M2 Adjusted S&P and Russell 2000 Fractal Idea
Equally Weighted M2 Adjusted S&P + Russell looks like it will turn negative soon in terms of moving averages. If this week closes at the current price, it will be the first time the 400 MA started to decline slightly since 2020, and if sustained will be the first time since the 2000-2008 era. It took 8 years to turn back positive in 2016. Almost any combination of averages seem to be converging lower.
There's also fractal of 2020-2022 that also looks the same as the 15 year chart above, except on the daily time frame. Consider that market conditions currently represent a short lived reflection of what already happened on the longer timeframe:
Take it as you wish.
To plot the chart yourself:
Open the IWM and ES1! symbols on a separate chart and switch to weekly candles. Add the SMA indicator with 520 as the length. I chose hlc3 candles for the SMA . 520 weeks = 10 years. Here's the current values:
IWM: 0.983
ES11!: 17.749
Notice that our average for IWM is much lower than ES1! . If we don't adjust it, the IWM price will affect the chart very little, and it would only make up about 5% of our index. To weight them equally, first divide ES1! / IWM:
17.749 / 0.983 = 18.05
Now we can apply our multiplier in the formula below to properly weight the IWM. Paste this into your chart:
1/(FRED:WM2NS/(CME_MINI:ES1!+AMEX:IWM*18.05))
It might look confusing but this is just a fancy way to adjust for M2 and get a value between 0 and 1. ES1! has a weight of 1 (it's equal to the IWM), so we don't multiply it by anything.
Feel free to weight it yourself using any other value. I wanted to weight them equally via 10 year SMA, but anything will work.
I hope you enjoyed this idea. Cheers and good luck :) And don't forget to hedge your bets!
There's also fractal of 2020-2022 that also looks the same as the 15 year chart above, except on the daily time frame. Consider that market conditions currently represent a short lived reflection of what already happened on the longer timeframe:
Take it as you wish.
To plot the chart yourself:
Open the IWM and ES1! symbols on a separate chart and switch to weekly candles. Add the SMA indicator with 520 as the length. I chose hlc3 candles for the SMA . 520 weeks = 10 years. Here's the current values:
IWM: 0.983
ES11!: 17.749
Notice that our average for IWM is much lower than ES1! . If we don't adjust it, the IWM price will affect the chart very little, and it would only make up about 5% of our index. To weight them equally, first divide ES1! / IWM:
17.749 / 0.983 = 18.05
Now we can apply our multiplier in the formula below to properly weight the IWM. Paste this into your chart:
1/(FRED:WM2NS/(CME_MINI:ES1!+AMEX:IWM*18.05))
It might look confusing but this is just a fancy way to adjust for M2 and get a value between 0 and 1. ES1! has a weight of 1 (it's equal to the IWM), so we don't multiply it by anything.
Feel free to weight it yourself using any other value. I wanted to weight them equally via 10 year SMA, but anything will work.
I hope you enjoyed this idea. Cheers and good luck :) And don't forget to hedge your bets!
כתב ויתור
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