Benford's Law Applied to the S&P 500 (SPX)
As I have shown in previous posts for other assets, these are the expected price levels explained as midpoints adhering to Benford's Law, also known as the Law of Anomalous Numbers. Even though these gridlines shown are not always the price level of a reversal, we see that oftentimes these midpoints do in fact act as support or resistance, and the midpoints not shown between the midpoints shown also act as relevant price levels.
The probability of leading digits according to Benford's Law:
P(1) = 30.1%
P(2) = 17.6%
P(3) = 12.5%
P(4) = 9.7%
P(5) = 7.9%
P(6) = 6.7%
P(7) = 5.8%
P(8) = 5.1%
P(9) = 4.6%
Legend:
1.33 light blue
1.78 purple
2.37 pink
3.16 red
4.21 orange
5.62 dark green
7.50 light green
10 dark blue
Next order of midpoints in gray
For a more complete explanation to this methodology, check out the links below.
The probability of leading digits according to Benford's Law:
P(1) = 30.1%
P(2) = 17.6%
P(3) = 12.5%
P(4) = 9.7%
P(5) = 7.9%
P(6) = 6.7%
P(7) = 5.8%
P(8) = 5.1%
P(9) = 4.6%
Legend:
1.33 light blue
1.78 purple
2.37 pink
3.16 red
4.21 orange
5.62 dark green
7.50 light green
10 dark blue
Next order of midpoints in gray
For a more complete explanation to this methodology, check out the links below.
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