SPY Is Going Purple
We need to face the fact that this has been a tough trading season over the last few months. When we can find better signals, especially now, it will benefit us all in the long run.
It didn’t take long to recognize the power of the color panels – Purple, Orange, Blue (POB). When I started backtesting, it became clear Purple is a good key indicator moving forward.
To improve our predictions, I’m always running tests in the background to help tweak and improve our results.
The color panels are set up in order of stability and accuracy. Purple during the mid-winter review was the strongest. To determine SPY, IWM and QQQ we add up the POB numbers for each. To find the Purple number, we work from top to bottom across ETF’s using purple-only numbers. In other words, only the most accurate set (purple) determines the Purple number.
In the future, if I find more accurate groupings, I may, for example, switch out the blue with a different grouping and call it a different color. This would help the accuracy of the two out of three colors.
I have two sets of numbers for each ETF group and color group. The large numbers (in the small boxes) are the totals and the small numbers (in the large boxes), which seem most accurate for Purple, are only 1 or – 1 for each group. So if two of the three are negative, the number is -1. If all three are positive, then the number would be 3. Whereas the total groups can go as high as the 20’s.
We have to remember each of the panels has a level of accuracy. Over 50% correct. Sometimes too much information can be confusing, however, I also worry about just having one indicator without support.
I’ll leave the panels as is for a while. Purple is the logical and now proven (back-tested) choice for the most accuracy. What are the best support combinations, this is not conclusive until we have the data. Currenly, 2 of 3 small color panels are the best option.
I’m now using the total (large) Purple number as the confidence number. Although we don’t have correlating data yet, I’m assuming it works the same as the SPY number until proven wrong.
Most of the same numbers are available in the Panels as before. Members can use these numbers as they see fit. That’s the advantage, you don’t have to depend on my interpretation. My job is to provide the best options and offer guidance.
If members have thoughts or requests, they can place them in SPY chat.