Our signals are interrelated and, when used together, expose extraordinary insights into alpha.

Next-Day Probability (precise probability of a next day up or down price move).

Market Power (the ability of the market to raise or lower the price of an asset).

Market Resistance (increasing resistance reduces Market Power).

Market Noise (increasing noise reduces the efficiency of Market Power).

Market Temperature (with Free Energy determines entry and exit points).

Market Free Energy (energy available to move price; used to define entry and exit points).

Exposing Alpha – QQQ Example

Prediction:

As of March 12, 2021 close (today’s close: $315.06), our machine learned market signals predict conditions for a significant and extended move up for QQQ starting within the next couple of weeks.

Observation:

Market Power has fallen and the price has responded.

However, down from its high, the market power is still elevated.  In addition, the probabilities are far from equilibrium (0.5) and persistently Bullish.  And, most importantly, the energy to do bullish price work is just becoming available (free energy).

QQQ is poised to for an extended increase.

Action:

We bought some QQQ calls.  Closing price today (April 19, 2021) is $338.38.  7.3% increase in closing price in one month, exited with increasing resistance and noise.  Waiting for power to increase to buy in again.

Probabilities

Next day probability that the price of an asset will go up (bull), or go down (bear) the next day.

Note – Probability is Bull Dominant.

Market Power

Ability of the financial market to raise/lower or maintain the price of an asset above/below what would prevail at equilibrium.

Note – Market Power falls but remains elevated.

Market Free Energy and Temperature

The energy available to do useful price movement work (the free energy) has reloaded and is leveling off— ready to do work.

As the free energy drops, the price will move up (direction of dominant probability) over an extended number of days and weeks. The free energy has increased at the expense of the market temperature. The free energy and temperature have created conditions for a heat engine cycle to perform price movement work.

Note – Heat cycle ready to do work. 

Market Resistance

Resistance to a dominant movement in price of an asset. Increasing resistance reduces market power.

Note – Little Resistance to Changes in Market Power. 

Market Noise

Noise reduces the efficiency of market power. Market power is dissipated.

Note – Market Power is efficient. 

QQQ Closing Price Chart

Note – Market Price increase predicted.  To Be Determined.

Order Exchange Data Measurements

Our Approach

Precision Alpha uses non-equilibrium signal analysis on closing prices to expose what market participants are currently unable to see: Exact, unbiased probabilities that show reversion-to-mean and increasing momentum.