The Cycle Projection Oscillator (CPO) is a technical tool that uses complex algorithms to filter multiple cycles from historical data, combines them and gives a graphical representation of their productive behavior. The CPO methodology employs proprietary statistical techniques to obtain cyclical information from price data. Other proprietary frequency domain techniques then are employed to obtain the cycles embedded in the price.
In the CPO charts, the green line represents the detrended market price and the red line indicates the CPO projection (the bar charts shown above the CPO show the market’s trading in real-time). The blue lines above and below the projection line represent a two-sigma move and indicate overbought and oversold territory.
Amazon (AMZN) has had an impressive rally since February when the CPO indicated that it was in extremely oversold territory. If you were lucky/smart enough to take advantage of that move, it may be time to take profit. The CPO is indicating that Amazon is close to a turning point. While the stock has not reached overbought territory, the CPO forecasts a near-term top and expects Amazon to move lower going into September before turning back up in Q4.
The CPO is showing an interesting pattern in Netflix (NFLX) in mid-May. A recent sell-off has put NFLX near extreme oversold territory with the CPO indicating it will move higher. This means there is a strong buying opportunity; however, the rally is expected to peter out in the summer. The CPO is showing that NFLX will set a significant top around late July followed by a serious downturn that could take out the February lows.
The CPO is indicating that the recent rebound in Google (GOOG) may have run its course. However, expect Google to remain mostly range-bound to slightly higher for the spring and summer months before turning sharply higher in the fall. The CPO is expected a solid upward move in Google during Q4.