Bayesian Probability Points to Bullish Path for SPY
By
Luke Miller
Our Bayesian Timing System (BTS) indicates two potential larger-time period paths:
(1) With a Bayesian probability (BP) of 59%, this path is bullish, and indicates the SPDR S&P 500 ETF (SPY) has bottomed and then prices generally begin a bullish run higher into and throughout 2019 leading to all-time highs.
(2) With a BP of 41%, a bear market of sorts has begun dropping well below 250. This path is expected to last months and have bearish attributes of a 20%-40% correction from all-time highs.
A press higher into the current vibration window extending from Feb 12-14 occurred. SPY hit resistance at 276-277 on Feb 15 and is presently just hanging out above that zone. The peak to trough to peak intraday movements on Feb 20 are an indicator of vibration window activity, but on the micro level getting below 277.75 is the first sign of better days ahead for bears. Then at the slightly larger micro level, getting below 274.50 should be all that’s needed to kick off a more aggressive move lower. A vibration window is forming for the middle of next week.
In metals, the BTS was expecting a deeper retrace for the SPDR Gold ETF (GLD) and the metals, in general, into mid-February. As it stands now, the BTS sees metals topping sooner than later the week of Feb 18 on a false break higher for GLD and lower high for SLV. The BTS still sits on the sidelines awaiting a higher probability set up, which in all honesty, on a pre-posterior basis, would be a short signal.
GLD 127 remains formidable resistance from which a strong bearish reaction could result, but above 127 there is 130. On Feb 20, that 127 zone was hit and an initial rejection ensued. Further, with the iShares Silver ETF (SLV) just matching its previous most recent high and then rejected, bullish interpretations have been switched to neutral for the moment.
