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About WingCharts

How It Works

WingCharts is an objective technical analysis framework which scientifically searches for common technical patterns and gives a consolidated, unbiased outlook and price forecast based on the historical performance of the patterns. As an illustration of how it works, below is the chart for S&P 500 ETF (SPY) on Nov 7th, 2016:

Based on the chart and technical indicators, WingCharts determined the following pattern :

TECHNICAL PATTERN
TYPE DESCRIPTION CRITERIA
Short-Term Up Trend 9-Day Exponential Moving Average is Trending Higher 9EMA Trend > 0
Short-Term Down Trend 20-Day Simple Moving Average is Trending Lower 20SMA Trend < 0
Medium-Term Down Trend 50-Day Simple Moving Average is Trending Lower 50SMA Trend < 0
Long-Term Up Trend 100-Day Simple Moving Average is Trending Higher 100SMA Trend > 0
Long-Term Up Trend 200-Day Simple Moving Average is Trending Higher 200SMA Trend > 0
Positive Divergence Price is Moving Lower while Slow Stochastics is crossing Positively Slow Stochastics K Line > Slow Stochastics D Line And 10-Day Total Return % <= 0
Positive Divergence Price is Moving Lower while Fast Stochastics is crossing Positively Fast Stochastics K Line > Slow Stochastics K Line And 10-Day Total Return % <= 0
Oversold Condition Statistically Low Value in Slow Stochastics D Line with a 4.34% percentile Slow Stochastics D Line = 14.37 +- 0.99
In brief, the pattern indicates that trend is mixed while momentum is improving with Slow Stochastics turning higher and Fast Stochastics turning higher. Near-term technicals are oversold with Slow Stochastics D line near statistically low levels. What does the pattern imply in terms of price performance? WingCharts searched historically using the pattern criteria and found 2 matches:
HISTORICAL MATCHES
MATCH DATE 2-DAY 5-DAY 10-DAY 20-DAY
2016-11-07 ? ? ? ?
2014-02-06 +1.43% +3.12% +3.61% +6.07%
2012-11-19 +0.23% +0.86% +1.52% +4.49%
# Matches 2
In other words, other than 2016-11-07, there were 2 occurences historically with the above pattern and the following 2-day, 5-day and 10-day and 20-day price returns are listed above. Since the historical performance was unambiguously positive, WingCharts concluded that the pattern was BULLISH and projected the following QuantForecast based on the average return of the historical occurrences as well as the fact 100% of the time the occurences had a positive return.

It is uncommon for patterns and forecasts to have the same level of conviction as the above example. In some patterns, the historical performance could be around 50%, meaning the odds of going higher is no better than flipping a coin. In such cases, QuantForecast would assess a NEUTRAL outlook. Here is an example on the XLF as of 2017-02-10, which had a flat price projection based on the MACD indicator:

In this example, QuantForecast has no conviction based on the statistics of the pattern as % of the time positive is near 50% while the average return around 0%. The dispersion is also very high with best and worst 20-day return 11% and -8%, creating a very wide band in the forecast curve as shown in the chart. Users are recommended to narrow down further by running a customized QuantForecast in order to refine the forecast or find a better pattern.

In general, the QuantForecast Outlook is a logic based on the statistics of the historical matches. If there are too many matches (more than 50), a NONE outlook would be assessed due to the noise. The objective of the QuantForecast framework is to find a pattern with at least 2 matches and no more than 20. Here is a summary how Outlook is determined:

OUTLOOK CRITERIA
OUTLOOK LOGIC
BULLISH % Positive >= 60% And Avg Return > 0%
BEARISH % Positive <= 40% And Avg Return < 0%
NEUTRAL Neither Bullish or Bearish
NONE No Outlook (Too Many Matches or Not Yet Available)

Using the above methodology, WingCharts systematically projects the outlook and price forecast for the following asset classes every trading day:

  • S&P 500 and Nasdaq 100 Stocks (Note: will be expanded in the near future to every NYSE and Nasdaq stock)
  • US ETFs
  • Indices
  • Futures
  • Currencies
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Why It Works


WingCharts framework offers the following key advantages vs. conventional technical analysis methods:
Consistent
  Objective outlook and forecast every trading day based on probablistic framework
Comprehensive
  Processes large amount of historical data and filters the noise to determine the best matching pattern
Adaptable
  Adapts to ever-changing market as our algorithm learns from new data points every trading day
Trackable
  Track forecasts over time vs actual performance by using the Save My Forecast feature
Whether you are a fundamental investor or active trader, beginner or experienced, our WingCharts framework and series of Premium tools enhance your daily trading and investing decision-making process in various ways.
BEGINNER TRADER EXPERIENCED TRADER FUNDAMENTAL INVESTOR
  • Learn the essence of technical analysis and how each technical indicator impacts price outlook using our customizable QuantForecast
  • Develop a consistent, robust trading strategy by following our high-probability Trade Signals
  • Combine your expertise and our QuantForecast to further enhance your decision-making
  • Discover more high-probability trading opportunities with our Trade Signals and Screener service
  • Get daily objective technical outlook to help you determine optimal entry/exit points in your stocks using the My Alerts tool
  • Use our Screener to find more stocks that match your fundamental and technical criteria
>>> Click Here for a Full List of our Features

 


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