Thinking Like A Machine

I get asked many times to clarify what I truly mean when I talk about the “markets” and use references such as: If the market is made of bots than you have to think like a bot to gain clues.

As I was browsing a few different things this morning I was viewing the image below and thought it would make a great visual aid for those that may be interested. To wit:

(Chart Source)

The above is a chart of the S&P 500™ futures as of this writing represented via 15 minute bar/candle intervals. Why the above is interesting is for the following observations…

What those lines, squares and colored sections represent are different Fibonacci equations expressed using the price data contained within said chart. i.e., the lines aren’t drawn arbitrarily – they are drawn (calculated) via mathematical equations beginning and ending by using the only two arbitrary numbers allowed which is the starting and ending point I placed, which is represented by “0” for the beginning and ending point represented by “1” All the rest is filled in or drawn using math, not by my hand.

What caught my attention was when I was using different technicals and more, I just happened to use the above which I haven’t in quite some time. The reason for it was, I used to use it many moons ago when I was looking at different markets that appeared lifeless and without volume to see if it could give me insight to what the machines or bots might be paying attention to since it appeared that was all that was trading at that given time.

Remember: Algorithms, bots, machines what ever you want to call them use one thing and one thing only to trade – math. So if machines appear to be the only thing buying or selling to each other? I believe you get the point.

So with that said what appears interesting is that the trend over this month appears to be following and coinciding almost far too neatly many lines, areas, drops, spikes and more far too numerous to be just coincidence. Could it all be? Absolutely, for remember – There Is No Holy Grail. Period.

What caught my eye even more is exactly where this all is in this progression which is within the furthest and top area that’s following both a 0-line which is a perfect trend line along with being in what may be called “a termination of trend area.”

Does it mean it will? No one knows. However, if you want to try and think what the machines may be calculating then you have to sometimes try and look for clues that may allow you to see what the machines are using for reference. This is what I mean by “thinking like a machine.”

Again, just to point out, volume for this entire rally since the December lows has been by any normal measures – pathetic. That insinuates that the only ones in here buying are the bots on autopilot.

So if you want to anticipate what the machines may be doing, then you’re going to have to lose all emotions and begin thinking like one to garner any clues.

And as always, we shall see. Why?

Because Apple™ reports right at the very end of the highest right hand corner signified by “1/1”

Maybe the bots have a sense of humor after all, right?

© 2019 Mark St.Cyr