STOCK MARKET MODELER™ (c) 2009-11 Dr Jeff Software™ Co. ============= PRODUCT BRIEF ============= The Stock Market Modeler™ (SMM) is intended to provide the tools necessary to analyze and predict the current market state and inertia, and to help track sectors and stocks – for purposes of short-term trading (where timing is everything) – separately at each of these three levels of market hierarchies: *Overall stock market *Sectors *Individual stocks The "Stock Market Modeler™" is implemented as an electronic spreadsheet market model with prediction, plus tracking forms for sectors and stocks. THREE PROGRAMS IN ONE The "Stock Market Modeler™" product contains 3 separate programs, each operating in its own "form" (window): 1. Stock Market Analyzer -- for analyzing the overall market 2. Sector Cyclotron(tm) -- for tracking sectors 3. Stock Tracker -- for tracking individual stocks The overall "Stock Market Analyzer" provides 2 major outputs: 1. It combines the weighted values of all 3 models into a singular "Overall Market Value" useful as a "market index" of one's own creation. 2. It predicts what the overall market is likely to do the next day, calculating a "Tomorrow" value based on an all-inclusive formula. The "Stock Tracker™" is available as a separate subset product for those only wishing to track individual stocks. PURPOSE SMM includes all three of these levels because it is possible to make stock market plays at each level. The overall market can be traded via ETFs; sectors can be played via their ETFs and/or component stocks; and of course, any individual stock can be traded long or short (caveat: there are broker restrictions on short sales). It is SMM’s unique purpose to support stock trading at all three levels. SMM provides each of these three levels with a separate, resizable, relocatable Windows form with which to utilize specific tools appropriate to the level. The goal is to be able to separately quantify and visualize the current strength/ weakness of the overall market, each of its sectors, and user-specified focus stock lists. SMM’s purpose is clearly distinguished from the plethora of graph-analytic tools currently available to stock traders – which entirely and accurately depict the past history of an underlying market entity. SMM’s tools are intended to be used instead for forecasting the immediate future pricing behaviors – based solely on current market, sector and stock conditions and momentum. The three tool sets allow the stock trader to gain a sense of where the overall market momentum is, and track the momentum/swing potential of their favorite sector and stock plays (tracking overbought/oversold conditions for swings). (Caveat: News event spikes/gaps down, and their sometimes deadcat bounces, are not accurately trackable, nor model predictable. Regularly scheduled earnings releases and guidance updates, whose dates are known, have unpredictable market reactions. These events are not intended to be utilizable in the SMM product.) FEATURE: Color Coding There is extensive use of traffic light (red, yellow, green) color coding of most displayed values, including multiple levels of red and green as visual intensity indicators. Color coding is consistent throughout all 3 forms -- with RED indicating a SELL signal; YELLOW indicating a NEUTRAL signal; and GREEN indicating a BUY signal. STOCK MARKET ANALYZER FORM ========================== The "Stock Market Analyzer" in turn contains 3 independent models: 1. Market Forces -- 10 independent "forces" (e.g., energy, interest rates, etc.) 2. Technical Levels -- bracketed index levels of the DOW, NASDAQ, S&P500, BKX 3. Calendar -- seasonal, daily, Holidays, quarter-end, and option expirations (with pres. election years factored in) OUTPUT: Overall Market Value The "Stock Market Analyzer" calculates a singular value for each of the 3 models. It then combines these 3 values into a linear user-weighted average (mean) of the 3 models to produce its main output: a singular "Overall Market Value" (OMV) useful as a "market index" of one's own creation -- with a range of (-100 to +100). Since the Overall Market Value is a complexity of constituent values, the value changes slowly with any one parameter change. An analogy would be like a watch: "Overall Market Value" is like the hour hand, controlled by a big gear which moves slowly, being turned to and fro by the many movements of much smaller gears (user clicks on counters). Moreover, since both positive and negative market forces are provided, the Overall Market Value can be either positive or negative -- with the implication being exactly that: positive or negative (bull or bear). OUTPUT: Tomorrow Value Additionally, a "Tomorrow" predictor value is calculated from the "Calendar" section "Day" value, the OMV, and a dedicated "Days U/D" cycle counter -- producing a range of -10 to +10. This value is solely a historical and cyclical computation indicating the prevailing calendar forces acting on the next day's market. CAVEAT: NO OUTPUT IS INVESTMENT ADVICE, AND ALL DATA ARE USED AT YOUR OWN RISK. MARKET FORCES Model The "Market Forces" model identifies, weights and valuates the top 10 forces acting on the stock market as a whole. The user adjusts the weights, and provides all valuations subjectively. This model is a market "electronic spreadsheet," in that it supports "what if" conjectures. Simply change a few parameters, and instantly see how it affects the market. TECHNICAL Model The "Technical Levels" model provides bracketing (support and resistance levels) of the 3 major market indices: Dow Industrials, Nasdaq and S&P 500; plus the all important "BKX" (see below) financials index. This model requires the user to input all 4 index values. However, this model also offers "what if" conjectures -- by simply changing any index parameter and seeing the result on its model value, and on the "Overall Market Value". Special Technical Factors The following technical indices with heavy impact are factored in: 1. VIX (Volatility index) - directly impacts the "Volatility" market force 2. BKX (Philly Bank index) - 1/4 technical levels directly factored CALENDAR Model "Calendar" is the only model that is fully automatic, gathering the day's date from the PC, and computing values for the quarter, month, week (in month), and day (combining historical data with empirical data for a normal or "special" day). "Special" days supported include all of the following: market holidays, option expiration Fridays (including "triple witching"), and quarter ends. The model additionally supports the day before and after these special days. This model also utilizes 2 user-provided parameters: "Monday" and "Yesterday" -- both of which are factored into the compputed value for the "Day". (The "Yesterday" entry is binary, up or down, and it incorporates 50-year mean data for "next days" in the market.) SMM DATA GUIDE Dr Jeff publishes an updated user "Data Guide" on the SMM product web page, which provides an updated baseline set of suggested current Market Force and Technical Levels values based on current conditions. These values will be adjusted frequently, as conditions change. Dr Jeff encourages users to experiment with their own set of values, and perform "what if" conjectures. SECTOR CYCLOTRON™ FORM ========================= The "Sector Cyclotron™" is the all-important tracker of 15 major sectors, including 3 "Commodities" (includes energy, metals), 4 "Tech" and 8 "Others". User inputs daily up/down performance, to track cycles. The idea is that traders would play entire sectors via their ETFs (e.g., GLD, SLV, IAU for "metals"), or play individual stocks within a sector. STOCK TRACKER™ FORM ================== You will want to use this form as your trading radar screen. An unlimited number of individual stocks (12 per form), also unlimited "watchlists" (1 per file), may be tracked. Each selected stock has its associated sector listed – so as to visually couple in sector cycling. Each of the 12 stock records includes five price fields: current price, the intended stock entry and exit prices, and bracketing with support and resistance prices. Visualization of each stock’s current position within either the entry-exit or the support-resistance bracket is provided with two-color (red and green), two-level (light and dark) signals for each stock. This tool thus supports trading so-called channeling stocks – which all stocks are to some extent (in between news events). Additional data is also tracked (user input), with color-coded signaling, for each stock: 1. pattern (e.g., buy rating, ETF, cup & handle, Elliot wave) 2. term (day, week, month, quarter, year) 3. cycles (days up/down compared to set limit) 4. forces (technical indicators, short interest, buy back, merger spec.) TO CLOSE: if online, click browser BACK button LAST EDIT: 8/31/11