#### New, Very Helpful Correlation

There are times when SPY seems unstoppable, and other times trading isn’t going as planned. I have a pressure gauge which is OK, to help guide my position sizing. However, until now, I didn’t have an indicator that changes the game entirely.

As you know, I now share three groups of 9 numbers. Each of the three groups measures the pressure a little differently. There are a few ways to read the groups, 2 of 3 groups correct, the number of point totals or number of Green vs. Red totals. The number of Green vs. Red is more accurate than the others by a few percentage points.

The next question is do higher numbers, red or green, correlate to greater accuracy of the prediction. The exciting answer is YES!

The above chart are various results from about 100 SPY tomorrow predictions, using current indicators, from Nov 2021 through March 2022. As you can out of the 17 one’s, + or -, they are not as accurate (10 is how many correct). 2-5 is 67.65% correct and any number above 6 averaged correct 83.33% using our rules. Zero’s or errors are not shown.

If you consider a 10+ reading, the average is 90% correct. A 2 or over will be correct 76.32% over the long term.

This insight is important in so many ways. One example is how I test. During the time frame above, I have two sections. One with 43 trades and the other with 58. My best indicators were much more accurate with the 43 trade group. The 43 trade group only had 4 ones (9.3%) during that time and the 58 trade group had 11 ones (18.97%). Knowing 1’s are poor indicators, I can make better calls and take different approaches to find stronger combinations.

I also took a look at one of SPY tomorrow’s longest losing streaks, five trading days in a row. 5 in a row can hurt an account badly. Especially if you are not adjusting position sizes. The results were 2 – ones, 2 three’s and a Five. Of course, this was during the war build-up and overnight news certainly played a role, and will continue to do so.

The highest reading during the 100 trade time frame was a 19, one in each direction. Both were correct, however, remember all it takes is market-changing news to turn a 19 into a losing trade.

## Better Trading

Even if I don’t change the current setup, this information is an opportunity to make us better traders. Over time with more trades, we will see how the ones pan out. For now, we can consider our position sizes or even if we trade based on the pressure number.

Perhaps if SPY shows a 1 consider a secondary indicator such as a technical indicator on a stock chart. The fact is if you can place bigger trades when the odds are more in your favor and smaller or no trades when they are not, it’s a winning combination. Now we know.

With this knowledge, I would have had a green arrow up rather than a yellow (blue arrow pointing at it). Yes, April 13th was a solid up day. In the future, until the next quarter’s adjustments, 4 or below will be Yellow/Orange and 5+ is a Green/Red. A 5 is rather accurate in the current data set. A 5+ is 77.42% correct, not bad.

I will certainly include this information in my next SPY video. Let me know if you have any questions.