(WIP) Agathos Vector Analysis Illustration

Timely warnings of an imminent, significant correction were generated by AVA during the four to six weeks preceding the major correction in equity prices in early 2020, supposedly caused by the advent of COVID19.

The graph shows a market level analysis of quadrant distribution. Tenants of Quadrant I (basing) and Quadrant II (bull phase) haver been lumped together, purely for simplicity sake. The monthly (strategic) analysis (left part) is shown alongside the weekly analysis (tactical. All information refers to the Swiss equity market only. Similar observations were made in all major markets at the time.

Monthly Analysis

By June 2019, an overwhelming majority of stocks in the Swiss market were classified as either being in a bull phase of varying maturity. As the market kept rising for another seven months, this excessive situation proved unsustainable. The percentage of stocks classified favourably began to fluctuate at a generally still high level but forming a succession of lower peaks each time. Thus, the continued ascend of the index was unconfirmed.

 

Weekly Analysis

During the summer of 2019, the weekly work mirrored the buoyant impression of monthly ratings. Into December 2019, weekly classifications too were becoming more fragile confirming the divergence between a rising market index on the one hand, and diminishing breadth on the other.

Two sudden drops in favourable classification can be seen, each market with  vertical arrow.