Friday, January 19, 2007

Datawink

This is a handy tool which matches current trading patterns with historical patterns for the stock; from this you can see the outcome of these matches. I put in today's stock, KMP, which made the following 1-month matches:



and predicted the following 1-month outcomes:



The charts are ordered from greatest match to least match from left-right. It would be good to get a measure of the correlation between past behavior and future price movement - do highly correlated price patterns produce the most consistent returns?

From eyeballing the above charts I would say chart "2" had the strongest correlation to the current KMP 1-month picture. In the historic match the stock followed through before the stock pulled back at months end.

Chart "4" is a relatively good match and it too was followed with some upside follow through before it gave its gains back by month end.

Charts "1", "5" and "7" look fairly similar and it was interesting to see the outcomes of "1" and "7" to be relatively similar.

Certainly it is an interesting tool to play around with. I look forward to when you can test a longer time period (only "1-month" is availble for now).


 
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