Global Market Watch – Knee Jerk Events

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GC-GMW-Knee Jerk Low

QUESTION: Marty; The GMW was saying it was a knee jerk low the day before the week closed. Do you have to wait for the week close?


ANSWER: Technically yes. The comment is as of the close of that time level so in the case of Knee Jerk Events, it is forecasting in reality that the event (high or low) will hold. It also depends upon how the event unfolds on the Weekly to Yearly level. You can get that Knee Jerk low show up early in the week and then rally into the close of that week with all the time it saying it is a Knee Jerk event. The important aspect is that the event is being identified as a Knee Jerk rather than a capitulation and change in trend. That is very important.

What we have been building is a database of the GMW whereby each pattern number is recorded with the event that follows. We are then running systems on that to see if it is possible to produce a highly accurate forecast of say when event #10550 takes place #11870 follows.

We are always looking at more in-depth means of analysis that is testing the boundaries of forecasting.