AEX Short Term Update

To look at short term turn signals in the market, we can look at ‘classic’ technical analysis indicators such as RSI, CCI, Stochastics and Moving Averages. While they certainly can be useful, the problem with these indicators is that they are all lagging indicators. A lagging indicator looks into historical data (the past) and assumes the future is the same. In this article, I take a little different approach by using 2 different kind of charts, that peek more into the future than into the past. Together with other analysis tools, these charts hopefully gives us just an extra piece of information to pinpoint turn signals.

Let’s take a look at the first chart, showing the AEX index, with a ‘Volume Cloud’. The Volume Cloud provides way more information than just looking at volume, because it shows where volume accumulates over time. During Oct-Nov 2012, the AEX was in a trading range, so a lot of volume was accumulated around that price level. This price level than provides support/resistance into the future. However, over time the influence of these support/resistance levels dissipates, which is shown in the chart by changing colors. Red is a strong influence and then it fades away into blue. In this chart the timeframe is set to 200 (trading) days, which means that the cloud completely dissipates from red to blue to nothing in 200 days. This is visible in the bottom of the chart where the ‘flame’ starts in June 2012 and then dissipates in 200 trading days (about 1 year) in June 2013.

So we see the effect of the cloud indicated by arrows. On Feb 26-27, the AEX hit resistance and bounced back. The second arrow, pointing to Mar 27th shows a little bounce as well when price hits a red zone. Today, the AEX is on its way to another red zone, so we’ll see if it holds.

The second chart shows the AEX with what I call “Jupiter Lines”. To explain what this is let’s look at nature first. In an atom, electrons can only orbit at certain levels around the nucleus. These discrete or quantum levels were discovered by Bohr. These relationships happen on all levels, and are as such, fractal. For example, an Earth year and a Venus year are related to each other with an almost perfect ‘golden ratio’, Phi.

As it turns out, legendary trader Gann discovered that stock and commodity prices also tend to exist only around certain price levels. For the AEX this concept was further pioneered by @Hoefgeest. However, the quantum grid is not static (straight lines) but fluid and it is subject to planetary influences. This chart shows the fluid grid for Jupiter. Jupiter seems particurlary related to the AEX, more so than other planets. Just like in a person astrological birth chart, we can thus say that ‘Jupiter is the AEX’s ruling planet’. The lines on the chart shows the movement of Jupiter as seen from Earth. When the lines go down, Jupiter is retrograde. The lines are then mapped to the ‘quantum’ price levels using the wheel of Gann.

We can clearly see (arrows) that the AEX bounces at many occasions on the Jupiter lines. In this chart we use AEX end-of-day prices (closing prices) as this gives better results. Using intraday prices (OHLC) gives overshoot on the lines. I am not sure why.

This chart combines the ‘Cloud’ with the ‘Planets’. Note how the AEX low at Feb 26th shows a bounce of both indicators. Since planetary movements are known in advance, and the influence of trading volume extends into the future as well, we now have 2 leading indicators helping us to predict future trend changes.