting elements here:
Let us draw one of them, Andrews pitchfork. Follow these steps (they are pretty much the same for all
charting tools):

For this particular tool, three mouse clicks define its anchor points  (the anchor points are marked by
yellow bars):
For any other charting tool, the appropriate instruction defines its anchor points.

If "Snap" button is pressed, the program automatically sets the anchors on the nearest highest high or
lowest low:

You can move the anchors this way:

Many tools can be modified. See how to modify our pitchfork:

The Andrews pitchfork requires three anchor points. Some charting elements require two anchor points
only. For example, to draw the Fibonacci grids simply drag the mouse from one anchor point to the other
one:
   

As with the pitchfork, using the RIGHT mouse button, click on any yellow anchor bar to modify your
Fibonacci grids (colors, price/time grids, marks):

    In "Retracements" tab you can add new line and set the color and width for any of these lines:
    Clicking "Panel" button:

you will get the :Charting Panel" window:

Here you can save or download our charting elements, delete them, make a copy of any charting element,
lock/unlock them.

Question:

What Relative Price Oscillator is more preferable?

Answer:

Let’s consider some chart that covers the time span of 4 years:
Here you can see the up trend movement since 2003. Looking at the details of this chart, you can see the
waves that last for several months each.
Magnifying this chart for 3 months period, you can observe the price charts that take place within several
days:

From another, side if we consider this data set in the perspective of the recent 20 years, you can see that
the 2003 swing is a part of some bigger waves:
When we speak about waves inside the waves, we are referring to the fractal nature of the stock market.

When you start to make the forecast model for any financial instrument, first of all you have to decide
what wave will be researched and what is the typical period of this wave. The Relative Price Oscillator
(RPO) deals with this issue.

Let’s create the relative price oscillator with the period of 50 price bars. Follow these steps:

MA1, MA2, and MA3 are parameters and components of the formula for this RPO:

The RPO(1,50,50) catches the waves that are about 50 price bars. It looks like this:
The most important feature of this oscillator is that it makes these waves horizontal. This is very
important: if we look at the waves in Nature, it is much simpler to describe (and thus forecast) water
waves on the lake than waves in the water flow that runs from the mountain (the mountain in this case is
the analogy for the market trend).
We can make this wave smoother – if we would like to reveal cycles that last for several months; in this
case, we are not interested in small details inside this wave:

To eliminate small waves, we use MA1 parameter that makes this wave smoother:

Look at these two waves together: red curve represents not smoothed oscillator RPO(1,50,50), blue line
stands for smoothed oscillator RPO(10,50,50):
As you see, the smoothed (blue) oscillator eliminates small waves.

Another thing that is typical for moving averages is the lag effect. Timing Solution has a special
algorithm to calculate RPO with minimized lag effect. See these lines on the same screen: a line for Close
(the black line) and two different RPOs: RPO (1,50,50) and RPO (10,50,50):

The shift effect is practically eliminated.

So, for practical usage, keep the MA2 and MA3 parameters equal; they define the typical period of the
revealed wave, while the MA1 parameters indicates its smoothness:

Important: To calculate MA1 (the moving average), we always use the “Symmetric 2” algorithm. Thus
we eliminate the lag effect typical for classical moving averages.

If you use “Symmetric” algorithms in RPO window with MA2=50 (as an example), the real period of the
wave will be less than 50 price bars (due to math reasons):
 ,
However, I would recommend to use “Exponential” algorithm here.

The period of RPO should be compatible to the typical period of the swing that you are looking for.
See these two RPOs displayed on the same screen: the blue line represents RPO (3,10,10) and the red
line is for RPO (10,200,200):

As you see, the shorter RPO (3,10,10) sees the waves inside the month:

while the red line represents the RPO that is more oriented to see the waves inside the year:
As a compromise, I often use the oscillator with 50 price bars period, RPO(1,50,50):

But you can try your own variations.

Also I would like to remind that you can change the thickness and color of any created oscillator. You can
remove them as well by clicking this button:

All these operations can be performed through this window:

You can also modify the parameters of created indicators while you are in the Main window by clicking
on the indicator’s identifier:

If you click this button: these indicators

will be used “by default”. It means that when you download the new price chart these indicators will be
created automatically. This feature is useful if you often use the same indicators.

Detrended Zigzag
 

This patch allows to create the detrended zigzag. The detrending procedure applied to zigzag method
allows to calculate the Spectrum and Composite for it as well as to use this zigzag in the Neural Net
module. Thus, now we are able to reveal any kind of periodicity that might exist in the time distribution
of turning points.

Generally speaking, zigzag is the line that we draw while connecting together tops and bottoms of the
price line. Another name for zigzag is "filtered waves" (this theory was created by Arthur A. Merrill). The
biggest problem with zigzag is that we cannot use it for big time intervals due to the existence of market
trend. But - what if we try to eliminate the trend? Thus, we get the detrended zigzag. (By the way, it is a
good example of mutual cooperation with the users of Timing Solution. This idea was born in our
discussions of the subject.)

You can define the detrended zigzag here:

To see the difference between the regular and detrended zigzag, let's draw them both on the same screen:
The usage of the detrended zigzag makes possible the analysis of turning points for big time intervals
(due to elimination of the trend).

While the detrended zigzag is created, we can use it in all modules of the program. For example, we can
calculate Spectrum for it. It will give us the time periods with high probability of turning points:
  

Remember that the program does many operations automatically.  You have to define only crucial points
of the process; simply follow the steps shown on the picture above. 

Extract the most active cycles. The program puts these cycles into the clipboard automatically.

When it is done, we can create the  Neural Net model and predict the future turning points. How do we do
that?

First of all, define outputs (i.e., things that we want to predict). In our case, this is the detrended zigzag
with critical change 3.225:
  

Next step is to define inputs, or factors that we use for prediction.  In our case, we use regular cycles
calculated by Spectrum module. These cycles are already found, we get them from the clipboard:
 

The next step is to train this model. 

This simple technique provides surprising results. See the picture below; it shows how well: this model
allows to predict the turning points, although sometimes we still face the "inversion" effect: 

At the inversions, the model replaces tops and bottoms. But the most important fact is that this model
points out the correct time when the turning point occurs no matter what its nature is (in other words, no
matter whether it is a top turning point or a bottom one). 

Also, due to its whole appearance as teeth of the saw, the detrended zigzag is able to locate turning points
more precisely than with any existing oscillator.

All the above gives us a very strong reason to use the detrended zigzag for creating timing models.

June 18, 2005

Sergey Tarassov

Toronto, Canada

Zigzag
As a source, we use the book by Arthur A. Merrill “Filtered Wave basic theory” published in 1977 year.

This is the window to set the parameters for Zigzag in Timing Solution:
The most important parameter is the minimal height of zigzag swing. Merrill called this parameter FWG
(“Filtered Waves Greater than %”).
You can define this parameter here:

Just slide the bar.

Next parameter is how we calculate the swing/wave heights. We can calculate it as a difference between
High-Low or Close-Close:
You can define this parameter here:

Next parameter: how we specify the reversal points, there are two variants as well:
We can specify the reversal point as highest high or as highest close.
This parameter is defined here:

Do not mix these two parameters the swing/wave heights and reversal points. For example, you can
define the reversal points as high/low but the “Filtered Waves Greater than %” parameter is calculated as
close/close:

Thus we are doing the double filtering for reversal point: we have to reach highest high and close should
be in 5% (as example) higher than close of previous low reversal point.

Very important question is how we handle the last turning point.

For example, the question is: “is A point a low reversal point?”

I used here 5% zigzag. Formally we cannot answer this question because the up swing A-B is only 4%,
we have not enough confirmation that A is a real low.
We handle the last turning point in a special way: for the last swing, we use a smaller number. These
options:
The “last wave” parameter defines the length of last swing. In other words, to confirm the last turning
point A, we need 70% of 5% = 3.5% uptrend swing.

The parameter “Force” allows to play the more risky games. We can force the last
reversal point to the highest high or lowest low disregard the confirmation of opposite movement:

If you plan to use it in Neural Net, Spectrum or Composite modules, I would recommend using the
detrended zigzag it is here:

It is more suitable for creating a projection line:

Also, if you work with intraday data, use this option:

Insidiousness of "good" indicators 

During this year the Timing Solution research group did a lot of back tests for different indicators.
Usually people who invent these indicators tell about their benefits only and do not mention the side
effects that these indicators might have. We looked at the indicators that are used in Timing Solution
software and the most popular indicators used in other programs as well. Our main focus was to
understand where and why possible "future leaks" may occur. Definitely, we used different data sets for
training and testing intervals. However, it was quite possible that sometimes indicators themselves may
cause "future leaks". The results were very surprising: I did not expect that this effect could be so
significant. Now I would like to share with you our findings and some thoughts. I need to mention that the
tools suggested in Timing Solution software (as well as in other packages of other groups) do what they
are supposed to do. My purpose now is to discuss a problem and bring your attention to it.

There are some indicators used in Technical Analysis and software for traders (including Timing Solution
as well) that may lead to "future leaks" effect. The best example are Moving Averages (MA). Let us
discuss them first.

The biggest problem with regular moving averages (MA) is the delayed lag. See below the price chart
together with 100-days moving average (the red line):
The major turning points on the moving average are shifted to the right in respect to their real position on
the price chart. And this is the real problem! This moving average can be compared to the dog that barks
too late, when robbers are already in the house. Unfortunately, this is unavoidable price for the smoothed
view of the moving average. (The opposite to MA is momentum; it is a leading indicator, and it does not
provide future leaks either. This indicator feels the future price movements well, but there is another
problem there: it is too noisy. This dog barks too much, so much that we are not able to pay attention to
all its signals.)

Is there any way to deal with MA problem (i.e., delayed lag)? The answer is YES, but a BIG NO appears
here as well. We can use a special type of MA that avoids the delayed lag. It is the Symmetric oscillator.
There are two variants of it in Timing Solution. Look at the example of one of them:
As you see, this moving average (a purple curve) exactly reflects all turning points. But what is the price
for this beauty?  The price is that this indicator has future leaks.

In other words, to calculate the value of symmetric moving average for point A, we use the price bars
located AFTER this point. There is nothing bad with that - till we come close to the last available price
bar. There is simply no data to calculate Symmetric MA further, and the program switches to a regular
(exponential) MA - bringing back a delayed lag problem:
This delayed lag effect is not so big for MA used in Timing Solution software. However, it still exists.
We always should keep this fact in our minds. As to my knowledge, other algorithms of calculating MA
(like Mark Juric's MA) do not change this situation much.

This fact we have revealed doing the massive Back Testing. Practically it is impossible to discover this
effect in any other way.

Toronto Ontario

Sergey Tarassov

 The most powerful techniques

Here I will do the short overview of the techniques available in Timing Solution. The material below is
based on TS users feedback and my own experience. It reflects the situation as of December 2007.

1) For daily data, I recommend to start with the simplest Annual model. It really provides you a lot of
information. Use this button:
 The explanation regarding this technique is here:
http://www.timingsolution.com/TS/Uphistory/upgrade_19.doc

vedere dopo mmmmmmmmmmm

2) Very effective  technology is described in the article "Forecast based on fixed cycles". You can apply
it for daily and intraday data. The most important thing here is to figure out how the cycles for this
particular financial instrument should be extracted; it is described in "Parameters to vary" section of the
article.

3) Also for daily data I recommend three models a) Dynamic model; b) Planetary graded speed; c) Planets
waxing/waning. These models are based on Neural Net technology. So I recommend to read "Universal
forecast = Universal Language of Events + Neural Network" article and apply one by one these
models:

One important parameter here is the length of the training interval. It shows how many price history data
the program will use to train Neural Network. Use these buttons:

As a first approach, I recommend to start with 1000 price bar (which is set "by default"). For daily data
this is about 4 years - Presidential cycle. Then try to double this value to 2000 bars, i.e. use 8 years of
history. And after that try to use all available price history (if available data cover more than 8 years of
price history) clicking "All" button.

4) TS users apply a lot the Turning Point Analyzed module. It is here:

It allows you to see the "high probability zones" i.e. the price levels where the trend changes are more
probable:

mmmmmmmmmmmmmm

Upgrade May 19, 2006

Annual Cycles
In this upgrade you can easily create the simplest forecast based on annual cycles.

The annual cycle is a very important fundamental factor, and we should take it first into consideration.
Now you can create the projection line based on annual cycles by two mouse clicks.

1) Click on this button:

You will get the window where you can define the base interval (it is the interval used to calculate the
annual cycle; in this example, we use last 12 years of price history):
2) Clicking “OK” button, you will activate a set of operations that automatically provides the annual
projection line and sends it to the Main window. This is the annual cycle projection line for Dow Jones
Industrial index:

However, one question still exists: how the projection line will be changed if we vary the base interval?
As an example, we can calculate the annual cycle for Dow Jones Industrial index using last 2 years and
all available 120 years of price history. It gives us different base intervals and different projection lines.
The question is: “which annual cycle is better?”

To answer this question, let us calculate the annual cycle using last 2 years, then using 5 years, 10 years
… and all 120 years. Plot these projection lines all together and choose the time period where these
projection lines point at the same price movement.

You can do it now just clicking this button:

The program itself will recalculate the projection lines for the annual cycle based on different base
intervals. You will see them all on the main screen:

You can see here five projection lines. These projection lines are based on different price history: the blue
one is based on 2 years of price history, another extreme is the red line based on 120 years of price
history. I marked by yellow pointers the moments when all annual cycles point the same pivot points.

If you do not need some of these lines or all of them, you can delete these lines through the Strategy
window:

Simple SuperSearch Forecast Models (Neural Net + Super

Search)
Universal Language of Events (ULE) in Timing Solution has a new feature of creating simplest forecast
models. It is a step ahead in comparison to regular SuperSearch.
Let me show you this feature. I run Neural Net module and train it using FAM Geo model. Click this
button:

You will get the list of SORTED events that compile this forecast model. The strongest event is the first
one, then comes the second best, and so on …

Highlight first 20 events (just push Shift button and hold it) and click this button:

You may hide Neural Net Information panel pushing this button:

Now watch the SuperSearch window:

Here you can see how the most influential events work in time. I think you may be interested to see the
summary diagram as well. Set this options “Off” to hide insufficient information:

Here you can see the summary projection line based on these events.
Each event has its own weight calculated by the Neural Net module:
Thus, you can create simple SuperSearch models that use the most significant information calculated
through a very sophisticated Neural Network module.

You can read about this technique in the documentation and in these articles:

http://www.timingsolution.com/TS/Articles/waves_in_moon/waves_in_moon.htm

and:

http://www.timingsolution.com/TS/Articles/tp_1/tp_1.htm

5) Also a very effective technique to reveal the time for reversal points is described here:
http://www.timingsolution.com/TS/Articles/PT/

These five techniques mentioned above are related to the state of the matter as it is today, December 8,
2007. Our analytical group works constantly on creating and researching the new models and techniques.
You will be notified any time when something worth of your attention appears.

Application of basic statistics in Timing Solution

In this small article I will explain the usage of statistical criteria in Timing Solution.

Efficiency Test module

This module is used to research the effect of any astronomy/astrology phenomenon on the stock market
movements.For example, doing the research for the Sun - Jupiter conjunction, you can see that Dow starts
its uptrend movement in a week after this conjunction:

The arrow and the record in the lower right corner shows us that a week after the conjunction the price
has gone up 71 times against 41 times down. It looks like we have found a factor that causes the upward
movement. The question is: "Can we accept this factor as a really meaningful one?". In other words, we
need to know whether we should consider this factor or not.

The science of statistics can help here. Immediately it gives us the answer: "No, it is not enough
information to make such a conclusion; we need to conduct some additional research". Before taking this
factor (the Sun - Jupiter conjunction) as the up-mover, we need to be sure that there is no upward
movement when this aspect is not present. We need to ask ourselves how many times the Dow would go
up if we disregard this aspect. If Dow goes up with the same or greater pace when there is no such aspect
in the sky, our result above is not a mover itself, it just coincides with some other factor that we do not
know yet and that is a real mover. To find out that, we create a so called "control group". We randomly
choose 112 points (112 - because in our example the Sun - Jupiter conjunction has occurred 112 times)
and look how this random "aspect" (as there is some aspect for each of 112 points) "affects" the stock
market. The program shows that for this aspect the price went up 59 times against 53 times down. You
see all this info on the screen: figures "71" and "41" show the results for the analyzed aspect while "59"
and "53" refer to our control group. Thus we are able to apply the "Chi square" statistical criterion:

It says to us that the factor that this aspect moves the market up is not occasional, and the probability of
this non-occasion is 90%. Also, it means that there is 10% possibility that this fact is occasional and this
aspect has no effect on the stock market. This 90% is a probability to be true. Do not not mix it with the
force of this aspect - which may be not so impressive as we have 71 times up and 41 down, i.e. the price
went up in 63% of cases. 

Correlation in ULE and Neural Network modules

One more application of the statistics is correlation analysis of ULE events:

ULE module helps to record events that we believe move the market. Then we create a projection line
based on those events. And we can compare the projection line to the actual price (or price
modifications/oscillators).

You do not need to do the comparison; the program performs this analysis. As the result, you get the info
window similar to this one:
 

In this particular case, the program says that the ULE event that we research correlates to the relative
price oscillator (period=10 bars) at 8.5%. You can find the description of correlation coefficient in
documentation.

I would like to explain how to use this info:

It is very close to the probability to be true that has been discussed above. If we have a small price
history file, we might get a huge systematic error even if the correlation coefficient is high. As an
example, we could have 80% correlation between the projection line and our forecast on the last 100 price
bars. But we cannot be sure that this result is not occasional. To be sure, we need to use much more price
history data. To estimate how we can rely on this fact, we use t-statistic. In this particular case we have:

force of this phenomenon is 13%

its probability to be true is 97.59%

Do not mix these two parameters.

Solar System Center of Mass (CM): case study

Solar System Center of Mass (CM) is the center of mass of our Solar System. Due to the fact that the
planets constantly rotate around the Sun, the center of mass constantly changes its position. The most
interesting fact is that  this point makes its dance around the Sun's disk. See  how CM moves in years
2006 - 2033:
 

The yellow circle represents the Sun's disk. As you can see, sometimes CM dances just around of the
Sun's photosphere (from August 2006 till April 2010 - a red curve). Then it dives into the Sun's disk and
makes passes inside the Sun (April 2010 to July 2016 - a blue curve) and after that makes very wide
figure outside of the Sun's disk.

To see the beauty of this dance, we need to watch it during at least a hundred of years. See how trajectory
of Solar System Center of Mass's looks in a wider time frame (years 1950-2050):
 

Is there any connection between CM moves and the stock market? If such a connection exists, we may
use it to predict the future of the markets. In this small article, I will conduct a case study for CM  and
show possible ways to use this point to forecast different financial data. I am not a pioneer here; I only
continue the work that has been started by Theodor Landscheidt and is described in his excellent book,
"Sun-Earth-Man".

Who are the major performers of this dance?

First of all, this it is the Sun itself. It possesses 99.8% of the mass of our Solar System. It keeps our
dancer (CM) totally under its control, allowing them from time to time to make the figures outside the
Sun's photosphere. 

Second player is the heaviest planet of our System, Jupiter. Jupiter dictates to our dancer its 12-year
rhythm. This is important as the rhythm is very important issue for dancing.

Saturn and Neptune, the next heaviest planets, add a variety to  this dance. They add the sense of the art to
this dance, otherwise the dancer will be just running rounds.

Other planets add some nuances visible mostly to the professionals.

  Let look at this dance in details. As I said, Jupiter defines the rhythm of this dance. Look at CM and
Jupiter ephemeris:
 

They are pretty close. However, once in every 150-200 years something terrible happens. The dancer
does not  follow the direction pointed by Jupiter and moves retrograde. This the trajectory of Solar
System Center of Mass for the last 200 years:

You see here that CM has been retrograde in 1811 and 1989 years. This is how it moved in 1811 year:
 

Occasionally or not, two years after 1811 the Napoleon Empire ceased to exist as well as the Communist
regime in Russia (two year after 1989). 

Now let us look at our dancer pairing some financial instrument.  

It looks like the CM has some impact on Consumer Price Index (CPI). I have the CPI data  for Great
Britain. The data used cover a period from 1666 till now. In some book, I have seen a diagram for that
same index, starting from the year 1450. Unfortunately, I do not have these data and would be happy to
get it. I would like to mention also that this research is NOT an illustration of some econometric theory. I
simply look at these data from the point of view of mathematics and astronomy. 

Let us start. Below is the diagram that represents CPI, as per our data file. The first attentive look at these
data reveals that CPI's behavior has changed significantly in 70s (XX century). It became rising a lot
faster than it did three hundreds years before:

IMHO this is caused by the fact that money and gold have been separated at this time (Bretton Wood
conversion has been abandoned). So I conduct the statistical research for the data from the year 1666 till
1950.
Below I draw the radius of Solar System Center of Mass (a blue diagram) together with the variation of
CPI factor (a red curve: oscillator with period=5 years):

As you see, there is some coincidence between the blue (CM) and the red (CPI variation) peaks. It is not
ideal; however it is present. The mathematical analysis shows that these two diagrams (CM radius and
CPI) correlate to each other, and the correlation coefficient is 11%. It means that the further CM is
located from the Solar center, the higher inflation we have. When the dancer is under the Sun's control
and makes some figures dancing inside the Sun disk, the inflation tends to be smaller than at the times
when these figures are performed outside the Sun.

Much more interesting results are provided by the analysis of the latitude of the Solar System Center of
Mass. See it below, together with CPI:

 
 

The correlation now is about 30%. It means that these two factors are related with a high
probability. Practically it means that the higher CM is inclined to the Ecliptic, the higher inflation we
have. I think we can improve these results using Jupiter Ecliptic instead of the Earth's  Ecliptic. 

This is the CM latitude for 20 years of this century:

At least two years already I have seen many  forecasts regarding the coming hyperinflation for the next
year (it was said about 2006, 2007, and 2008), predicting the gold price at $2000 and the oil price at $200,
together with many other terrible things.

I believe and hope that all war/economics/liquidity problems will be solved smoothly, the Cosmic
weather gives us some chance for that.

Once again, remember that this is not an econometric analysis, it is the analysis of only one factor, CPI
for Great Britain - because of the available long term data. Other inflation related indicators (like PPI, M2
index) simply have not enough recorded  history data to make any long term forecast.
 

All our programs allow to calculate a position of the Solar System Center of Mass. It is marked by the
same symbol as the North Node in heliocentric coordinates:

This object has no relation to the actual Moon Node, we simply use this symbol in heliocentric
coordinates - because the Moon Node in heliocentric system has no sense at all. 

Thus we can use CM in the standard procedures of financial astrology. For example, we can make a
composite diagram that shows the Dow Jones Industrial Index movements in respect to the CM position.
Here it is:

The data from 1885 till 2007 are used to calculate this diagram. More detailed analysis shows that the
most reliable tendencies are:

a) DJI goes up when CM is in Aries;

b) DJI goes down when CM is in Taurus and Gemini;

The effect of all other areas of the diagram is rather mixed. This is how the composite diagram works in
time (the green line):

 
 

For your information I put the ephemeris for CM:

The last phenomena related to the Solar System Center of Mass that I would like to mention is its
conjunction with Jupiter (in SuperSearch module, the corresponding event is: the North Node conjunction
Jupiter Helio). This phenomenon takes place approximately once in 10 years. It usually has downtrend
impact on the stock market. The Efficiency Test shows that within a month around this conjunction Dow
Jones goes down (12 times down versus 1 times up):
 

Remember that this aspect takes place approximately once in 10 years. For me this fact is very interesting
because for years I try to find some rational explanation to 9-year Juglar cycle.

The analysis of many financial instruments shows that almost all of them contain one of these economical
cycles:

1) 40 months Kitchin cycle and 2) 9-10 years Juglar cycle. These cycles are visible in the spectrogram for
Dow Jones index:

So far I am not sure about the nature of this cycle. Maybe, it is a half of the Moon Node cycle; maybe it is
related to the Jupiter's conjunction with CM cycle.....
 Saturn-Neptune cycle: case study
Question: How does upcoming 2006 Saturn-Neptune opposition impacts the stock market?
First of all, you need to figure out the periodicity of this phenomenon. The Saturn-Neptune cycle is 36
years and to make any conclusions regarding this aspect, we need to have at least 100 years of price
history. That means that we can apply this analysis to the longest available daily data. I have data for Dow
Jones Industrial index, from 1885 to 2006, 120 years of price history. The most typical mistake that
appears in astrological research is the application of long term cycles to non consistent historical data.
You should always remember the period of analyzed phenomena.
Now let’s research Saturn-Neptune opposition with Timing Solution software (you can do it with me, try
the Demo from the website www.timingsolution.com):

1) Download the DJI data and click “Calculate” button

2) Go to “ULE” tab in Timing Solution and click “Edit Model” button:

3) You will get the window where you can define any phenomena you want to explore. Let’s define
the event “aspect Saturn - opposition – Neptune, culmination”:

4) Calculate this event:

5) Look at the Main window. You can see the set of vertical red stripes that show the time when this
phenomenon really occurs:

6) We can magnify any piece of price chart to see details, like this:
7) Let’s apply the “Efficiency Test” to understand the impact of this event on the market (DJI). Click
here:

8) You get the diagram that shows how the price is changing around the culmination point:

In other words, you can take it as an average price distribution around the culmination point. In our
example, we can say that in average the price 10 days before the culmination is 0.9% higher than at
the moment of culmination. Then it drops slightly and increases after the culmination.

9) You can apply the trading strategy based on the price drop before the culmination. To evaluate its
results, we will create the strategy arrow that connects points 14 days before and 1 day before
culmination. To make the arrow, click left mouse button at the beginning of the arrow, drag it till
the place where the arrow should end:
 10) This is the statistical report for this strategy:

If we compare the price 14 days before culmination with price 1 day before culmination, the price went
down 7 times while it was up 4 times.
For bullish strategy, we have this picture (7 up/3 doiwn):
11) Let’s consider the wider picture, the influence of this aspect within 200 days around the
culmination. Do this:

12) Now the Efficiency Test looks:

13) Pay attention to fast growth 80 days before the culmination:

14) This is the stat for bullish strategy 78 – 72 days before culmination:

It has been 10 up against 1 down.

Thus, we can describe the impact of this aspect on DJI as some splash 2.5 months before the
culmination and small drop around the culmination. In 2006, this aspect culminates at the end of
August:
To complete this research, let’s consider the influence of the heaviest bodies of our Solar system (the
heaviest are Jupiter, Saturn and Neptune). I downloaded the monthly historical data from 1789!!!
These data were developed by the Foundation for the Study of Cycles. Bill Meridian has got it in 1988
and has maintained it since that time. For 20th century, these data correspond to Dow Jones Industrial
index. Earlier data were estimated by a special method. The technology we will apply is the
composite diagram. 

It shows the normalized price in respect to the angle between Saturn and Neptune. We have a top
around 180 degrees (opposition). It means that in longer perspective (several years) we can expect the
decline. But the question is – “can we rely on this info?”.
On the diagram, besides the main colored part, you can see three lines (red, blue and black). They
represent the composite diagrams calculated on three independent time intervals. Two diagrams (black
and blue) show the top, while the red diagram indicates the bottom and further price up trend:

So, we cannot rely on this aspect, some surprises may occur. We need more information and research
of other aspects.

As an a good example, look at the composite diagram for Jupiter cycle (12 years cycle). This cycle
definitely presents in American economy:
 USD/CHF Mars Geo Case Study

I have got this note recently: “It would be nice to see your software do Mars Geo on USD/CHF”.
There is no problem. I will show in this article how anybody can perform this type of analysis using
Timing Solution software. Highlighted in green are the key words to fast find the appropriate topics in
the documentation.

Step #1: Download historical data: USD/CHF 1973-2006. This is the price chart:
Composite module:

Mars in Geo means that we would like to see whether there is any impact from Mars going through all
Zodiac signs in Geocentric coordinate system. It is a cyclic movement. Thus, to get the first impression
regarding this cycle, I would recommend starting with the Composite module. Click on “Astronomy”
button in the Main window and choose these options for “Mars-Geo”:

You will see this Composite diagram:

It shows the price changes in respect to Mars position. Is this cycle reliable? Can we use this information
while making trading decisions?

The most reliable zones here are Leo and Capricorn - Aquarius. All three lines (red, blue and black) point
at the same price movement:
In other words, when Mars is in Leo or Capricorn and Aquarius, it contributes its energy to the strong
movements on this market.
These are typical trend lines in respect to Mars position:

ULE/SuperSearch:
We have got the fist impression regarding this cycle and now would like to see more detailed analysis. In
this situation ULE/SuperSearch module is recommended:

We will explore what happens to USD/CHF when Mars ingresses Leo, Capricorn and Aquarius.
We concentrate first on these three signs because the Composite module shows their importance. We do
Efficiency test for each of these three astro events. (I did it for each event; however, the following
illustrates the most interesting event. In this case, it is Mars ingress to Aquarius)
Efficiency Test:
Fill this form and click “Efficiency Test” button:
You will get this:

The Efficiency Test shows how the price changes around some specific moment of time (in this case,
when Mars ingresses in Aquarius).

You see the price starts going up about 2 days before this event. This upward movement continues for 4
days after the ingress (12 up against 6 up):

This factor is important, especially taking into account that it occurs on downward general trend for this
instrument.

We looked at Mars’s ingresses (single moment events). However, the active zones (found by Composite
module) tell us about Mars being in these signs. Let us look at Mars in Leo first (you do the same thing
for Mars in Capricorn and Aquarius).

You see here the big drop in price, in the middle of Leo. The program does not do Efficiency test for
prolonged events. But - all three diagrams show the bottom right in the middle of Leo:
We can look at it in details, degree by degree. Let us start with the middle (i.e., 15 degrees of Leo).

Fill out the form this way:

Calculate the Efficiency Test for Mars in 15 degrees of Leo:

We can say that within a week after the moment when Mars passes 15th degree of Leo the price goes up.
However, trading strategy based on this information may be too risky (12 ups against 7 downs).
Also look at he bottom of Efficiency Test window:

Here the red stripes correspond to the moments when price goes up a week after Mars passes 15th degree
of Leo, blue – down. You can see that this rule worked well for the last 4 passes. In other words, this rule
works for the last 8 years.

Projection line:
The program is able to create the projection line for Mars cycle (based on the information that we have
got doing this research). You can see it immediately in the Main screen:

Committee:
The question is: how we can rely on this projection line? I recommend creating Committee of projection
lines based on Mars cycle. (Committee is a term used in Neural Net science, it means a variety of
projection lines.)
Follow these steps:
You will get this diagram with 5 projection lines calculated on different time frames (the red diagram
based on latest price history, the blue one is based on the whole available history, other lines are based on
different intervals within the price data file):

Pay attention to the moments when all these diagrams show the same tendency. They are marked as
circles.
Here I made the typical trend lines produced by this cycle:

Actually, here you can see the possible ways of playing with this cycle.

Spectrum:
We explored Mars Geo cycle in details. There is one more question regarding this cycle that is not
answered yet: is this cycle really important for our data set? There might be some other players, much
bigger than that.
To get a whole “cycle structure” of this data, I would calculate a periodogram ( “Spectrum” button):

The most prominent “astronomical” cycle here is 762 days cycle:

The astro cycles are marked by small lime stripes on the period scale.

This corresponds to the Sun-Mars synodic cycle 779.9 days.

The Sun-Mars composite looks like this:

This is the projection line based on this cycle:

When you are working with synodic cycles that involve the Sun (like the Sun-Mercury, Sun-Venus, Sun-
Mars, Sun-Jupiter … cycles), I would recommend to work with planetary phases cycles.
For example, instead of using the Sun-Mercury synodic cycle (period 115.9 days):

use Mercury phase cycle:

This is especially important for the Sun - Mercury, the Sun - Venus, the Sun - Mars cycles. But this idea
needs more research.

All the above is just a draft of the analysis. To get the whole picture, you should analyze all cycles.

Perigee, Apogee and their influence on the stock

market 
These are the definitions for perigee and apogee I have found in the Internet (
http://www.astro.uu.nl/~strous/AA/en/verschijnselen.html).

"A planet is in its perigee when the planet is closest to the Earth. That means that the planet was further
away just before and just after that moment. When a planet is in its perigee then that planet appears
largest in the sky (seen through a telescope).

...

A planet is in its apogee when that planet is furthest from the Earth. That means that the planet was closer
just before and just after that moment. When a planet is in its apogee then that planet appears smallest in
the sky and the least bright."

In this article I will demonstrate how to conduct the research regarding perigee and apogee with Timing
Solution software. I will provide the research for the planet of Jupiter using these three financial
instruments:

 Dow Jones Industrial 1885-2006

 Corn price 1949-2006

 Gold price 1975-2006

Let's start with Dow Jones Industrial Index (DJI).

First of all, I would like to remind that perigee/apogee describes the distance between Jupiter (in our
example) and the Earth. Let us calculate and watch how this distance changes in time.
In SuperSearch module, you need to define this event:
Calculate it:

This diagram shows how the distance between Jupiter and the Earth changes within four years. These
waves are caused mostly by the Earth revolving around the Sun. To see the influence of Jupiter, we
should look at this picture in a bigger time span:

The Earth rotation here is presented by a cycle that is very close to the usual annual cycle. Also, you can
see a 12-year cycle; this is Jupiter.

Let us analyze what could happen to DJI when Jupiter reaches the furthest distance from the Earth, i.e.
Jupiter is in its Apogee.
To do that, fill out the SuperSearch form this way:

Calculate the Efficiency Test for this event clicking on this button . 

You will get:

This diagram definitely shows that the Dow Jones Industrial index drops down a week before Jupiter
reaches its Apogee. After that, when Jupiter's distance to the Earth decreases and Jupiter becomes
brighter, the DJI goes up.

We can confirm this fact statistically as well:

 

You see that the week before this phenomenon the price went down 63 times against 48 up. The chi
square statistic shows that this result is not occasional with 95% probability.

It is interesting to note that Jupiter's Perigee has no effect on DJI. In other words, the Dow Jones
Industrial index is very sensitive to the furthest position of Jupiter. When Jupiter is closer to the Earth (it
means that Jupiter's gravitation is higher), the DJI has no reaction to this phenomenon.

 Now we will analyze the Jupiter's influence on corn prices.

For Jupiter in Apogee, the Efficiency Test looks:

You see the week before Jupiter reaches its Apogee, the corn price starts rising. But - one day before this
phenomenon, we have a sharp drop (30 down against 14 up).

The Perigee point has no affect on corn (as for DJI).

For Gold price, we have no influence at Jupiter's Apogee, while some weak influence presents from
Perigee point:

There is a small drop in gold price around this phenomenon.

This is just a case study as a part of "Study" project to demonstrate how to conduct this type of research.
You can provide it for other planets.

Also you can provide this research for Perihelion and Aphelion points, i.e. the distance between analyzed
planet and the Sun:

Also pay attention on events related with planetary nodes, i.e. the moments when planet crosses the
Ecliptic plane. For example, this is the Efficiency Test calculated for DJI for the moment when Venus
crosses the Ecliptic ingressing into South semi sphere:
   

Declinations: how they affect the stock market 

Case study
written by Sergey Tarassov

The declination is in fashion nowadays. It is a necessary item of many Internet group discussions. And
most of the software that touches astro base in any way uses the declination calculation at some point. In
this small article, I would like to  introduce the way of conducting research on declinations using Market
Trader and/or Timing Solution software.

First of all, let me make some notes on declinations in general. Declinations are used by anyone who
takes the planetary movements into consideration. Our interest is in the forecasting of stock market
behavior. It is a common belief nowadays that stock market behavior is strongly connected to mass
psychology. There are many ways to work with mass psychology phenomena. One of the possible ways is
to consider the findings of old astrology, so called astro indicators. There is a documented evidence of the
usefulness of such indicators (especially of those that can be calculated and are described and confirmed
by methods of modern astronomy and mathematics). There is no proven theory yet that explains the
mechanics of the relationship between the Universe and Man (though there are some attempts to it). From
this point of view, declinations are one of the many factors that we might be willing to consider. Our task
now is to realize to what extent and how they are useful in market forecasting.  

What are declinations? The declination is related with Equatorial Coordinates. Equatorial coordinates
describe a plane defined by the daily rotation of the Earth around its axis; it is inclined to Ecliptic
approximately at 23 degrees. This is a very important angle as it is a reason of hot summers and cold
winters on our planet. If this angle would be equal to zero degrees, we would never have the summer and
winter. All year around we would experience the same temperature; to me, it is too boring. If this angle
would be very big (like 90 degrees for Uranus), we would have extremely hot North (especially around
the Pole) and extremely cold South. 
The 23 degrees is the best angle, at least for those who like skiing in winter and swimming in summer. 

Now, the declination. The declination is nothing more than a parameter that shows how far the planets
and objects in the sky are located relative to the celestial Equator plane. There is nothing mystic in
calculating declinations, the modern astronomy and mathematics do it well, and you can find the
declination points info in ephemeris. 
See how the Sun declination is changing within the year:

The Sun reaches the maximum South declination of 23 degrees 27 minutes around Christmas time
(December 20th, Winter Solstice) and the maximum North declination in the end of June (June 20th,
Summer Solstice).

I have created this model using these settings in SuperSearch/ULE module of the program:

Now, let us consider the Moon declination (a blue diagram, added to the previous one):

The Sun and the Moon paint on the Equatorial sky the regular sinus waves. It is not so nice with the
planets. See this picture painted by Venus:
The Venus declination line is not so regular as the Sun's or the Moon's. The reason is so called retrograde
movement of Venus sometimes. However, this fact makes the Venus declination cycle (and the
declination cycles of other planets)  very suitable for stock market prediction.

Let us go back for a minute to the Sun declination picture (see above). The star Sun creates the most
regular pictures in the sky thus setting the legal bands for other planets' movement as 23degrees 27
minutes to both sides. Usually, the planets move inside this band (as to paying their respect to the most
important person in the Solar system; immediately all ancient legends come to mind, with the Solar god
in the middle). However, sometimes they are able to break these rules and spend some time outside these
legitimate 23.27 degrees. These zones are called "Out of Bounds". Actually, these zones are very
interesting. See this diagram for the Moon breaking the rules stated by the Sun in 2006:

In 2006, it happens to the Moon two times a month for 5 days each time. These zones are marked by red
stripes. 

Look at the same picture for a wider time span, from the year 2000 for 30 years ahead:
The red zones correspond to the Moon "Out of Bounds". You see there 9-year periods when the Moon is
allowed to move out of border, and then there is 9-year period when the Moon does not break these
borders. Together, they make an 18-year Lunar  cycle (so called Saros cycle). 

The current period of the rebel Moon has started in 2001 and will finish in 2011.

See these dates and compare them to the recent history:

   

The Moon left the legitimate borders for several hours on August 15, 2001, then for a little bit more time
on August 28, 2001, and on September 11, 2001 the Moon spent outside these Borders more than one
day. I do not want you to take this as the explanation of the great tragedy that has happened that day; I
only state that at that day the Moon (our emotions) was for more than a day out of the Sun's boundaries.
This red zone will finish on April 20, 2011. Now (June 30, 2006) we live in the highest point - the Moon
is Out of Bounds 10-12 days a month. It was a situation of the years 2004, 2005, and 2006. Next year,
2007, it  will be out 9-11 days a month; in 2008 - 7-8 days; in 2009 and 2010, about 6 days a month. So, if
these zones affect our lives in any way, now we are on the way to more proper position of the Moon and,
probably, to more "quiet" period of our history. (Everywhere, when I refer to "legitimate", "proper",
"rebellious" or similar terms in regards to the planets, it reflects the lack of our knowledge and research of
this very complex matter - interrelationship between humans and the Universe.) 

Now, let us return to financial astrology needs in the light of the declination.

We need to find the answer to this question: Do the declinations of different planets have any impact on a
chosen market? The only way is to conduct a research on every financial instrument in regards to the
declination of every planet. It sounds like a lot of work to do. However, we are in a much better position
than the researchers of the past: we have computers now and necessary tools to conduct this research.
Manually, it would be impossible to do this job (only some random examples, as George Bayer did). With
a computer and without a proper tool, it will take too much time, machine and human as well. With our
software, it is quite easy and definitely fast.

I did the following examples for Dow Jones Industrial Index data. My purpose was to show you how this
research can be done and what things are worth to consider. Though I did the comparison of declinations
of several planets, I provide here the example of the research for one planet declination only. I do it using
two different techniques. Two other examples show the research of compounded models. You can try to
do the same research yourself (or explore any other financial instrument). For me, it is easier to make
examples as the answers to some questions.

Question #1. What is going on with Dow Jones Industrial index (DJI) in respect to Mars declination?

There are several ways how to deal with Mars declination in the program. We could do it exactly as we
did before for the Sun and the Moon and Venus: create a SuperSearch/ULE event and see the dates when
it actually had happened. Then we could do a statistical analysis for these dates, for turning points of DJI
price history diagram, including specific amounts of increase/decrease for 2%, 5%, etc. The program can
do that. However, it would not be a smart solution if we analyze the DJI data from 1885 to 2006
(practically 120 years of price history). One of the reasons is that we cannot state that Mars declination
was the only cause for all these moves. What we can do is to evaluate the Mars declination input. This is
how we do it.

Run the Composite module and set these parameters:

You will get this diagram:

 

This diagram is divided on two zones, North and South semi spheres.

You see that in general the values are higher for the North part, especially when Mars reaches 23 degrees
of its North declination; in this case, the DJI is pretty high. 

The  Composite model gives us the general idea only; to get more detailed answer to our question, we
need to use Efficiency Test module. It is shown in the next example.

Question #2. What does happen to DJI when Venus declination reaches its maximum South value?

In comparison to the Question #1 (where we were exploring the impact of the planet's declination in
general), here we consider a specific value of the declination. It means that prior to this we have to
explore the impact of Venus declination on DJI in general. 

Set these options in the Model Editor:

and calculate the Efficiency Test for this event. Here it is:
It shows a drop in DJI value, though not a significant one (89 down against 78 up).

The same way you can calculate the Maximum North Declination (choose Max option) or find the
moment when the planet crosses Equator, i.e. has zero declination (choose Value=0 option).

Question #3. What does happen when Venus declination is higher/lower than Mars declination?

In this example, we do not explore the declinations of each planet separately, we are trying to understand
the impact from their mutual position (there is an idea that the planets and heavenly bodies might work as
filters or lenses to some kind of cosmic energy). As we are looking for a general evaluation, we go to
Composite module again. 

Set these options in the Composite window described above:

You will get this diagram:

This diagram presents two regions: the right side is for Venus declination higher than Mars's, while the
left side is for Venus lower than Mars.

The diagram shows that DJI is high when the difference between Venus and Mars declination reaches the
extreme values, especially when Venus is lower than Mars. 

Question #4. What does happen when Venus and the Sun have the same declination?

As we are discussing a specific value, we will work with Efficiency Test. So, set these options in the
Model Editor and run the Efficiency Test:

The Efficiency Test looks like this:

The Efficiency Test indicates the significant drop a week before this event (181 down against 154 up).
In this example above, we have analyzed the aspect of parallel between Venus and the Sun. It occurs
when two planets have the same declination. There is another possibility as well: when two planets have
an opposite declinations (like Mercury's declination is 15 degrees South and Jupiter's declination is 15
degrees North). It is called a contraparallel aspect.

This kind of aspects can be defined in the "Aspects" tab as well:

Choose the planets to be analyzed and click "Standard Criteria" button. You will get this:

Then you can work with this event as usual. For example, see this Efficiency Test for the event Mercury-
ContraParallel-Jupiter:
  

Again, my intention here was only to show how to do the research on declinations with this software. I
believe that now you can easily analyze any planetary combination and different phenomena that
involve a declination.

Gravitation of the planets and its effect on the

stock market
As definition states: "gravitation force is the tendency of objects with mass to accelerate toward each
other" (see http://en.wikipedia.org/wiki/Gravity/). This force makes the Moon moving around the Earth,
and the Earth and other planets moving around the Sun. This force keeps Galaxies together preventing
their dissipation on single planets and planets' dissipation on single atoms.

For physicists, the gravitation is the most enigmatic force in respect to the other knowing forces.

We can do a research on the impact of this force on the stock market. In this small article I will show how
to do it for Dow Jones Industrial Index 1885-2006 with Timing Solution software.

In Timing Solution, the gravitational force is presented by these three persons: a gravitational force
itself, a tidal force and a gravitational potential. We will explain the difference between them using the
classical legend of how Sir Isaac Newton had got this idea observing a falling apple.

Gravitational force: it is the degree of how the Earth accelerates the apple.

Tidal force: different parts of our apple are affected by the Earth differently. The side of the apple that is
closer to the Earth is affected stronger than the other side of it. For the apple, this difference is miserable,
but for the astronomical scale this force becomes very important.

Gravitation potential: we can take it as the energy that apple is getting when it falls.

In Timing Solution, define the gravitation terms here:

 

As an example, let us consider the planet of Venus. First of all, we want to know the gravitation force of
Venus that affects the habitants of the Earth.

Set these options:

Here is the diagram for this force in 2006-2009:

This is the oscillation of Venus gravitation around its average value.

Sometimes it may be more interesting to deal with the change of this force in time, not with the
gravitation force itself. The force may be small, while its change is pretty significant.

In this case, we should research Rate Of Change (ROC) of Gravitation force, it is here:

For the same time period, ROC of the gravitation force looks like this:
You may choose to see the tidal force and the gravitational potential; these options are here as well:

Actually the gravitation, the tidal force and the potential look pretty much the same:

The most narrow peak is for Venus tidal force.

This has been done for Venus gravitation toward the Earth. We can do the same for the gravitation
between Venus and the Sun. Set these parameters:

"Heliocentric" means that we consider the effect of the planets towards the Sun, not the Earth. The
gravitation force of Venus on the Sun looks like this:
Change of this gravitation force looks very interesting:

Very similar pictures are received for the tidal force and the gravitational potential.

Now, let us research how these forces affect the Dow Jones Industrial Index (DJI). I have downloaded the
available history, from 1885 to 2006. 

Click this button: to set Learning Border Cursor to the last point. Thus we will
use the whole price history to do the analysis.

We start with the gravitation force of Mercury:

Calculate this event ("Calculate" button) and click "R" button:

You will get this information window:

The correlation -0.18%  is pretty small, so we can conclude that Mercury gravitation does not affect the
DJI movement.

Checking all  possibilities one by one, I have found the following important phenomena:  

a) Gravitation force of Venus (geocentric). Correlation is about 5%:

The negative correlation means that the DJI tends to reach its LOW point when Venus gravitation is high:

b) Changes of Mars gravitation force (geocentric). Correlation  is  2.3%, not big. Practically the same
results are received for the changes of Mars tidal force.

Here is its effect:

  

c) Very strong influence is provided by Mars gravitation force in Heliocentric coordinates. I have got here
the biggest negative correlation -7.9%. The negative correlation means the inversion - when tops of the
diagram correspond to the bottoms of DJI, and vice versa.

The wave provided  by this event looks:

Actually, the impact on DJI of the planetary gravitation does not look significant (except Mars's).
However, I have got some not bad Neural Net projection line based on gravity effects:

In Neural Net module, you can define the gravitational effects here:
  

 And the last note: it looks like the gravitational forces are more effective for non directional indicators
such as volatility.

This issue needs additional research on different financial instruments. For example, the volatility of gold
price has a big correlation to the changes of Mercury's gravity force (geocentric):

Or, if we do a negative sum of the effects of gravity forces for the Sun, Mercury, Venus, Mars and
Jupiter:
 ,

we will get a very good approximation for ADX index (this fact is proved with probability 98%):

I hope I have shown the possible frame of this research.

One more method of finding the best forecasting

model
 

In this article I would like to share with you some method of finding the best projection line. You can
consider this method as an alternative to Back Testing procedure. Back Testing usually takes a lot of time
for calculations, while this alternative approach can be performed in less than one hour.

However, before any discussion, I prefer to clarify the subject of the forecast's accuracy. I have said it
already and I will repeat it many times, because I am pretty much sure that the question of accuracy is the
darkest question practically for any trading system available on the market. You can easily find in the
Internet advertisements for the systems that promise 80% and even higher accurate forecast. At the same
time you can find on many forums the complaints of the users for whom "these systems do not work".
And they still look for other systems that promise again 80% and more...
I did the calculation how much money you would make if somehow you find the way to forecast next
week price movement 80% accurate. Guess how much? You will be surprised: within just one year you

can increase your capital to 1200% (E-mini analyzed)!!!!

I put the results of these calculations into the table. It shows your Annual return in regards to different
forecast horizons and accuracy.

  with accuracy 60% with accuracy 70% with accuracy 80%

in one year your will
You forecast next day 1750% 2000%
make 1500%
You forecast next
900% 1050% 1200%
week

Now try to remember your own real Annual return and returns of your friends, for different financial
instruments. Make conclusions yourself. 

Back to the theme of this article. The idea of this method is pretty simple: we organize the competition
between the different forecasting models and pick up the best one. Remember that this method is
applicable for financial instruments with long price history (at least 10 years). 

I will show how to do it for S&P 500 index. Download S&P 500 data from the year 1950; this is almost
60 years of price history. 

The first thing to do is to divide all available price history. The reason is to get two data sets: one - to train
the Neural Net and another - to test the model:

I set LBC in this example somewhere in the middle. Thus we have 7288 price bars till the year 1980 year
(it is our training interval) to optimize our model and 7106 price bars 1980-2007 y (the testing interval) to
check how this model works. 
The trick is: you should make the testing interval as big as possible because the big testing interval allows
to avoid occasional coincidences.

Next step is to create several forecasting models and then test them one by one.

Before creating any model, decide what you will forecast. Let us try to forecast the relative price
oscillator, with the period of 100 bars:

The usage of oscillators  allows to eliminate any trend inside the data history.

Now we need to define the forecasting model, what it is based on. You can create all models during one
session; set the other model using "+" button here:

Let's start with the astronomy based dynamic model:

I use all price history data (on the training interval) to optimize Neural Network. Click this button: 

 
 

Now click "Training" button and in 2-3 minutes after 10K-20K training steps you will get this:

As you know from the documentation and classes, the bottom diagram represents the relative price
oscillator for S&P500 (a black line) and Neural Network projection line based on the chosen Dynamic
model (a red line).

We need to find the model that forecasts best on TESTING interval, i.e. between 1980 and 2007 years.
We do not use these bars to optimize Neural Network; therefore the coincidence/correlation between the
price and projection lines shows us the real forecasting power of our models.

Click these buttons to calculate the correlation between the oscillator and the projection line on the
TESTING interval.

The higher correlation the better coincidence between the oscillator and the projection line we have. I
recommend to pay attention to those models that have a correlation higher than 0.1.

If you look at the projection line on the TRAINING interval, you will see a very good coincidence, but
you should understand that this does not mean that the model provides a good forecast. The real forecast
ability appears on the TESTING interval only.
Particularly this model does not provide the good forecast (as you see from the correlation coefficient).
We will not work with it, so we clear it choosing "Delete All" item:

Then we create and check in the same way another model:

This model is based on a planetary speed (I do not use the Moon because our goal is the long term
forecast).

After training, I have got this correlation:

This is not enough. 

I clear this model too and have downloaded another astronomy based model, waxing/waning model (I
recommend to try its different variants):
After training I have got a better correlation for this model:

It is still a small correlation though it is better than its predecessors. In this case I recommend to look at
this projection line in details. 

We can see here that this model provides pretty good forecast for the year 2007. 

I recommend also to try these models: 

 

To make a long story short, I have tried these models and got a not bad projection line with "Aspects
Model"  with these options:

It gives this projection line:

 

Usually I analyze a dozen of models or so. However, do not waste your time trying to find the ideal
projection line. I think that usually there are 2-3 good models for any financial instrument. I believe they
reflect 2-3 possible scenarios of the stock market behavior. Put all these projection lines into Strategy
clicking this button:

and you can see all these projection lines together:

Also I recommend to draw Annual cycle together with these projection lines clicking this button:
     Step-by-step guide
Neural Net Module

Before creating any Neural Net forecast, you need to understand clearly the difference between the two
things: what you would like to forecast and what this forecast is based on. In the terms of Neural Net
technology, things to be forecasted are called OUTPUTS while what this forecast is based on is called
INPUTS.
Here are some samples of forecasts you can make with Timing Solution software. You can make a
forecast for:

1.  Relative Price Oscillator (OUTPUT) based on Spectrum model, i.e. based on fixed cycles
(INPUTS). In other words, the software's Neural Network obtains the set of nice looking sinus
curves and cooks from them not so nice looking price oscillator;
2. Volatility (OUTPUT) based on astronomical cycles (INPUTS); 
3. RSI, Relative Strength Index (OUTPUT) based on auto regression model (INPUTS). Here the
auto regression model means that we use previous price information (for example 10 trades ago -
auto regression order) to get the new price. Price several days ago is INPUTS, it has already
happened. Price today (or tomorrow) as a thing that what we would like to forecast is OUTPUT.

So, if you would like to do a forecast using Spectrum model, use Fast Spectrum Solution feature. You
will find it here:

The program automatically extracts fixed cycles (INPUTS) from Spectrum and creates a forecast based
on these cycles. You need to define your target, what you would like to forecast (OUTPUT):
The same thing with astronomical cycles. The Fast solution based on these cycles is here:

Now, I would like to remind you that Fast Solutions differ from ready solutions in the module of the
program called "Timing Solutions". With ready solutions, you do nothing except choosing the solution
once. It is a fully automated process that provides you the general information regarding the market
conditions (we do them for major indices mostly, and these Solutions are based on extended Back Testing
of the different models). Fast Solutions are just half automated. There you have more options to choose
from and to customize a set of standard procedures to your particular data. But there are a lot of
calculations that the program provides itself, automatically.

If you would like to control the whole process of forecast creation, run the Neural Net module:

You can find more information regarding Inputs/Outputs in related parts of Timing Solution
Documentation:

Object Oriented Neural Network - Outputs (what we are forecasting ...)

Object Oriented Neural Network - Inputs (what forecasting is based on ...)

Let us discuss them a little bit. We begin with Outputs. Click on this button: . There is a big
variety of possible indicators you may to forecast with this software. As an example, you can forecast the
moves of the Relative Price Oscillator to catch short term swings:

Here is how this oscillator (red bottom curve) looks against the real price:
To catch the turning points, the Detrended Zigzag is the best:

Here it is (the purple line):

After the indicator to be forecasted is defined, it will be added to this list:

    

Now we need to define INPUTS, or the base for the forecast. Click this button: 

Or, for some models, you can use a "quick" button: .

You will get this dialog window:

Here each button is devoted to different categories of inputs. We recommend to read the documentation
regarding this issue.

When OUTPUTS and INPUTS are defined, we are ready to TRAIN the Neural Network. Click this
button:

Now look at Main Window, you will get something like this:
Here the red curve is Neural Net projection line, while black line shows Detrended Zigzag (OUTPUT).
You can disable buy/sell signals here:

Give Neural Net some time for training, and the red line becomes closer to Detrended Zigzag line:

You can chose any part of the price chart to see the projection line for any time interval:
When you decide that the projection line is ready for your purposes, click this button:

To see the Neural Net projection line in the Main Window, push this button to remove the Neural Net
results panel:

and then click:

Now the projection line is in the Main Window:

You can manipulate this projection line; for example, display it together with the price chart:

 Forecast for coffee prices in three mouse clicks

written by Sergey Tarassov

Introduction
Counting Mouse clicks 
Buy/Sell Signals
 

Introduction

This article regards to the forecasting model based on astronomical cycles. 

Before any discussion, I would like to mention some fact that I have faced doing the research for
commodities. My goal was to create a forecasting model for coffee prices. I have started with the first
thing that I usually do - calculating the spectrum. My assumption was that commodities are related to the
seasonal activity; therefore, the annual cycle (=1 year) or some of its variations should be presented. To
my great surprise, I could not find this cycle there. Instead of 1 year cycle, I have found 312-320 days
cycle (depending on the algorithm for calculating the spectrum). It is not the annual cycle, but a kind of
its remains. I have got this result for coffee. To check this thing, I have calculated the spectrum for other
commodities - and have been surprised to find this 320-days cycle almost everywhere (for 8 types of
commodities from 9). It varies from 310 to 330 days. Right now I see only one explanation of this fact:
we deal with a regular annual cycle, but it interacts  non-obviously with some other, more longer cycle -
with a period of 7-11 years. The longer cycle might be the sun spot activity cycle. For example, the sun
spot activity  from 1980 year looks like this:

In other words, we can suppose that the seasonal price for any commodity varies depending on the current
phase of the sunspot activity cycle (or some other cycle with the period of 7-11 years). The only one thing
comes to my mind regarding this issue: in 1801, William Hershel has discovered the relationship between
the sunspot activity and the price of wheat.

I have no intention to go now into the history of the research in economy nor into the discussion of
different theories. The main goal of this article is rather more pragmatic: how to create the reliable
projection line for coffee prices. And the first question arises: what cycles are the main players for this
commodity - seasonal cycles, any other cycles that can be revealed by the Spectrum module or
astronomical cycles?

I did not find pure seasonal cycles for coffee. Those who are familiar with this website probably can
easily do the Spectrum analysis themselves. I will show now how the astronomical cycles work for this
particular commodity. The usage of any other forecasting techniques (like a model based on fixed cycles
extracted from Spectrum) does not provide the reliable forecast. 

Counting Mouse clicks

Timing Solution software has one feature that I like pretty much: the presence of two buttons. Click on
any of these two buttons; the program itself will conduct many operations saving your time and efforts.
These buttons allow to get the forecast right away. Here they are:
As I mentioned above, I used the astronomy based model to create a forecasting model for coffee prices.
So, let us count the mouse clicks.

Click #1: Click the button next to "Astronomy" button:

Click #2: You will get the window to set the parameters for astronomical model. A lot of time has been
spent to find the best options to be recommended; now these best options are set "by default". The
research regarding this issue will be continued, and you will be informed about other possible settings. 

Look at proposed settings and then click "OK". The program will start working, and it is a time for you to
relax and wait for a few minutes: it is a huge job to reveal the most influent  astronomical cycles.

Click #3: Now you are prepared to run the Neural Net module; click on the "Training" button:
You can observe how Neural Net is creating the projection line. We use the price data from 1980 to
05.05.2001 to train the Neural Net. The data from May 5, 2001 (05.05.2001) to February 2005 are used to
check the projection line generated by this model. This is the projection line (the red curve):

The statistical analysis definitely shows that the projection line reflects the real price movement. The
coefficient of correlation changes during the training procedure between  0.15-0.225. It means that this
curve explains 20% of all price movements:
This is an impressive result, because this model provides a rather good forecast for 4 years, and it is not
the annual based model. It reflects some other process.

Buy/Sell signals

If the good projection line has been found, you can create the buy/sell signals to specify your trading
strategy.

It is very easy to do with the new feature of the program. You need just drag the mouse through any time
interval in the main window and you get the strategy report for this selected time interval. I have selected
a part of the testing interval, from 05.05.2001 to February 2005, to estimate the real buy/sell performance
of  this model. Here is the report:

This model provides 108% profit for 3.7 years, while buy/hold strategy gives only 39% profit.  55.4%
trades are winning (36 winning /26 losing). Commissions and slippage are not included. 

Caution: use the buy/sell signals only for a projection line that has a good correlation to the price. The
correlation is the  primary measure to estimate the model's performance, while the buy/sell strategy
parameters are the secondary one. This is the main difference between methods of Technical Analysis
and methods provided in Timing Solution. 

To optimize the buy/sell signal strategy, click on this button:

You will get this window: 

To calculate buy/sell signals, we use the "wing" parameter. This is some kind of spread value but applied
to the projection curve. The smaller wing parameters are, the more buy/sell signal will be generated. To
find the best strategy for you, click on "target" button (1).

You will get the list with different parameters. For example, the string
means: if we use 24% wing, we get a profit 121.58% (initial capital $100), 5 winning and 0 loss trades. 

Also I recommend to watch the parameter:  - max and min consequences

winners/losers. The big losers values may indicate that this buy/sell strategy just follows a trend 
tendency. Therefore, you will have more winning trades when the trend is present and more losses when
the trend is obscure confirming the conclusion of Technical Analysis experts: "Trend is your friend".

To see the future projection for buy/sell signals, click on this button:

You will get this window:

We continue to develop the buy/sell strategy system. Right now, it is only an experimental technique.
You are invited to share your opinion regarding this method. After more extended testing, it will be
announced in the future upgrades of the program.

Notes regarding correlation cofficient

I'd like to comment on this:

"The correlation as so far is a necessary palliative. Actually this is a big-big problem for
me how to estimate the effectiveness of the projection line"
I'd like to present how I deal with this issue, and my purpose is to present an alternative
for evaluating forecasts. In no way am I asking for something to be "fixed". I also want to
respond to your comment:
"I believe that it makes sense to create a back test system that will simulate the
trader's behavior."
Here I'd like to show how I use Forecasts in trading - that is, prior to "turning them over"
to a tech-based trading-system.
- This doesn't mean I'm saying this is the ideal way, or that I'm recommending it. This
works for me.
- I doubt if the process I use can be automated  
- If your goal is to create one forecast from which you trade directly I'd recommend
skipping this post
 
I don't use forecast correlations at all. The forecasts I use on a regular basis I developed
two years ago by manually reviewing ("eyeballing") the forecast - I zoom in no more then
two months on the X axis so I can clearly see the relationship of the forecast line to the
out-of-sample prices. (Summer 2005 I added an ADX (trend strength) forecast to my
arsenal, that won't be coverd here)
I am looking for two things:
- is the forecast calling the turning-points within a couple of days
- by relative comparison to other forecasted swings, is the forecast identifying when
larger swings will occur
- I am not looking for anything else!
If it looks good, then I review the exact same forecast on different time periods of the
same market (cross-validation testing). What that means is I use TMIN and TMAX to
select different years to load, then rerun the forecast using the same length training
interval, target, and criteria. Then of course I manually review again. Then I select
another financial market.
While this is a slow process, and somewhat subjective, when you find a forecast that
passes all your tests you can re-use it for years.
Hint: if you're using an RPO and you'd like to try this approach out, DO NOT use a '1' as
the first parm of the RPO. Using '1' is best if your aim is to find a day-to-day high
correlation.
 
The next two images below show both why I ignore correlation and how I manually
evaluate. This first image had a low correlation - yet its picking the turning-points just
fine. My guess is the low correlation reading is for two reasons, the first being the
sideways price action in the last week of May and the second, and main reason being the
lack of upwards amplitude during the correction in early June. Yet to my eye this is fine,
to yours it may be unusable, and to correlation it was a pretty bad forecast.

 
The second reason I ignore correlations is that Inversions happen in all astro-sourced
forecasts. Obviously an inversion will wreak havoc on a correlation reading. Its an out-of-
scope topic that happens. While Inversions obviously aren't ideal, here's whats good
about them for me:
- since I use a tech-based system to trade them, I rarely get filled. For example, the below
forecast has an upswing starting around June 18. As there was no upswing and I use a
"price-confirmation" entry technique (ie price has to be rising thru a SwingLine) I don't
get filled, hence no loss
- At the close of trading on June 21 I know I'm most likely in an inversion. I have a choice
now - I can remove the "Long Only" filter on my tech-based system and go short and/or I
can wait for the next turning point in the last week of March
- its noteworhty that the forecast did accurately call the start and end of the swing; to
some an inversion is a bad thing; to others it still gives the start and end times of swings,
a good thing; it may also provide the relative amplitude of the anticipated swing, another
good thing
 
Here's a forecast with a negative correlation, it would be dismissed immediately as
unusable.

 
 
But if I zoom in on the first month it looks different. How much data past the LBC you use
is relevant in the correlation calc.
 
 
In the same forecast, zooming in on June, the two circled areas show why the correlation
reading may be poor. The forecast is just not tracking day-by-day. Also look at June 21.
The High of the day correlated with an upswing, the Close and Low didn't. For correlation
purposes, which is right? If my objective in using a forecast:
- has nothing to with tracking price day-by-day
- but rather with figuring out the approximate start and end days of swings and their
relative amplitudes
Then I'm happy (possibly ecstatic) with this forecast.
 

 
The forecast I use most is usally off a few days in the exact start and end times of swings.
So I always run other models whose only purpose is to tell me about non-directional
turning-points. Non-directional means I don't care if the market moves up or down before
or after the trend-change date. What I care about is:
- if the market was moving up I expect it move down after the trend change date
- if the market was moving down I expect it move up after the trend change date
- beforehand I have no directional bias
Some people have a very hard time understanding "non-directional".
 
Below is an image of one of my turning-point models for financial markets. Its run in ULE
- it does not do any training, it just plots a vertical grey line when the event is due. The
EfficiencyTest does a fine job of evalating turning-point events - llok for a "V" shape
around culmination. If you have MT's Statistic Expert you can evaluate a few thousand
events to see if they are useful in predicting trend-change times (in Step 3 check only
"Mixed")
As you can see most each vertical line coincides with a trend-change in the market (I call
the below model "Lunar Occultation Index"). What I do is wait for when a forecasted
swing is predicted and then "fine-tune" the anticipated start of that swing with turning-
point models like below (then i turn it over to the tech-based trading-system).
 

 
Below is another trend-change model for the EurUsd (shown below is the dollar index).
Note that the only thing it forecasts is the time of anticipated trend-changes. Some are
up, others are down (no-directional turning-points). To some "non-directional" makes it
unusable, to others its incredibly valuable information.
 
If what you're looking for is one forecast model that you can trade directly from,
and you're attempting to find that model based on high correlation readings, it may take
you a long time to find it! In the mean time, you may already have at your disposal 
techniques that allow you trade profitably, but may not recognize these models
because of the way you're evaluating them.
 
It may be worthwhile to:
- manually review forecasts to see if you're catching the start and end of swings; if you're
missing short counter-moves the correlation of that model will be low, but you have to
seriously consider asking yourself this question: "If I know the start and end days of large
market swings within a couple of days - is there any way, any way at all, that I could put
that information to use?".  
- create separate models whose only purpose is to provide the dates of anticipated trend-
changes
- find a simple technical-analysis based swing-trading system that confirms your
forecasted swing has occured, sets an initial stop-loss, and uses a trailing-stop to capure
the bulk of the swing if it occurs
 
Yuri Shramenko
www.TechEdgeTrading.com

Forecast + Risk Management

Often I hear this question this: “I am very interested in Timing Solution forecast abilities but I am not
satisfied with the forecast made for some financial instrument …”. In this small article, I would like to
share with you some thoughts regarding the forecast in general and forecasting abilities of Timing
Solution software.

What should we expect?

Before discussing abilities of Timing Solution, let us try to understand the degree of risk that we face
applying ANY trading system, not Timing Solution methods only. It was the first question that I tried to
figure out 10 years ago, when I have begun working on stock market analysis. For a long time, I could not
find the satisfying answer. Instead, I have found a lot of information regarding different mechanical
trading systems that provide up to 70/80/85 % of winning trades, as well as a lot of information regarding
people who lost they money on this kind of systems. Why is it so? I think the best answer can be found in
this book: Robert W. Colby "The Encyclopedia of Technical Market Indicators", Mc Grow-Hill, where
the trading strategies based on 127 indicators are analyzed.  The detailed research conducted by Raden
Research Group (P.O. Box 1809, Madison Square Station, New York, NY 10159) shows that the forecast
based on these indicators provides usually 0%-10% of winning trades (if we use 0%-100% scale), and it
is mostly closer to zero. Moreover, if we analyze the short term forecast with 0-20 days horizon, the
forecast ability is no more than 3% (see Robert W. Colby "The Encyclopedia of Technical Market
Indicators" pp 40-43).

In other words, 75/80/85%% of winning trades is no more than a simply fantasy if we speak in the terms
of true statistically complicated verification of our systems, not occasional results based on 10-20 trade
examples. If you would like to understand the power of causality, try to throw the coin 10 times,
supposing that one side is a winning trade while another one is losing. It might be your lucky day, and
you get a “win” 8-9, or 10 times (sometimes it happens!). Do not advertise your abilities yet: try to do 10
series of these throws. The more attempts you do, the lower will be your effectiveness, till the average
50%, according to the possibility theory.
According to the Raden group research, the % of winning trades should be approximately between 50%-
55% if we use 50/50%% scale.
I am not telling you that you cannot get better results trading. My point is that you cannot get more
relying on the same system all the time, using just one indicator (or a group of indicators) all the time.
There are winners among traders, and they win as they use other information, to avoid losses.

Accept a risk
The risk in regards to making a real forecast is huge. If somebody guarantees you more than 65% of
winning trades, ask for the real statistical verification.

What Timing Solution does

When I have started developing the software to forecast stock markets, I looked at it first as a math
problem. I had to spend some time studying all available materials regarding this issue. They all are now
reflected in the program. For example, the combination of Spectrum and Neural Net modules covers
mostly the forecasting abilities of the following math systems:
1. Regular Spectrum Analysis;
2. MESA system (Maximum Enthropy Spectrum Model; its features are especially good reflected
by the auto regression model in Timing Solution);
3. SSA - Singular Spectrum analysis (or Caterpillar technique);
4. Multi scale SSA.

Timing Solution has one unique feature – its Back Testing module. We are not afraid to test our models.
With the Back Testing module, you can get the answer to the BIG question: how do these systems work
in reality?
We have several models based on pure math approach, and we continue to develop them. However, after
playing long enough with the math methods, you start feeling as beeing on the “Information Bottom”.
Math based models provide several scenarios of price movement, and this is everything that pure math
approach can give to us. In Technical Analysis, this problem is called “co-linearity”. We can invent one
more thousand of technical analysis indicators; but all these indicators become looking very similar to
each other. We need some fresh air beyond the price chart; it may be the assumption that some external
forces other than the memory of previous price movements rule the stock market.
After that, it is just logical switching to astronomy based models.

Example:

We analyze the Euro/Usd rate, and we are not satisfied with the results provided by the Spectrum model.
It is not because our researchers did not a good job. I personally think that they applied practically
everything that relates to the possibility of getting the forecast based on regular cycles, and they are
working hard. This is the problem of risk. Sometimes the price starts following some other rules, and we
need to reveal these scenarios.
Let us run Timing Solution software and create a phenomenological model (based on astro cycles). These
astronomical cycles look very promising:

Here is the forecast based on these cycles:

I think it is obvious that in real forecast mode (red region) the price follows this model; however,
sometimes (these zones are marked by red bars) the price follows another rules.
Now let us think how we may improve our forecast.
As a hint, we can use the Composite diagram for the Moon related cycles.
Look at this composite for the Moon-Mars cycle:

All three diagrams (black, red and blue) show approximately the same influence, especially within 0-200
degrees region.

Let us add these cycles – for the Moon-Mercury, Moon-Venus, … Moon-Saturn, using a big 100 degrees
orb:

This is the projection line based on this model, it allows to reveal more details:
When you create the forecast based on astronomical cycles, do not forget the training mode that uses ALL
available price information:

The big question for me now is to provide the sequence of steps to getting forecast. Right now (April
2006) it looks like this:
Step 1: Start with the Spectrum based model. Thus we are trying to get the forecast based on the market’s
own cycles. This model contains several influential parameters that is better to obtain using Back Testing
procedure. This is the recommendation how to use this projection line.
Step 2: If this projection line does not work for your market, try to create a phenomenological Astro
model. We need to chose several planetary pairs that might move this financial instrument. I recommend
starting with the Geocentric system.
Step 3: If this model does not work well, try to use Phase Zodiac or models based on dynamic terms.
Also, keep in mind that the astronomy based models show very often the inverse picture: instead of tops,
you see bottoms, and vice versa.
In any case, this information is very suitable to reveal turning points. No one Technical Analysis indicator
can provide you such information.

Projection Line
 What the projection line is
 How to use the projection line

 Problems related to the projection line

 What this projection line predicts

What the projection line is

The Timing Solution software is designed to generate the projection line for any financial instrument. It
means that we are modeling the future behavior of any financial data. We analyze the past information,
search for repeated patterns or other elements, make a model and then test it. If the results are satisfactory,
we create a projection line based on this model. 

It is a different approach than the one used in Technical Analysis (which is concentrated mostly on
technical indicators). A typical task for Technical Analysis is to get enter/exit signals using indicators (as
an example, the intersection of two moving averages). As somebody noted in one of the articles, the
Technical Analysis professional is not interested in the future price movements at all, he needs to know
only what must be done now. In other words, the forecasting horizon for TA specialist is just 1 trade.

Timing Solution is focused on forecasting. This software is very much interested in knowing the future to
some extent. The forecasting horizon is much longer here, and no existing TA methods can provide the
same thing. We test our forecasting models on all available financial data and got really statistical
improvement for them.

How to use the projection line

Before discussing anything, we need to clarify some important issues regarding the projection line.

1. The projection line is not the Holy Grail for the trader.  Each forecast has some degree of risk.
Though it is based on the past performance data and statistical analysis, we simply do not know
why the price moves this or that way. The projection line can provide some clues and guidance.
However, it is totally the trader's responsibility to handle the risk concerned with the projection
line.
2. Usually we provide several models for each financial instrument. These models describe the
financial instrument from different points of view. Each one reflects some "behavior patterns" that
this stock market used to follow. To be successful, we should simply understand in what pattern
mode the stock market is on.

3. We have to accept the fact that sometimes the market cannot be described by any available
models.  

Now let us look closer at the projection line. We believe that it may be a good idea to look at the real
samples from the real life.

During the year 2005, we have published regularly our forecast for some financial instruments. You can
see it yourself, on the website http://www.timingsolution.com. Let us analyze the forecast published at the
end of December, 2005. The forecast horizon for all models is one month.  After this time, the usage of
this model is too risky.

Dow Jones Industrial forecast

The upper diagram is the forecast published December 22, 2005; the other picture shows the real price
movement.
We have created two alternative models for DJI. The blue line represents a dynamic model based on
astronomical cycles, and the red line is for Spectrum model based on fixed cycles. The blue line is
thicker; it means that within last 2 months this model has described the DJI movements better than
Spectrum model.

Look at the upper chart. First ten days the blue line there described the real price pretty well (see the
bottom chart). The discrepancy has started around January 6 - 7, 2006 (which is marked as "be careful!").
This discrepancy is a signal that you better be prepared for the change of rules of the game. From that
moment, there are two possible ways: 1) the stock market behavior is unpredictable in regards to available
models (or stochastic if not predictable at all);  2) the stock market since that moment will follow the
inverse scenario - top and bottom turning points will trade their places. If the second possibility is the
case, we can at least locate the turning points. This scenario has been realized in our case - see the turning
point on January 10, 2006. After that date, we do not recommend to use this model - it is too risky.

Euro/USD rate forecast

Euro/USD is a very complicated financial instrument to forecast. We have found the very good Spectrum
model back tested by Ben Price. The problem is that we still do not have the  alternative scenario for
Euro/USD movements. All three available projection lines are based on Spectrum model, and any
moment we can face the "inverse" or "melting" effects (see below the description of these phenomena).

So, the upper diagram is the forecast published December 22, 2005, and the next picture shows the actual
price movement:

We have three projection lines here,  two of them are very close to each other, the most interesting is the
green line. Between December 21, 2005 and January 3, 2006 the price was flat, the stock market looked
like waiting something. The predicted turning point A (December 28) was pointing at a big price range
only. In this case, what we have to do is just watching the turning points. The turning point B (January 3,
2006) was the beginning of a huge upward movement. The projection line caught the turning point C as
well, though it promised the upward swing B-C be very miserable. However, in reality this upward
movement was very strong. May be it is the reaction after long waiting, may be some fundamental factors
are playing bigger role here than the price movement due to natural reasons.

S&P 500 forecast

The best model here is a dynamic model (see the green line). I think the coincidence with real price
movement is pretty good:
 

Problems related to the projection line

Usually we provide several projection lines that correspond to different scenarios of price movement. If it
is possible, it is a good practice to provide independent models, like one based on fixed cycles, while
another one is based on astronomical cycles. Thus we analyze the stock market from different points of
view. But the life is so diverse and changeable - there are no models that are able to describe the market
behavior forever. Changes are unavodable, and the models have to be corrected and sometimes replaced.

Thus, while dealing with the projection line to forecast future price movements, you should keep in your
mind these possible outcomes:

 Inversion effect  - when the projection line points at the top turning point, while the real price
reaches its bottom. And vice versa.
 Melting Effect - for the projection line based on fixed cycle (like Spectrum model), we face a
very typical situation:
Sometimes the turning points are shifted. Looks like the cycles are "melting", their period is changing
within the time.
I believe that this problem is related to the time metric problem: we do not really know in what time this
stock market exists (and fixed cycles as well). Any university graduate will suggest to use Universal Time
as the most commonly used time since the great Newton revolution in physics. The real Back Testing
shows that the time measured by trade bars provides better results. And I am not sure that it is the best
variant as well. The problem of the nature of time still persists.

As some experimental approach, I can suggest using the volatility time. In other words, we assume that
the time is not even. When the volatility is high, the time flows fast; when it is low, the time flows very
slow; when there are no trades, the time stops. Maybe, this understanding of time is more human than the
physical time used by scientists (at least, this idea is very close to the idea of "real time" measured by
events and their duration as suggested by Henry Bergson). Right now you can calculate the Spectrum for
this kind of time.

What this projection line predicts

Obviously the projection line means the future forecast; the  question is - forecast of what? Definitely, we
would like to make a projection line for the price itself or for any initial data. Unfortunately, we do not do
that - for pure math reasons. It is due to the existence of trend in the most of financial data. Look at this
example:
This is the price for IBM shares from 1960 to 2000. Though we measure this price in dollars, the dollars
do not have the same value at different time. 

Trend is presented not only in the share price. Other types of financial data are a subject to trend as well.
Look at the diagram for the currency pair, EURO/USD:

As you see, the Euro/USD shows a wide range of changes within last five years, from 0.8 to 1.44. And the
most relevant to future forecast data level relates to the year 2004 and up. Again, though we use the same
measure, its inner value is different for different times. Because we apply Neural Net technology to
generate the projection line, we need to normalize these data, make them as flat as possible. In this case, a
good replacement to price or price index would be the detrended oscillator. It allows to see the waves of
price movements, and it is flat. Here it is:
The following diagram shows this oscillator (the red curve) together with the price chart (the black
curve):

Compare these lines. The most characteristic points (turning points) of one coincide with the same points
of the other; when one goes up or down, the other goes in the same direction. It looks like we have
substituted the original diagram with an averaged one. The values for earlier data are over weighted while
the original values of the latest data are under weighted. But now we can compare them and apply
different math methods to analyze these data. 

If we need to reveal more short term waves, we can use the shorter smoothing period. See below the
oscillator with smoothing period=10:
Thus, if we would like to make the forecast for future price movement, we need to decide what waves we
are most interested in and make the relative price oscillator with the appropriate periodicity. So, when the
program calculates the projection line for the price, it actually does it for some kind of the detrended
oscillator.

Price movement is not the only thing that this program is able to create a projection line for. It also makes
the projection lines for different indicators like Volatility index (Vx), Relative Strength Index (RSI),
ADX and many others. All these indices are "targets" for Neural Net; it will generate the forecast for the
chosen index/indicator analyzing its historical data.

To make the forecast for turning points, we have developed the special indicator. We call it "detrended
zigzag". It is shown as a red line on this digram:

Any projection line for any indicator defined as a target for Neural Net module can be prolonged in the
future as long as you need. Look at this example. This is Spectrum model for detrended zigzag index (the
last available price bar here is Jan. 26, 2006);
The biggest issue here is to find the reliable forecasting model. This is the task for Back Testing module
of the program.

Future leaks indicators in Timing Solution

When we provide the Back Testing procedure in Timing Solution, you should keep in mind that some
indicators contain the future leaks by default. This is important for VERY SHORT term forecast only and
especially for the next day forecast.
The effect of future leaks means that these indicators “see” the nearest future – because we use future
price information to calculate them.
Let’s consider all available “Relative Price Oscillators”:

There are 4 variants here. The “Simple” and “Exponent” types do not contain the future leaks at all – to
calculate today’s value, we use the price information for today, yesterday, two days ago and so on …
The other two, “Symmetric1” and “Symmtric2”, use the future price information as per definition, and we
definitely should not use them in Back Testing procedure to provide the next day forecast.
To estimate how far this indicator “sees” into the future, use this formula:

(MA1 period) divide on 2.

See this example:

The future leaks period is 2.5 price bars ahead. This effect is especially significant for “Symmetric2”
oscillator.

In other words, this kind of oscillator should not be applied for making a forecast 1-2 price bars ahead.
Look how it works in practice:

There are three relative price oscillators corresponding to different kinds of moving averages. The local
bottom on January 7, 2005 is reflected by blue (Symmetric2) line exactly , while other curves
corresponding to other types of moving averages reflect this turning point only two days later.
For 1-2 days forecast, this choice between different moving averages is critical. But, for instance, for 10
days forecast, this effect is miserable. For phenomenological models when we provide the long term
forecast this effect is invisible.

To monitor the difference between Exponent and Symmetric moving averages, I have created RPO
(3,10,10) for Exponent (black line) and Symmetric1 (red) moving averages:
For detrended zigzag indicator, this effect is more significant.
Look at this example:

To calculate the value of this oscillator for Nov, 1, we need to know the information regarding the next
top turning point that really has happened at the end of December 2005. In other words, the slope of this
line contains the information regarding the future movement.

To minimize (though not to eliminate) this effect, I would recommend for now using “Normalized” LBC
in Back Testing module:

I plan to modify the Back Testing module in the future with a possibility to recalculate all “suspected”
indicators regarding Learning Border Cursor in Back Testing module. For Detrended Zigzag, we
simply have no other possibilities.

 Multiframe Technology
notes for internal usage

In general, the idea of this technology is very simple: use the short length price history to reveal
short term cycles, while use more price points for longer term cycles.

As an example, to calculate the 30-days cycle, we use 30*12=360 days of price history before
Learning Border Cursor (LBC), while calculating the 1-year cycle, we use 12 years of price history.
This idea is pretty logical - to reveal the short term cycles (like 10-days cycle), we use the latest
price data only (before LBC), as the impact of these price bars is much more relevant for the future
price movements than some price history 20 years ago. More data will be confusing. To reveal the
long term cycles, the price data enough for short term cycles must be expanded - otherwise there
will be not enough information to reveal the impact of these long term cycles on the market. And it
was up to the user to decide what data are necessary for the analysis. Multiframe technology
provides this task automatically. Due to complicated math methods and techniques applied in
Timing Solution, the program itself analyzes data and suggests the time frame enough for the
cycle's research. Moreover, using the same data, the program automatically selects different time
frames for different cycles.

We do it through the Spectrum module. To apply the multiframe algorithm, set these parameters:

One parameter is very important here: stock market memory; it points out how much price history
we use to understand the cycle's impact in respect to this cycle's period. 

In our example, it is set to 12; this means that, while exploring the impact of 10-days cycle on the
market, the program uses 10 days *12=120 days of price history.

This approach causes one effect - the view of spectrum diagram strongly depends on the position of
Learning Border Cursor. It is especially important for short length cycles. 

This approach is more sensitive to the recent price history, it reveals the cycles that have begun to
impact the stock market just recently.

Using the analogy with a royal family member, we can say that the stock market memory
corresponds to the memory of the royal person about her/his favorites (i.e. cycles).  Some favorite
may have the royalty's attention for a week (i.e., short cycles), while another one may be of some
interest for years (long term cycles). The memory of the royal person is proportional to the
importance/interest/appeal of the favorite. We are not modeling the mood of this person regarding
her/his favorites (i.e. cycles). We just ask who is in favor now, i.e. what cycle is the most influential
for the last few months. And we make a forecast based on this cycle. Periodically, we update our
information regarding new favorites and make new forecasts as well.

The multiframe algorithm is applied in Astronomical module (Composite) as well. Set it this way:
Thus, to calculate the Moon's 28-days cycle, we use 28*12= 336 last days, while to reveal the annual
cycle we use 12 years history.

The mulltiframe technology is represented in all modules of the program. In the Neural Net
module, you can set the multiframe training regime:

During the training process, the program pays more attention to the latest short term events (all
events). There is a special way to set the stock market memory parameters in respect to these
events. Do these settings in the "Options" window:
Recently we have developed the special module that allows to reveal the astronomical cycles very
fast:

You can set the multiframe algorithm there as well:

With the multiframe technology, you need to vary one parameter only - stock market memory. It is
easier in comparison to attempts to set different length of training interval.

This is an experimental technique, and I am not quite sure yet what is the value of stock market
memory. My preliminary thoughts regarding stock market memory are:

a) it should be at least 3.0 (2.0 is minimum)

b) "12" looks like too big value (our royal person does not remember anybody so long).

c) the optimum value is somewhere  between a) and b).

The question regarding the stock market memory is the most important for me now. This
technology is totally "terra incognita", and we must build a "digital fortress" to make this territory
inhabitant. In other words, we need to conduct the extensive Back Testing to get answer on this
question.  This is what I do now.

Some information  regarding this issue has been provided by Mark Juric, who told me about 4 as a
value for stock market memory (to be exact, this information has been provided for autoregression
model).

All existing Solutions are now transferred to multiframe regime, except the Dynamic model. For
Dynamic model, the multiframe regime does not provide good results. For Dynamic model we use 4
years as a training interval.

 Predictable Zones in Timing Solution

 

These are some notes regarding the option "Predictable Zones" of the program.

When you run Timing Solutions module to create forecast based on ready solutions, you will get
this window:
Set this option "On" and run the Solution. You will get something like this:

Predictable zones are shown as the colored band in the bottom of the diagram. They are presented
by red/blue regions. The red regions correspond to periods where the predicted price correlates
pretty good to a real price movement, while the blue zones correspond to a negative correlation.
You can judge the degree of the correlation by the brightness of the color. The brighter the color,
the higher correlation (or anti-correlation zones shown in blue). Actually, the anti-correlation
means the period when the projection line "mirrors" the real price. In this situation, the top of the
projection line corresponds to the bottom of the real price, and vise versa.  White and gray zones
mean "non-predictable zones": there we could not find neither correlation nor anti-correlation
between the projection line and the real price. Each line has its own independent life.  

How did we calculate these zones? It is just a pure math. The program calculates the correlation
between the projection line and the indicator used as a target for Neural Network (for example,
Relative Price Oscillator). Thus you can see how and when the projection line correlates to the real
price (i.e., its Relative Price Oscillator, shown as the black line while the projection line is red):
This is an experimental technique. We believe that these zones give some clue when the forecast
might work.

To activate predictable zones in Neural Net window, do this:

The "Window" parameter corresponds to the window where the correlation is calculated. We
should find a compromise here: from one side, to calculate the correlation coefficient correctly we
have to have enough price points; from the other side, if we use  too wide window, we are not able
to see how this correlation changes in time.

"Resolution" - keep it as it is. If you will use the smaller value, the calculation process becomes
longer, though more precise.

"Filter" - if the correlation is less than filter set up, the program displays these zones as empty
spaces - "Gray Zones"

Two dimensional Time!!! - Spectrum model for Intraday

written by Sergey Tarassov
If you try to make a forecast for intraday data based on Spectral analysis, you obviously will face a few
problems that have unexpected solution: the usage of 2D time.

Let's consider the typical intraday data, they look like this:

This is weekly intraday, we have here 5 trade days and 2 weekend gaps.

For daily intraday, it looks like this:

Here we deal with trading and non trading hours.

Suppose we want to create the Spectrum module for these data - the model based on fixed cycles. We
create the Spectrum, extract the most significant cycles from spectrum diagram and use these cycles as
inputs for Neural Net module.
The question this in what Time is it better to research these cycles? Right now in Timing Solution  there
are two possibilities:

There are a) Universal Time and b) Price Bars Time. 

The universal Time is the Time we all used to live in, that same time that is now measured by the atomic
clock. If we consider the weekly intraday data with one hour tick, we'll get this:

The distance between two points A and B is 48 hours, or 48 times bigger than the distance between two
price bars.

Another metrics is Price Bar. This time does not see the weekend gap, the distance between points A and
B is the same as the distance between two price bars. The time between points A and B flows very, very
slow - 1 hour of price bar time lasts 2 days of universal time.

The problem is: both of these Times are not suitable for modeling of these data.

If we use the Universal Time, the distance between points A and B will be overestimated, while in
reality there are no trades in this period. On Monday morning, traders remember what it ha been on
Friday evening. If there would be any trades within these two days, the traders possibly would forget
about Friday evening - so many things would happen at that time.

If we use Price Bar Time Time, this interval will be underestimated. From the point of view of this
Time, the distance between points A and B is exactly the same as the distance between two price bars.
Everything sells for 1$:) But it is not quite correct. During the weekend, the traders have a rest and they
remember the situation on stock markets; when they return on Monday morning, they may change their
strategy as well. 
Anybody experienced in math should feel uncomfortable in this situation. It is like you are trying to draw
a nice 3-dimensional castle using a single sheet of paper. To get a better picture, we should add one more
dimension here.

Let me introduce 2D Time. Each point is presented by two Times (T1,T2):

As T1, we can use the Universal Time, we can call it Major Time. Besides, there is one more Time
presented that is calculated as Price Bar Time. The cycles in this time are represented by two modulated
sinus curves.

It is interesting that it is possible to calculate the spectrum for this 2D time, it should be 3D diagram. We
can extract cycles from this 2D Spectrum. The result should be sound like this: "for this specific market,
36 days cycle modulated on 27 price bar cycle is strong enough". These cycles are strong together,
separately they do not work.

I plan to develop this module in Timing Solution Advanced program at  fall 2006.

Actually, we are living in many dimensional time. Surely, the Universal Time is the Major one. However,
besides it there is a strong annual cycle as well, and we used to live in this cyclic time: every spring we
feel ourselves very close to the same as we were young, this Time is returned to us, but the Major Time
follows straight only. We can add here weekly time or daily time. It is very interesting that such a nice toy
as a many-dimensional time for this particular task becomes a necessity...

Sergey Tarassov.

February 16, 2006

Toronto, Canada