Mapping Human Behavior - Markets as an Indicator of Mass Human Behavioral Patterns

The Institute understands, as do most Market Makers and Institutional’s, that in conglomerated Markets, such as the S&P 500, are phenomena related to Quant revelations and activities and, significantly, mass psychology - specifically, greed or fear. What most, if not all, lack is the knowledge of the overriding significance that psychology plays on themselves and their Market algorithms related to changes in the natural variable.

Long-term market response or direction can be controlled through brute human forces or intervention, but short-term market activity solely reveals mass human response to a primary natural variable, which begins the general directional trend of markets.

If markets were left to solely reflect the human response to variability of this natural phenomenon, highly reduced volatility in these conglomerated markets would occur, although the general direction of the market would continue as dictated by the variability of the natural process.

Nevertheless, brute human intervention attempting to counteract long-term conglomerated market patterns related to long-term variability in this natural variable can only be accomplished to a minor degree. Eventually, the natural phenomenon will dominate mass long-term market patterns, thus reflecting mass human psychological behavior and attitude.

The Currency Flow Simulated SPY graph (below) shows results from modeling and forecasting daily values of the SPY ETF (exchange traded fund) using global currency flow. Note the approximate date (X-Axis) of the last red square (11/24/2009). This point is the last day’s SPY value (Y-Axis in USD) used for the run. The red squares are approximately ten floating SPY points (days) used to help calibrate and analyze the predictive ability of the run. The green line (PMA20) is used for 90% of the Future Forecast and the light blue line (OPMA50) is used to assist in evaluation of the forecast. 

The nature of the model and variables used are unlikely to change and, therefore, only slight deviations are expected in the model’s ability to predict the SPY (S&P 500, and to a lesser extent, the NASDAQ and DOW) for at least the next 5 to 10 years.

NOTE: An update of this model (updated forecast ranging from April 2, 2010 through mid June 2010) is available on the ‘Clients’ side. To view the updated forecast please go to the ‘contact us’ section and send a request for a username and password.

The following S&P 500 Intraday graph was one of our original early, average success models. These graphs were previously posted (for proof of concept) on our website one hour prior to market opening (6:30 a.m. EST). The blue line represents predicted model based on human behavior (posted prior to market open). The purple line represents actual human behavior during the day (posted after market close).

NOTE: Such graphs present past results of initial models and are no longer active and available as of this publication for security of TINMORE INSTITUTE.