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Yearly graph of VIRA analysis on market crash of 1929

 

Well it is back in 1929 and you have the power of Vira…   Well you don’t really because of obvious reasons: (1) we can’t -yet- to go back in time and (2) if you did, your smart phone wouldn’t work would it?

But we will analyse the market crash of ’29 all the same.  I know it has been done to death, but not through Vira, which will give it a new perspective I think.

Imagine you are back then and that you do somehow have the power of Vira (well in essence you could’ve done it since the maths used for Vira  have remained the same through the years; more on the maths on later posts).  We will do a re-enactment of the most important signals that you would have seen though the glass of this methodology.  We are showing all the year 1929 through the Dow Jones Industrial indicator.  You could argue that we could’ve zoomed in to the weeks or days prior to the crash… but in reality nobody saw it coming, and they were all taking decisions based on the yearly info available to all.

0 – Thursday July 11, 1929.  I was going to start this series in event No.1, but after considering it for a bit I though it was best to start in a signal to get in to the market.  This is shown in event 0, that Thursday was a good day to get in.

1 – Tuesday August 6, 1929.  This is the first indication in Vira to watch it, the streams have crossed (yes, just like in Ghostbusters) and there is an indication that people are leaving the market and that the price is climbing.

2 – Monday September 9, 1929.  This is the peak of the sell zone.  The delta between Price and Volume is at its highest and it can be seen in the Dow that after this peak it all starts going pear shaped.

3 – Wednesday September 25, 1929.  This is the last cry to get out, by now it is a “Please for the love of all things get out now!” kind of signal.  The shares traded start to climb significantly, and in hindsight we know that it is panic building up.

Black Tuesday – October 29, 1929.

Events 4 and 5 are a long shot… nobody in their right minds would’ve gone back in, but there were some opportunities still to make some of that loss before Christmas.

4 – Monday November 11, 1929.  Big delta of price and volume.  Signal to buy, but as I said it was not for the frail of spirit.

5 – Friday December 13, 1929.  And this is the exit from the last buy signal, albeit it is a very very washed up one as you can see from he difference between price and volume.  Yes, there was money to be made between November and December 1929 according to the information out there.

So here we have it, the market crash of 1929.  The crash analyses have the aim to learn from the extreme circumstances about the application of Vira and how to read it.  I hope it is helping, comments are welcome of course.

 

 

 

 

Posted by & filed under How to use Vira.

Analysis on stock market crash through S&P

After people have seen our website and Intro video; one of the first things that they ask for is “Real life example”.  They want to see the app applied to a real share and have it working and see the signals, etc.  Well, the main reason that we decided not to do that in our website or videos is because it would be “cherry picking”.  By “cherry picking” I mean that we would have to pick a share (maybe it should be “shary picking”… got it?) that has worked according to every single signal in the app, and that shows that it is able to tell every movement in every possible scenario.  Well that picking activity is not a reflection of real life, and I for one would be very suspicious if somebody out there was trying to push a product to me and was showing all these beautifully and perfectly laid scenarios and was trying to get me to use it and promote it… I just wouldn´t buy it!  So I am not going to do it in the web and video, but I have always thought that the Blog would be a perfect spot to discuss particular scenarios, so here we go!

When we were developing the VIRA tool, we did quite an extensive amount of testing with historical data from the market.  I took a dive in our database and found this example that I think would be of great use.  This was way before we had a working app so the graphs look a bit different but you´ll get it.  The white line is the S&P points value, and the red and yellow are the Vira Price and Volume variability indicators.  The graph is depicting the Standard & Poor’s index from August 2010 until August 2011.  If you can remember, there was a crash in the market in July 25, 2011.

So, with the benefit of hindsight we present this analysis of the crash of July-August 2011 through the S&P indicator.  This would be a good way to see the uses of Vira.  We have always said that a good way to start is to look for the extremes, so we have numbered them for you, and here is the description of what to read in these events:

  1. March 14, 2011.  A high number of trades have been exchanged at a lower than expected price (by price we mean the S&P points indicator).  Notice how the price goes up after this event.
  2. March 28.  The trends of price and volume have inverted totally by now.  A new change in the market is actioned with the price starting to go down from this point onwards, these days reach a sort of plateau and then you have the dent right after event 3.
  3. April 11.  The volume is higher than the price again, albeit not as extreme as even 1, it still tells us of a future positive change in the price.  We have reached a ´floor´ situation.
  4. April 29.  In our opinion one of the two clearest flags of this series.  We see the price graph in its extreme position compared to volumes, and the market is about to drop the prices.
  5. July 7.  The second, and perhaps the strongest of the signals to get out.  This shows the timeliness of VIRA, since it was signalling a sell way before July 25, the day that 35 billion stocks were traded and when, in our opinion, all hell broke loose.
  6. After event 5 you could say that we were in “run for cover” mode.

 

 

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Today we made our day-view in HotCopper.  We are all very excited to see our banner there.

HotCopper is the largest Australian share community site.

Our first banner on HotCopper

Posted by & filed under How to use Vira.

We discussed in an earlier post the four main scenarios that one can see as extreme situations in VIRA.  We can call them 1 through 4 or maybe if we look at it in (Volume, Price) terms then they will be (Low, High), (High, Low), (Low, Low), (High, High).  As far as graphical representations go please find here four sketches of an ‘ideal’ scenario depiction in the VIRA graphs on the app.  Now of course we can’t say it enough but this information must be taken along with other market info, such as the actual price of share and trends, the MACD, the Stop Loss values, and any other information that you use in your strategy.  But since we are going one step at a time I am showing only the VIRA graph, but as I said it is not the only thing out there.

A few things to know about VIRA:

– The lines can’t go any lower than 1 nor can they get any higher than 3.  What this means (among other things) is that if a line is showing a value very close to 2 then it is simply depicting the expected variability of that share for either Volume or Price.  We propose that we should only react to special circumstances and not to every single movement in the market.  So in that sense we only want to think about reacting to a market that is showing some special movement in price or volume or both.  By reacting I mean to take a conscious decision, in our case it is easy for we only have three decisions to take… right?  So the farther away we are from the center mark of 2 the stornger the signal is.  I have been asked before to produce some sort of rule of thumb value of ‘what is a significant number’.  I have to say that it depends on each particular share.  Yes it sounds like it needs to be taken case by case… but hey it is only your money!!  My recommendation is that you take a share and look at what the variation has been for the year (I always start with the 1 year zoom) and then zoom in to 6 months and then to 3 months.  The graphs automatically adjust the scale of the Y axis for the most detailed veiw, so one may think that the gap is great in the 3 month view only to find out that it is really minuscule.  So pay attention to both the squiggly lines AND the values.  So what are the three decisions some may ask?  Those decisions are whether you are going to decide to Buy, decide to Sell, or decide to Hold.

Abdel, why do these graphs look like you drew them with your left hand and blind-folded?  Well I really didn’t want to show the exact same output as the moble app, since I am tryng to show the theory behind the tool.  Also I didnt want to name and shame one particular share over the others… and also I kinda like the free hand look on these graphs.

 

Scenario 1:  Low Volume, High Price

VIRA graph for Low Volume High Price

Scenario 2:  High Volume, Low Price

VIRA graph for High Volume Low Price

Scenario 3:  Low Volume, Low Price

VIRA graph for Low Volume Low Price

Scenario 4:  High Volume, High Price

VIRA graph for High Volume High Price

 

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itesm1

Article in University Magazine

Well this one is in Spanish, so sorry for the language jump!  This one was published in the internal online magazine of the ITESM (Instituto Tecnologico y de Estudios Superiores de Monterrey).  I did my Masters there and also some Specialisation in Economics and Finance at their business school EGADE (Escuela de Graduados en Alta Direccion de Empresas).  They were kind enough to run an article of one of their ex-alumni releasing a financial application.  Si!

 

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Facebook Banner 2.1

With my constant communication effort with the release of VIRA I have come across comments from some of my colleagues that our image doesnt look ‘serious’ enough.  Well if by that they mean that our app is sitting in the middle of a jungle and there are birds flying around then I guess it could be taken as a non-serious page by some.  We did quite a bit of looking around the existing financial services web pages and found a lot of the same:  Corinthian capitels, and white motifs, and serious black fonts everywhere.  So we decided to go in a very different direction.  This is a new application, and has a new approach.  So yes, it is a gold idol sitting in the middle of the jungle.  We can relate to that image as normal people trading in the market, so we though that it was best to be true to that idea and go ahead with the image.  Also I must say that the creative team at Winning Sites was awesome in the concept and design of our webpage.  This may seem as a cheapo publicity stunt but it is not really, we are not web page designers so we left that to people that knew the craft.  And we are pretty happy with the results.

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SWTimes1

Here is an article published in the South Western Times about the release of our app.  I am sorry that it had to be my mug in the picture, but there was nobody else around.  The article gave a good summary of the intent of the app.  It is really for the regular ‘mortal’ trader like you and I.  The ‘super-duper’ professional traders they don’t need us.  Clearly they have all the answers and the economy is shielded from collapse… Oh! sorry, wrong on that account…!

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Abdel has worked in many industries applying statistical methodologies to the analysis and improvement of their business processes. It is through this experience that he started to develop the VIRA analysis tool. After extensive testing with historical data, and then with real money in the real market it was clear that they were on to something exciting. He founded Viracocha along with the other founding partners and launched the VIRA app. He lives in Western Australia with his a wife and two kids.