Probabilities for short-term up and down moves for 11 popular ETFs are calculated by the p-indicator. The results show that GLD has the highest positive bias and USO the lowest negative bias for directional moves with a 3% upside and downside objective.
The probability of an up move and of a down move are the long success rate and the short success rate of the p-indicator, P-long and P-short, respectively, as shown on the screenshot above. P-long is a measure of the probability that a long position initiated at the next open will result in a profit for the corresponding profit target and stop-loss values (in this case 3% for both). Similarly, P-Short is a measure of the probability that a short position initiated at the next open will result in a profit for the corresponding profit target and stop-loss values (in this case 3% for both). A more useful measure in this case is the difference between the long and short probabilities, shown as P-delta, which is a measure of the bias, or tendency, of the market to move towards the long or short direction. The parameter S represents a significance measure of the calculated numbers with a zero value indicating no significance, values around 5 indicating moderate significance and values above 8 indicating high significance.
For GLD P-delta is +25.00 with significance S equal to 6 and for USO P-delta is -24.04 with S equal to 5. DBC and TLT also have a high P-delta.
Thus, the probabilities calculated by the p-indicator point to a continuation of the Gold rally in the short-term and to a further correction in crude oil prices.
Please note that the p-indicator calculations change on a daily basis and as a result any signals derived from it. Thus, the calculations of the probabilities are valid until the close of the next day when the indicator is recalculated. The same also applies to all technical analysis indicators. Furthermore, probabilities are not related to events themselves but only to their frequency of appearance, in the sense of the low of large numbers. At least this is just one of the many interpretation of probability and one of practical use.
Like all indicators, the p-indicator also generates false signals and quite often it is very hard to interpret. Experience helps with the correct interpretation of the values and patterns of most technical analysis indicators, including the p-indicator.