Hindsight makes us all geniuses.
I did not anticipate the magnitude of the up move yesterday. However, it turned out to be an almost textbook A-B-C Wave with proper market symetry. This is also the third time recently that an (S) day is followed by a nice up day move back to the moving average.
Charles
" I never blame myself when I'm not hitting. I just blame the bat and if it keeps up, I change bats. After all, if I know it isn't my fault that I'm not hitting, how can I get mad at myself? "
Yogi Berra
Hi Charles,
ReplyDeleteI enjoy reading your posts every day since finding your blog. I really like how you approach the market and feel it is similar to my preferred trading style. You have many good tips in what you are sharing. Please keep up the excellent work.
In looking back through older posts, I have not figured out what the "B", "(B)", "S", and "(S)" are referencing in your second chart for 9/11/08 that shows the Two Day ROC. I hope it is not something obvious that I'm not thinking of.
I feel this is the type of analysis that I have been missing in my trading and I'm interested in everything you will share or point me towards to do more research and learning.
I'm also interested in your comparison charts of today's range to yesterday's range. I think this will also help my own trading.
Thanks again for sharing,
John
Hi John,
ReplyDeleteHappy to hear that this blog is of some help to others.
The "B", "(B)" and so on is from Linday Raschke. I attended her 3-day seminar in 2005, in which she discusses the 2-day market cycle. The original idea of the 2-day cycle comes from George Douglass Taylor, who was a 1950's trader and wrote the book "The Taylor Trading Technique". George Cole (1930's) also had a 2-day pivot which he used to follow the short-term cycle.
Here goes a short explanation:
(S): anticipate a buy day. Usually the market is starting to show signs of bottoming. Get ready for a long bias market.
B: Market has advanced. Look to liquidate longs.
(B): Anticipate the market topping. Get ready to place short trades.
S: Market is trading down. Look to take profits in short trades.
Remember that the market cycle isn't perfect. Some short-term cycles are longer or shorter than others. Lately, the short-term cycle is a little out of synch due to the financial scandals. I like to use other indicators such as the $TICK to determine if current momentum is weakening, and the market is ready to turn.
I will start to post the range analysis info again. I temporarily stopped since we change contracts. It takes a few weeks to collect meaningful data on the new contract.
Hope this helps,
Charles
John,
ReplyDeleteI forgot to add the following:
When the Rate of Change Indicator has flipped up from a downtrend, put a "B" on that day. If the ROC trends up a second day, put a (B) on that day. When the ROC flips down, put a "S" on that day. On the second down day, put a (S) on that day.
Charles
Charles,
ReplyDeleteThanks for the explanation. That is exactly what I was looking to learn more on the concepts.
The Tick is my primary Strength and weakness indicator. I have an accumulated Tick like Dr. Brett and also look at the Tick to see if it is making either Higher Highs or Lower Lows.
I'm looking into your Tick Pivot and the entries you show on some of your charts. Your Pivot line looks like it will make the signals more visible.
I primarily follow what I see in the price action and the NYSE Tick. I found my trading was often better without an expectation (preconceived notion) that the market would go up, down, or be range bound. But I also feel it has been one of my biggest weakness .
Thanks again,
John