Ok, here's a link to the simulation video. It's a lot less exciting than I was hoping for - one snap every 2 seconds, over 6 hours or so. It really needs sped up another 8x to get a feel for what's going on, but I'm out of time on this tonight. This machine is not set up for postproduction stuff, it was painful to get that far.
http://dl.dropbox.com/u/12947585/trainedsim.wmv
So if you have the patience of a zombie, you can see the 'fit line' gradually converging on the true price history, and a bit of a projection to the right edge, beyond the vertical white line. That's the "today's date" line. Anything beyond that line is either prescience, or nonsense ;-) it takes a long time to settle down.
For the less patient, I cobbled a 4-frame sequence from beginning, middle, end to show the same thing.
It's important to realize the spikes are ironed out and not reproduced very well. So even if it makes a decent job of projecting prices, it won't necessarily follow that line. The line is a guide to the 5-day-average approximately, and timing of reversals, but not much more than that.
The reason it takes so long, is because it's fighting a tough battle - lots of competing influences, some more subtle than others. If it fits too quickly, it's probably memorizing and that's bad for prediction. The more trouble it has fitting, the more general the fit, and the better it works. It's not quite that simple, but near enough.
My interpretation of the result? That's maybe a
step too far, but here goes....
- early middle of a bottoming out parabola
- averages something like 1640-1680 for at least a month - probably longer, unless something dark and swan-shaped occurs
- suggests a fair recovery around mid-late-Jan or early Feb but possibly short lived
- no crash in price evident, just grinding along for a bit
...and...
- if something big and new happens, this result will be dead in the water. its not magic.
- it only tries to look a month ahead, so the next run might say something different!
Please don't trade on this. It's not wise. We'll see what happens and it'll be a bit of fun. I'll post updates now and again when I have the time.