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QuantDNA Reiterates Exhaustion Pattern Signal at Trader’s Narrative

Last week QuantDNA sent out a cryptic message that we had reached an important exhaustion pattern according to their black box.

It seems that they are very serious about this and have reiterated the signal this morning with some more information:

As we approach the end of the week, the end of the quarter, Triple Witching Day and a full year of unabated bullishness of historical proportions, we can’t help but take pause as our full symphony of exhaustion patterns tip their hat. Specifically, 4 patterns that we refer to as the “Fab Four” have fired in the last 2 days, rounding out what we believe is a very telling market condition when viewed in context with last weeks “Dynamic Duo”.

We are fully cognizant of the cynical conclusions that some might draw when looking at colored circles on top of a chart without the specific drivers and therefore caution readers to make their own independent decisions and conclusions and refrain from making investment decisions based on black-boxed algorithms. We are nonetheless bringing them to your attention and offering no guarantees, only probabilities. History will be the ultimate judge.

The charts below feature prior instances where the Fab Four appeared in such tight proximity to each other…

QuantDNA fab four Mar 2010

The decision is up to you whether you want to pay attention to this modern soothsayer’s warnings about the Ides of March. QuantDNA clearly has enough confidence to put their burgeoning reputation on the line. We’ll see how things shake out soon enough.

Lowry Research, while bullish in the longer term, is also calling for a short term correction. Personally, I’m seeing a lot of other things which point to the same conclusion. For the details, watch for the sentiment overview coming up later today.

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13 Responses to “QuantDNA Reiterates Exhaustion Pattern Signal”  

  1. 1 Jimmy

    unless the stock market continues to rally much higher soon… I see double and triple tops patterns on a lot of individual stocks.

  2. 2 Richard Day

    What would be interesting to see is the other times when the fab 4 signaled an exhaustion pattern and nothing happened.

  3. 3 Barry

    As I understand it 2nd hand from someone who has actually seen their database, the signals individually happen more frequently than they do in concert. So I doubt that they are cherry picking the signals. From what I understand its not their style.

  4. 4 Ed Mullins

    Does anyone know if this group of charts represent all of the examples of this particular cluster of signals, or is this a cherry-picked list of selective occurences?

  5. 5 Babak

    Ed, we don’t really have full information but since they mentioned that it was rare for the confluence to occur, hence the name “Fab Four”, then I would assume that those are all of them - at least during “modern” markets (say 1950 onwards).

  6. 6 Henry Bee

    QuantDNA seems to be cherry picking the historical data here. All of the historical Fab 4 occured during a low liquidity environment. Whereas right now it’s occuring in a high liquidity regime. This probably means that we see a minor correction or sideways action this time around.

  7. 7 Babak

    Maybe or maybe liquidity (however you’re defining it) is not a variable. Hard to say when you’re dealing with a black box algorithm.

  8. 8 Barry

    I finally got through to my contact that speaks to one of the quantdna principals directly. He told me unequivocally that the charts that they displayed represented EVERY occurrence where these 4 signals appeared in such short proximity to each other. They are definitely not cherry picking here. He was actually very agitated because they specifically don’t like discussing their proprietary stuff publicly and reluctantly decided to post it on their site at the urging of a few colleagues under the premise that they would be able to protect their IP by not divulging the pattern and only showing a marking in place of the signal. What ended up happening is that they are being accused of cherry picking (amongst other things…which is VERY unfair) as opposed to being thanked for sharing their stuff so I don’t think they will be doing it anymore thanks to the likes of Henry Bee. What do they have to gain by cherry picking if at the end of the day the signal doesn’t work. They are ultimately judged by the outcome not by the quantity of their proprietary hard work they decided to share.

  9. 9 Babak

    Barry, please drop me an email at babak AT

  10. 10 Kos

    Would you be kind enough to change your chart upload so that we can open it up in a new window for a closer look? Thanks for all you do here. Keep up the great work and o/c good luck!

  11. 11 Babak

    Kos, right click on image then ‘view image’ or hold down CTRL and use the scroll button on your mouse.

  12. 12 mz

    9 winner in 23 years. Good luck! :D

  13. 13 Ed Mullins

    If Barry and Babak are correct then this signal is worth heeding. Very interesting.

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