Above – Normalised DataSwarm Zeitgeist (in pink) of QQQ (above) and SPY (below) ETFs showing their Bollinger bands, with ETF daily prices overlaid in dark blue
The beginning of 2022 has proven to be “interesting”. For overall market direction it is helpful to look at the Zeitgeist for the NASDAQ and S&P500, as recorded using the QQQ and SPY ETFs (see diagrams above). (To recap, DataSwarm uses it’s Zeitgeist signal to inform market trading, and it has proven itself to be useful – see market trading use over here).
It is not only applicable for individual stock price prediction but also for market direction, as displayed in this post.
In the diagrams above, there are 3 distinct phases to 2022 to date, denoted by the labelled vertical blue lines in the diagrams:
- January 2nd onwards – no sooner did the year start than both the QQQ an SPY Zeitgeists fell, and this was matched by the drop in both ETFs’ prices into correction territory. There was a rally in late January. This seems to have been driven heavily by the US raising interest rates and the expected knock-ons from that, the rally seems to have been driven mainly by a perception of an over-correction. The Zeitgeist suggests that is the case, as its swing was more moderated, it was also far less convinced about the rally (note the Zeitgeist is normalised so not as sensitive in daily movements vs price so what we are looking at are the relative swings).
- Russo Ukraine War – from 10th February there is increasing concern about Russian exercises on teh Ukraine border, and the Zeitgeist and ETF prices drop again as these continue, among mountign speculation there will be an invasion. There is a major price drop when the actual invasion starts – and then, interestingly, a quick a bounce back. There were a number of reasons for the bounceback, but a large driver was the view that WW3 was unlikely to break out (yet, anyway) – but that low on the spike is probably indicative if it looks like that scenario may arise again.
- Predicting the future path – note how the SPY and QQQ Zeitgeists diverge sharply on 7 March, this is driven by a belief that commodity prices will rise (favouring SPY companies) but that Tech will continue to struggle with materials and markets. At any rate by the next week the SPY Zeitgeist leads the charge with the prices of SPY and then both QQQ Zeitgeist and price following a few days later, Note that QQQ Zeitgeist has now also started to rise now, the market seems to be moving rapidly up into a “new new normal” – if such a thing exists right now.
There is a “raising interest rate” story making the headines right now but we can see a lot other fairly major factors swirling around in the Zeitgeist mix – anything can still happen, as they say.
Interesting times, indeed.