Short Term Trading Member Forum

[airedale88]

belt, the concept of the fld is derived from the half span LMA. in the profit book chapter about using half span LMAs hurst shows that a proper length 1/2 span LMA will reverse direction at the half way point of a cycle's move from bottom to top or vice versus. a price projection can be made at that turning point. the fld line is merely the plot of prices forwarded in time by a 1/2 span which shows every day what price must be exceeded (crossed) up or down to turn the 1/2 span LMA up or down. in hurst's book, same chapter, he discusses extrapolating the 1/2 span average to intersection of the full span average as an add on method to determine price projections, and you will find that in a flat or mildly trending market either using the 1/2 span LMA turn as the projection point or the 1/2 span/full span extrapolation crossing will yield the same target. however, as the price move continues and the 1/2 span nears the full span any results of a change in trend have become factored into both 1/2 and full ma.'s so the eventual cross becomes very accurate as the 1/2 way point for a projection, but too late to use it since by intersection the move based on that cycle alone is usually over. the fld provides a method of projection which allows one to see in the future that if a cycle projection is fulfilled it can trigger larger projections by the crossing of flds larger than the cycle tracked. it is a misconception to think that 1/2 span ma's provide any clearer targets unless one waits till the move is over, which is worthless.

here's some SP500 charts, the 1st with the fld for the 10 wk cycle and the rest with the 1/2 and full span LMAs for the 10 wk cycle .........

http://charts.barchart.com/chart.asp?sym=$INX&data=A&date=021505&den=MEDLO&evnt=off&...

SP500 had just made new highs on 8/08 for the entire move off the 3/03 low. overall trend had to be considered still strong at this late stage in the 4.5 yr and 2nd 80 wk cycles. from the august high we retreated into a 20 wk cycle low that was met right on the button by the 10 wk fld projection. a 20 wk fld, not shown, was also broken right at the bottom and was recrossed to the upside quickly, usually a sign of strong trend again when this occurs. we then rallied up and broke the 10 wk fld on 9/07-9/08, projecting a move to the 1255/1260 area. with the 20 wk cycle up and the 40 wk cycle down, this target was expected to be met (not including the possible continued overall uptrend). prices broke below the fld and then recrossed to the upside again on 9/16, all still indicitive of an upmove. then the market turndown occurred. leaving aside other fld crosses, the only explanation for this fld failure is that trend (sigma el) took a sudden turn down as the weight of the downward 4.5 yr, 80 and 40 wk cycles took hold. IMO the force of that sudden turn could not be predicted based on recent action of the SP500.

now let's look at the 1/2 span LMA.

the 1st chart show the LMAs right after the late august 20 wk low. extrapolating the intersection confirms the bottom target
of course the cycle is up already. still very accurate cross.

http://charts.barchart.com/chart.asp?sym=$INX&data=A&date=91305&den=LOW&evnt=off&...

here we are on 9/13. SP has a break down. however, LMAs are both moving up, and the 1/2 span move up suggests a 10 wk target of 1260+.

http://charts.barchart.com/chart.asp?sym=$INX&data=A&date=091305&den=LOW&evnt=off&am...

on 9/17 the 1/2 span LMA turns down, this suggests a failure of the 1260 target and a move to the 1214 area. no extrapolation can mbe made, and this is an early signal for a 10 wk cycle.

http://charts.barchart.com/chart.asp?sym=$INX&data=A&date=091705&den=LOW&evnt=off&am...

chart of 9/23
the 10 wk LMA turned back up again, and then turned down again.(if you look at the 10 wk fld, these turns in the LMA accompany crosses and recrosses in the fld) by now we've had a good drop, and this is an instance where either fld or LMA did not help in catching an early change in trend. notice that the 20 wk LMA has turned down (20 wk fld was crossed downside too), and that projects down toward the april lows 1130/1150 area. that's not due till the nest of lows in jan 06.

http://charts.barchart.com/chart.asp?sym=$INX&data=A&date=091705&den=LOW&evnt=off&am...

the last chart is current. it has both 10 wk fld and 10 wk LMA. watch over the next few days as the lagged 10 ma turns up, caused by prices crossing the fld to the upside on 9/28, right before the bottom of the 5 wk cycle on 9/29. this will show how they are so closely related.

http://charts.barchart.com/chart.asp?sym=$INX&data=A&date=101205&den=LOW&evnt=off&am...

proper interpretation of flds (and in turn the use of LMAs as a future predictor) is complicated by trend. hurst developed a method for this but admits in the course that trend interpretation is only roughly accurate. in current action i can only guess that trend has turned quickly due to a number of sectors that had very strong price drops. some, like the oils, are slightly out of phase with the indexes,some others are in phase but got banged anyway, perhaps a change in fundamentals. then there's a group like the broker dealers, $XBD, usually a good indicator for the health of the averages. it was just making new highs about 7 days ago while the SP failed and now XBD is tanking.