SpeculoMeter

The fundamental unit of length in the metric system, equivalent to 39.37 U.S. inches, originally intended to be, and being very nearly, equal to one ten-millionth of the distance from the equator to the pole measured on a meridian: defined from 1889 to 1960 as the distance between two lines on a platinum-iridium bar (the “International Prototype Meter”) preserved at the International Bureau of Weights and Measures near Paris; from 1960 to 1983 defined as 1,650,763.73 wavelengths of the orange-red radiation of krypton 86 under specified conditions; and now defined as 1/299,792,458 of the distance light travels in a vacuum in one second.

What you read above is a very interesting paragraph. There are no points for guessing that we are talking about the unit of measuring distances, i.e. Meter. We know that 1 meter is less than 10 meter because we have a unit of measuring distances that quantifies and standardizes all distances adding perspective allowing you to measure it and compare it. Isn’t is a wonderful thing to have? A unit for measurement! Another important thing to note herein is that the definition of meter itself was largely on the same lines but kept on changing over the years. Attempts were made to standardize it in terms of inches, equator to pole distance, platinum-iridium bar, orange-red radiation of krypton 86 and now light.

Now, think how wonderful it will be if we have a unit of measuring speculative activity in the stock market. Retail investors can be advised to stay away from highly speculative stocks and look for consistent returns. Or it can give a precursor to a major stock market crash. It can help in identifying stock market bubbles and it can give you points of clean exit to preserve your capital. A unit of measuring speculations can do wonders in quantifying the risk and saving a lot of heart burn. And it need not be perfect to begin with. As with all units of measurement they evolve over a period of time towards perfection. Here is merely an honest attempt to have a start.

With this in mind, let me introduce to you the new unit of measuring speculations –

About now is the right time to introduce Mark Minervini – Trade Like A Stock Market Wizard. This guy very neatly identified 4 stages of any stock/market –

1. The Neglect Phase – Consolidation
2. The Advancing Phase – Accumulation
3. The Topping Phase – Distribution
4. The Declining Phase – Capitulation

Here is a simple graph to help you quickly get an overview of these stages. And amazingly you will find the same story repeat again and again for every market and every stock across the globe.

So here is building on top of this idea. If you holistically think about it, these stages represent nothing but speculative activity at their different levels. What if we are able to identify the stage in which a stock is based on SpeculoMeter reading? What if we are able to do it over a very short period of time say 1 month?

There you have it. Here are the same stages with SpeculoMeter reading –

1) The Neglect Phase - Consolidation (40-60)
2) The Advancing Phase - Accumulation (60-100)
3) The Topping Phase - Distribution (40-60)
4) The Declining Phase - Capitulation (0-40)

We tested it across different periods and figured out with one month data, it was most accurately able to identify stages for a shorter duration of time with 99% accuracy. Here is a small tool demonstrating the same PoC (Proof of Concept) for stage identification – SpeculoMeter – Get Reading. And here are more details that can help you in Understanding SpeculoMeter Reading and perfectly time the markets or stocks across different stages identified by Mark Minervini.

This can help you make money!!

DISCLAIMER

All information provided via speculometer must be used for information purpose only and not for investment advice. By using it, you understand that we are not making any claims and we cannot be held responsible for any specific trade outcomes.