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Airedale, Dow Envelope: One has to go back to January 2003 for DJ30 daily close at or below the lower 5% band. The one before that was in September 2002. Both resulted in further downward movement before before reversal and solid up moves. There are prior instances too - most resulting in further break. I have to think that piercing the lower 5% band as a bearish event near term, probability-wise. Is there any specific rule for the 5% level? TIA.
Geo
One Way (based on daily) keeps the Dow short position. It is going to take some major effort to get a prelim buy signal. Hopefully maintrend low is approaching. Thrust method works a whole lot better with commodities, not so good with equity markets. This final hour selling pattern has to change sooner or later.
Geo
Good point. I will keep that in mind, as I use similar principles in my daytrading activities ... i.e. a given pattern/setup gains significance at certain levels. Thanks again.
Geo
Airedale, I was aware of that. My experience with short time frames using either of the Dunnigan methods (Thrust and One Way) is that it is way too noisy and generates many false signals and whipsaws. Of course I am charting only futures which is even noisier. One Way, on the daily Dow, is on a sell and currently short awaiting a preliminary buy signal.
I am studying Thrust method with corn on shorter time frames. Works well on the daily time frame (pit hours only), although volatility has expanded much from the time of WD studies.
Thanks for the headsup.
Geo
Airedale, -4% tag was my expectation, as I am following these bands closely. How does one act on this "buy" signal? Does one wait for a thrust up day a la Dunnigan or buy based on the close and the position of the A/D without any further confirmation for a move back at least up to the median average line? (assuming trade based only on this methodology). TIA.
Geo
"On the other hand, Summarizing, if NYSE MCO has a Small Change that is less than 5%, Nasdaq Index will tend to have a Major Move in the next two days. Further then its related indices will also tend to have Major Moves."
If the NYSE MCO has a small point change, does it not relate to the NYA and related indices? Nasdaq may move in tandem, but I thought NYSE MCO indicates the energy in NYA stocks. Can you please clarify. Thanks for the tutorial.
Geo
Is the NYA level correct? It is trading well below that number.
Airedale, INDU envelopes
A swift move from 3% envelope top to the 3% bottom without a mid-band pause. Looks like a copy of the July drop, but for the A-D line. Your current take on INDU envelopes will be greatly appreciated. TIA.
Geo
Airedale, Charts are visible.
Geo
Airedale, INDU envelope
INDU tagged in the neutral zone of the envelope in one fell swoop. I am sure the A/D took a dive also with today's breadth extreme. A trip to the lower band looks highly probable now. Your excellent read and interpretation of this system is appreciated by this rookie swing-trader wannabe. Perhaps very suitable for trading leveraged funds (Rydex-Profunds) or ETFs - DIA/SPY. Won't have the stomach to trade futures.
Geo
INDU envelope/NYSE breadth system.
Very deep pockets required to trade this system. It will be tough to do so in leveraged products like futures. This parabolic move in the Dow might bring the bottom envelopes up to meet price instead of price trending down. Application of this method to a broader index might work better in the current high liquidity market environment. Have you studied this methodology by applying it to say NYA or RUT? Just 1 or 2 stocks in the Dow can skew the results, no matter what A/D says about the broader market.
I find I can stick with Dunnigan better. There was a brief Thrust sell signal with no confirmation from One Way. Thanks for the regular updates on the Envelope system - very educational for me.
Geo
Q for Airedale on Dow envelope
With new highs, how do you interpret current situation as far as the envelope system is concerned? The bands are turning up and AD is also rising. Is the sell signal still active or is it cancelled, awaiting a new sell or even a buy? INDU could not even breach the 2% envelope to the downside and appears ready to move to the +3% line.
Thanks.
Geo
Airedale, Thanks for the clarification. I can see I was not too clear on this concept of right and left translation.
Geo
airedale, left translation
means that the first part of the cycle is of longer duration than the second part. Is this assumption correct? I presume that the amplitude is not of consequence to name the translation. So if it rallies 4 weeks and breaks for 1 week, it is left translated, even though the 1 week break exceeds the 4 week rally in amplitude in a 5 week cycle.
Geo
Here is another demonstration of cyclical phenomenon in what appears to be 27 trading days for a major cycle with 9 day minor cycles. Or the implication is every third 9-day period has a high probably reversal potential.
I think if you draw enough lines fibonacci, gann, cycles or whatever, you are going to find pivots at some level or another. How one can trade these is whole another matter. If I had not seen the efficacy of Airedale's forecasts based on Hurst, I would not have paid any attention to it either. Perhaps Airedale's study and practice of the Hurst cyclic model makes it uniquely his - not easily practicable to others - perhaps.
http://www.patmedia.net/claudb/DowCycle.gif
Geo
Airedale, Can you in a line or two explain what exactly is "phasing"? TIA.
Geo
Thank you, airedale.
Geo
airedale, DJ30 Trading Bands
Would like your comment on the Trading Band system. A/D MA has dipped below zero level now and the bands themselves have turned down a bit. An updated interpreation will be greatly appreciated, whenever you have a moment.
Airedale, couple of questions
Thanks for the chart updates.
Q1: How do you determine the targets for taking profits? e.g. 1395 buys show 10-12 handle profit in the overnight session. I ask because my daytrading mindset does not allow me to stay in a swing trade long enough to outperform my daytrading trades. Also you are planning buys in the mid 1380, which means the stops on the 1395 buys must be large enough to keep that position. Correct?
Q2: Where may I see the rules of the INDU trading band system? Or what is the buy rule one may expect now? Should breadth MA turn up above the 0 level while INDU rallies? Does this slam through 2, 3 and 4 per cent bands have any special significance and treatment?
Geo
Re Brokers
Arjunah, since you already have a full service broker, Interactive Brokers would be a good choice for a backup. I run several accounts with IB and use PFG as a backup in case IB which is strictly online goes kaputt for some reason (net connectivity, servers down etc.). I have not had any problems for the past couple of years... seems like a well capitalized company. But so was Refco.
Geo
MetalFillBoy, Weekly oscillators, I presume, are constructed from Weekly Breadth and Volume Up/Down data. Do you just switch time period in AB to calculate using the same AFL? It is said that the weekly data is more reliably than the daily or shorter time frames. e.g. Breadth can be positive by issues being up in pennies for 4 days and down a buck the fifth, whereas the weekly will put this in the down column. TIA
Geo
ES Spike
Here is some info from Carl Futia
"For the curious I have some additional information about the spike from 1375 to 1398 and back down again last night in the December S&P e-mini futures. (Thanks to Tim Mack.)
Apparently a fairly large short futures position connected with options with a 1375 strike was covered at the Globex open. According to the Merc the painful fills that resulted were not errors."
gloe, Re ER2
I know YM trades less than ER2. However I have no problem trading lot sizes of 10 or 15 in YM, but risk gets larger than what I can take in ER2, unless the entry is near perfect. Lot of tick noise, but excellent daily range, though. I was just curious, as I am moving away from daytrading index futures.
Geo
Arjunah, Re ER2
Thanks. I know what you are talking about. I strictly daytrade and nowadays I trade the YM (Mini Dow) mostly. I was curious about ER2 specifically. Unlike the SPOOS, ER2 is thinly traded and is a volatile beast. Though YM is thin too, it is less volatile and the one dow point spread can help in fine tuning short term trades. Cheers.
Geo
Mr.Cash, Trading ER2
Wow, you are a brave man. Since you follow Hurst methods, I presume you trade somewhat longer term - multiday swing, perhaps, holding positions overnight. In the daytrading timeframe, I find ER2 somewhat hyper and hard to trade without at least a 20 tick stop. I would like to know the smallest cycle you trade using Hurst methods. TIA,
Geo
I see. I take it she is a reporter or an anchor person. Are you implying that she could be what your video stream depicted? I guess if I had to ask who Ron Pisani is, then I don't really need to know.
Geo
teaparty, Your charts are too information rich for my feeble brain to fathom. My loss, of course. But I would like to know who the good looking lady is and why she is there in your posts?
Geo
Hedge fund news may have been just one of the alibis used to create the sell off. However - the Fed Report release rallied bonds, the dollar sold off (at least the Euro rallied hard), while the equities had a waterfall decline, all starting about the same time. IMO the report was the catalyst/excuse.
Geo
Airedale, so it is. Thanks for the update and headsup. It appears that the 21 day average has some significance, for longer term trades.
As far as Dunnigan thrust is concerned, is a sell signal the reverse of the buy signal, using the opposite of the parameters (test of high, inside bar etc.)?
TIA
Geo
Airedale - INDU envelope
How do you interpret current status as per this system? After testing the trendline, price almost tagged the upperband and is now moving towards the 21MA centerline of the envelope. I see a divergence in the 21ma of the NYSE A-D, though still well above the 0 line. Is the buy still in effect i.e. is it still a hold? Or was the approach to the upper band a sell (liquidate long)? TIA. I ask because the tendency based on past price behavior seems to be consolidation at the 21dma level and then a move towards the lower band or yet another attempt towards the upper band without a consolidation effort.
Geo
Re Summation Index - mainly for big picture. I am a daytrader and use no indicators other than some horizontal lines and an occasional trend line. I am researching the McClellan tools to see if I can bring myself to hold some positions overnight to a few days with confidence. I appreciate your suggestion and the link, but I have a policy of "no subscription" of anything related to my trading.
Geo
Hello MetalFillBoy, Thanks for the feedback. I do use AddtoComposite and AA to compute the Oscillator and the Summation Index for Dow 30 and Russell 2000. Your inline method would work fine for Dow 30, it may be a bit much for R2K, though. As this may not be of much interest to the group, I will contact you via email, if I need further details. Thanks and keep up the good work. Perhaps you can add a pane for the Summation Index for NDX-100 also.
Geo
MetalFillBoy, Thanks for the updates. I am curious as to how you calculate the breadth McOsc and McSum etc. I presume you derive the data from composites from the NDX-100 watch list in AB, perhaps? Is the formula available? Thanks.
Geo
Airedale, Thanks for the update on the INDU envelope. 15%! If result is similar, then INDU should breach 12000 (12305 will be the 15% gain from 10700). Does this coincide with any of the cyclic targets you have derived? Perhaps a retest of the trendline at around 11250 for the inevitable pullback?
Geo
PS: Thanks also for the heads up on the breakout breaching the trendline which you had posted earlier.
Thanks, Airedale. Where can I find out more about this methodology?
Geo
Airedale, Trading Bands
How would this methodology interpret the status as of Friday's close. DJ30 tagged the upper 3% band and retreated promptly. (I was short YM in my daytrade and was nervously watching the cash Dow awaiting the eCBOT to re-open after the halt).
Price made a higher high while 21MA of NYSE A-D is at a lower level, showing some divergence. Is this a Sell now?
TIA.
Geo
Airedale, trading bands
The Dow is at the upper 2% band (well, almost there). From past behavior, it appears it will either consolidate at these levels or reverse towards mid-band, Would this system now generate a sell signal? Excellent call - based on this and Dunnigan setup. Thanks for sharing.
Geo
Nice one, airedale. Thanks.
Can you give an update on the Trading Bands/Dunnigan buy signals? What would negate the signals and cause an exit (other than money management exits)?
Geo
Airedale, That clarifies it a lot. I see now what you mean about the diverging level of the 21dma. Thanks. I guess money management will take care of things once you are in. May I ask what type of stops can be used with this? Or what will tell that the trade is wrong? Since it is based on dailies, I would assume either a 10 day ATR or 1/2 of 1% of the price of the index. Would that work?
This system is way too simple, so it ought to work.
Geo
PS: Where can I find out more about this?
Airedale, we still don't know if the 21 day breadth had made a higher bottom or not. Wouldn't you want the average to move back up before calling it a bottom?
Also, if one took the first signal, there is a position. Degrading the signal is somewhat irrelevant, no?
Geo