The Doaks Dow Divergence indicator failed six times out of eight to predict the correct direction of the next ES move, again supporting the heretical anti-hershical hypothesis that ES leads YM!
I believe your parameters are off somewhat. Your charts show 1min, and the traded instrument is the ES not the SPX. And it is the correlation between the 2min YM and the 5min ES, AT TURNING POINTS ONLY, as they should be expected when following the procedures outlined for "THE HERSHEY METHOD". If a person is not familiar with the method completely or doesn't understand it......how would they be able to judge it ?
he is very familiar with it, so familiar that he could interpreted the rule the way he "see" it without changing the original method intention one single iota I see there are six lucky persons who viewed the chart so far, speak up if the chart make sense, people.
Today, a divergence of $DJX relative to $SPX correctly forecast a congruent move in $SPX six out of eight times. Even a blind hog....
Forgive me, but I have not been following this discussion in all its detail. Am I to understand that some people believe that one index leads another with usable regularity? And if so, what is the purported duration of such a lead?
Those charts are a poor boy attempt to debunk Mr. Hershey's contention that YM leads ES. As I do not have a CBOT subscription, and it is not worth buying it for a month just to rag on Jack, I chose to examine the assertion using DJX and SPX as surrogates. My experience measuring instantaneous premium on NQ suggests that the YM and ES premia cannot be the cause of the alleged phenomenon, therefore using the underlying should be reasonable. As the faithful claim that YG in two minutes leads ES in five, I chose to define a DJX/SPX divergence as two consecutive minutes of DJX down while SPX is up or unchanged, and vice versa. In general the results have not been kind the Hersertion. One suspects, as I think it was ETLurker who wrote, the dillusion is an artifact of the two different time frames. I think it is the credulity of the Jackers, who see Booja where none manifest themselves. BUT, the exercise was immensely useful (if utterly trivial algorithmically), as I have identified potential leading indicators for NQ, which of course I will not reveal. I am on a sacred mission to explain to each new generation of credulous Jackers that in trading, one QUANTIFIES, CODES, THRESHOLDS and TESTS every half-assed trading idea that comes to the febrile (if feeble) minds of nearsighted and delusional old men like Jack and me. If you are old enough to recall who I am (a faded early fifties celluloid figure), then you will ignore everything I post, realizing that I am never up to any good. Kind regards.
Interesting. Personally, I did not think that such a relationship was likely. Admittedly, I have not tested the relationship empirically because it makes little logical sense to me. If we are to accept that one index reliably leads another by a few minutes or so, irrespective of market circumstances, then we must accept the premise that all of the arbitrageurs in all the world are reliably asleep at the wheel during this period. That presumption is rather tenuous at best. I suppose that some people may indeed have leading indicators of some kind or other, but I suspect that they would fail to lead once word got out. Since YM and ES are out there for all the world to see and compare (i.e., there is nothing "proprietary" in the comparison), I think it is counterintuitive to expect such a public goose to lay eggs on cue.
Well, I am careful to examine everything Pope Jacques says (I am less reverential about his cardinals), because what he believes is no less bizarre than what I believe. I just keep my mouth shut about my delusions. But I cannot help but believe that I am right about some things and he is dead wrong. For example, I have volume peaks coded up for NQ in one minute, and one just tripped an audible fully nine minutes before the five minute code did. Not that I believe a fucking word of it, because this is the third long signal on the way down this afternoon. But as Hypo always says, the study of Jack is heuristic, so best not totally ignore him. But it does seem such a waste to an old man likke me to totally shitcan classical TA. For example, though I channel, I also draw Shabackian independent top and bottom trend lines, which may diverge or converge, revealing much useful IMO. One of the newest supplicants suggested this (smart boy) and was roundly condemned for his hersheresy. So I read every Hershey thread carefully because occasionally a poster will lapse into good sense. Thank you kindly for your inquiry, as it is very lonely challenging Jack, as you well know.