SP.IXGO is a forecast based upon Dr. Hannula's energy theories. This forecast computes the energy being received by the S&P500 market on a minute by minute basis. This forecast gives a physically based time and pattern outlook for each day's S&P market.
According to Dr. Hannula's Market Chaos Theory, markets always have at least two solutions. For the S&P, one of these solutions is the SP.IXGO forecast. The second most common solution is the SP.IXGO forecast inverted. The price action of the intraday S&P follows one of these two versions of the forecast approximately 90 percent of the time.
SP.IXGO is unique. It is a breakthrough in the technology of forecasting markets. What makes SP.IXGO unique is that it is based upon a physical model of what moves markets. Research has shown that market movement is 60 percent fundamental and 40 percent emotional. Dr. Hannula's research has focused on determining the cause and the sources of this 40 percent emotional variation.
He has found that the emotional surges experienced by traders are due to electrical surges in the earth's electric field. He has been able to scientifically model this field and to produce formulas which allow him to compute the energy surges experienced by traders in a particular market. These calculations are unique in that they do not use any past price data.
Instead they use the fundamental properties of the earth's electric field. The waves in that field can be precomputed just like the waves and the tides in the oceans can be precomputed. This means that a energy wave forecast for the S&P's daily motion can be computed for any date past, present, or future. This ability to achieve long term accuracy is unique in SP.IXGO.
Such long range forecasting is subject to the limitations created by chaos theory. The electric fields set up in the earth's environment always occur in pairs. There is a positive wave and a negative wave. The energy forecast by SP.IXGO is the positive wave. An inverted version represents the negative electric wave.
These waves are the input energy into a market. Prices will follow either the positive wave, the negative wave, or a combination of the two. This is not a failure of forecasting. This is simply an accurate model of how chaotic systems behave.
Chaotic systems always have at least two solutions. SP.IXGO isolates the short term wave causing the intraday motion in the S&P500. It is a unique forecasting methodology and a unique tool for traders.
A trader can use this forecast in a number of ways. One way is to examine the forecast for the best swing of the day. The trader then watches the market as it approaches the start of that swing and determines whether the market is following the normal or the inverted forecast. The trader then uses a trailing stop to enter a position on the swing and trails a protective stop during the swing. At the forecast swing end time, if the trade is still in place, the trader simply exits the trade.
This methodology is used on Dr. Hans Hannula's One-A-Day hotline. That hotline increased equity 90 percent in 1997, outperforming the S&P by nearly three to one.
Another way to use the forecast is to examine the time intervals between the lows and the time intervals between the highs. The trader then uses these time intervals to set up an indicator for trading that day's markets. If, for example, the trader likes to use RSI, and the interval between the highs and the lows averages eighty minutes, and the trader uses one minute bars, the trader would set up an eighty bar RSI. The trader then could use the RSI signals to enter and exit positions.
A third way of using this forecast is to select which days are the most promising for day trading. Day trading can be an exhausting activity and very few people can devote full time to it. Since the SP.IXGO forecast can be computed for any day in the future (yes, you read that right), it is possible to use the forecasts to plan which days during the month look the most promising. Additionally, the forecast can be used to plan what time period during the day should be devoted to trading the S&P. Since the turns are usually accurate within 15 minutes, it is possible to wait until 20 minutes before a scheduled turn to even begin watching the market. One can plan to be out of a position and done with trading 20 minutes after the forecast end of a swing. For busy traders who have other lives to balance this is a great planning tool.
SP.IXGO is available as a faxed chart via Dr. Hannula's Tomorrow's Market Faxout service. It is also available as a data subscription. With the data subscription a trader receives three months of forecasts in advance. The data may be loaded into the trader's trading software and overlaid on the screen with actual prices. The trader can use this overlaid screen to judge the quality of the forecast during the trading day and to select either the normal or the inverted forecast.
Doing this in real time on the screen is a great aid in trading. This overlaid capability is not available in all commercial trading systems but is available in Ensign, Dynamic Trader, and Dr. Hans Hannula's online Chaos Trader-RT (Real Time).
The next section shows a full day's trading using SP.IXGO and Trader-RT.
Traders will encounter three types of markets: a normal market which will follow the normal forecast pattern, an inverted market which will follow the inverted forecast pattern, and a mixed market which will alternate back and forth between following the normal and the inverted forecast. Using an overlaid forecast and an overlaid inverted forecast, a trader can determine which of the three types of markets is operating that day.
Let us start with a day on which the market was mixed.
FIGURE 1
Figure 1 shows the market for January 7, 1998. The times on the bottom of the chart are Eastern times. The market has been open for 45 minutes, and is balanced. The green line shows the normal forecast and the red line shows the inverted forecast. Where the two lines come together, the trader can expect congestion. When the congestion ends the lines separate from each other. In Chaos theory this is called bifurcation. These are the points when the trader should be looking for a trend to develop. In this case it appears that a trend should setup shortly after 10:00 AM Eastern.
