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:
- 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.
- 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.
- 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.
- 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.
- 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.
- After event 5 you could say that we were in “run for cover” mode.