A friend has asked the quintessential question again. Which is actually a good thing don’t get us wrong. We love to dive into new data and discuss the uses and abuses of financial tech tools. So here we go. By the way, the quintessential question is: ‘How do I know that your Vira stuff is good for anything anyway? I have this tool, and that tool, and that other one over there’… ‘Go give me proof proof proof!’
It is important to reiterate that we believe Vira is great to read what is going on in the markets. But also it is no substitute for whatever decision making you use. It is valuable added information that will help reducing risk. So we come in peace, we are not questioning your decision making process… really we aren’t. That being said, here are the three amigos. Three stocks that were given to me with specific time frames to put through the Vira glass. At the moment, our flagship (by flagship I mean only) product does not have the functionality to go ‘back in time’ within the published app. But we have our ways here at the office.
I thought I’d use this opportunity to get away from the threaded path that I have been using so far in the Crash Courses. The following is a very quick glance at the way I look at Vira when trying to conclude insights from squiggly lines. There may be better ways to do it, but this one is mine. As always, hindsight is a big benefit, that is to say that some of this conclusions can only be drawn by looking back.
These are just my quick hand notes as I looked at the outcome. Sometimes it is just ‘buy’ or ‘sell’ when it is obvious, if it deems more explanation then I did it.
LUV – Southwest Airlines Co
Event 1. Very very into the past, but this spike is a buy signal where volume was higher than price.
Event 2. All this is a sell zone, then in
Event 3 we can see some run to floor.
Event 4. This is an unusual signal to buy it is a 1,1 test with both price and volume low. Not very often I have seen this one
Event 5. Clear buy again with volume going up and price being maintained, then price climbed in
Event 6 to have a get out signal and a violent price drop after the ‘streams crossed’
Event 7. All this is typical buy zone.
Event 8. Sell zone and then run to floor
Event 9. Buy zone.
JWN – Nordstorm Inc
This one is the curliest one:
One way to look at the graphical outcome of Vira is in zones. But keep in mind that we want ‘extreme’ interaction where the variability is away from the value of 2, anything hovering around 2 is just normal variability. I will here describe how to read the outcome in a quick birds-eye view… its relationship to price.
Event 1 – The stats are based on one year of data, and as with any time based tool, the closest to the present, the best alignment. I normally don’t even look at things past 6 months. The best way to look at that is to go into the past and make those 6 months the last part of the dataset… I hope that is making sense. In any case Event 1 is a Yellow Zone. When yellow is above red it could be considered a buy scenario. In this case the red (price) variability is still within value of 2 so my interpretation is that the volume of trades exchanged because the market thought the price was still valuable, even decreasing a bit.
Event 2 – This is a clear sell zone. The problem is that coming out of Even 1 is not very clear when looked at it at the first glance. What was really happening is a ‘race to the floor’ where both yellow and red were very close and in a downward trend. the trick is to time it correctly. Here my only metaphor is to do the ‘Ghostbusters thing’ when the streams cross then pay attention!
Event 3 – Clear buy spike with a total correlation to low price. Then a run to the floor again with yellow and red following each other. The buy signal here is when the red crosses to go high.
Event 4 – All this is a sell zone, the stock price even though it was going up to same levels as during Event 1, it was not under the same circumstances. This time the price variability was moving up, with the volume remaining steady. The clear ‘get out’ on this one is at the end of Event 5, when you have a run to the floor again. Even thought you don’t see it in price, the stats suggest that a lower price will be experienced not short after.
FCX – Freeport McMoran Copper & Gold
Event 1. After the run to floor, we have a clear buy zone with a peak correlating with a low spot in price.
Event 2. This is a sell zone, albeit it is only relating to that up and down ‘shoulder if you will’ bump, had you bought at the end of the run to floor then this would be a good sell.
Event 3. Buy signal at the start of a climb of price.
Event 4. Sell Zone and run to floor with
Event 5 being a very quick get in signal. But a very valuable one, it seems (with the obvious benefit of hindsight) that the events leading up to Event 6 were just preparations for a steep recovery.
Event 6. All a sell zone but the more extreme it is (when yellow is lower than 2) the more attention needs to be paid to sudden changes.