IT Term

Discussion in 'Technical Analysis' started by nwbprop, Mar 13, 2004.

  1. My objective for this thread is to help learn how to determine the difference between a reversal of an IT trend or the creation of a 2nd pt 3 for the current IT trend.

    My overall game plan is to swing trade the ES using the IT trend channels and short term trade the left and right traverses within the IT channel.

    The traverses to the right side of the trend channel seem to be less in pace than the left traverse unless the IT trend channel is lateral. Less in pace means medium (iceberg) or CCC pace.

    The problem that i have now is to determine the difference between a reversal and the creation of a new pt 3. I think this can be solved by volume.

    This thread might be a work in progress because I think the IT trend may take weeks to change.
  2. I posted a 1 pager on SCT in the psychology forum under the "fear" thread.

    In two other places on ET there are some threads running re: tape reading and volume and price (journal).

    tape reading means= volume and price charting.

    Volume and price is a misnomer for supply and demand without any strategy for making money.

    Throughout history things have changed. Transportation makes a good example. In my life horses were cart pullers for bread, milk and ice delivery. Autos and trucks have come to the fore and will be around quite a while. Failure to put wings on railroad cars has led to airborne stuff and not using ships to cross oceans. 20 mil gets you a ride to the space station. My packer llamas are retired from exploration and trail designing and helis now drop in materials for remote campsites and everyone has locators now.

    Chalk boards and ticker tape machines spawned tape reading. I watched while seated in cushy leather lounges giving orders to lackys. I inked IT veluum chart grids in the 50's for blueprinting and brown lining copies to give to others. This was the replacement for the original strategies for tape reading. the volume on the day Kennedy died nailed the coffin of that era definitely. QED.

    Supply and demand came and went too. (Think 24/7 arriving, electronics. and global and markets sizing up through inventions like mutual funds, etc). Count the # of journal participants and the disconnect on strategy aspects. QED.

    Details change too. Pounds became dollars related to pieces of 8 and prices became 8ths of dollars. Curbs became exchanges and buckets became phones and tickers. Now here we are.

    Trivial maths were applied: averages, geometry, MLR, periodicity, indicators, transformations, fractals, bigger is better (random, neural), etc.

    Prediction somehow made it's convenient appearance. Asset allocation "fixed" everything until we learned "bubbling".

    The Brinson, Singer, Beebower, almost religious ratio, 91, 6, and 2, is,as we speak, still getting the coffin nailed.

    Nobel awards made their appearances all the way up to profits>>>fear and losses>>>>hope.

    As in transportation, time compression prevails and dooms both methods and strategies. There are always remnants of the past, however.

    Now we make money just everywhere. Electronic support has crossed a line where people are no longer faster than their support sytems. See tape reading as a cool slow example.

    So where do we sit as we face a global burgening of market growth that will shift our opportunity by orders of magnitude. ET is not a place when maximixing, minimizing and optimizing is part of the vocabulary. Nor is market regionalization arbitrage going on either. Risk management here is an on/off switch and not marginall concerned.

    People are going to have to learn. They are going to have to deal with how "progress" is coming at such a rate that "getting more for less" will be the dominant theme for the generation ahead. "Getting more for less" is the theme of deflation. How to "get it", that is, to learn how to be on top of the future, requires learning.

    Time compression, oversupply of everything (cheap labor, electronic advances, money supply expanding, financial markets appearing and growing) for the generation ahead, getting more for less all collectively lead to unprecedented wealth building for those who are equipped.

    Lets say a beginner is a learner and he becomes a novice(meaning he is independantly operational on a basic level). How does he become effective and efficient after that? That is beyond ET at this time as we see.

    A novice has to grasp what is going on to apply his beginner knowledge, skills and limited experience. This singular need to know what is going on is found in the "context" of where he is making money.

    Money is made NOW. The future flows into the present (NOW) and becomes the past. We are in a boat that floats in a"context"

    Intraday floats in short term (position) which floats in IT which floats in LT. SCT is intraday for indexes. SCT is short term for equities. Both these operating points allow money to be shoveled (the term for effectiveness at high efficiency) out of highly leveraged profits into larger markets. 100,000 share limited streams in short term trading can be paralleled to quite a breadth before additional markets must be used from those available (prepare to go 24/7 global). It is not possible to pool large sums of capital and make money as we all see by the "bigger is better" continuing demonstration of failure. SS makes 1% a year before inflation. Wider is better as the only thing that works. We need to plan for a wide context with our boats sitting in boats sitting in boats.

    You are asking how the boats work. We fractal on up and apply SCT principles.

    For ES it goes this way. Chart using EOD on the daily fractal. Quarterly roll over is handled because the commercials and producers set a boundary for us. The cash index offset tells you the quarterly direction that is potentially a difficulty. Now we have opposition between the charts and the offset. Charts prevail.

    Draw the LT for the Q. Extrapolate from the past Q.

    The IT fits in the LT. to leave the LT with an extension of any given IT takes "more". "More" is volume.

    IT's traverse the LT. IT's are 5 to 8 days long and come in three sizes: up down and lateral. Laterals only occur on the R and S (LT channel usually). Intradays (H/L's) traverse the IT's.

    When you trade overnight just to make money, do it in the IT direction even though it will go both ways it just nets out in the IT direction.

    You need to regard two parts of trends: the ends and the runs.

    You are chosing to trade in a place where there is slower action and not faster action. Usually people choose to trade to make more money.

    All novices should go through the process of seeing what can be made where. A graph of this is nice to have on the wall. ET people are not into this thinking because it is related to maximizing and minimizing and optimizing. This thread of yours actually introduces these things. To prepare a graph, it is a good idea to make a spread sheet to find out what is what.

    My detractors usually directly or by inference tell us their troubles. None of them so far can do the above mentioned graph nor spread sheet. This is the FAQ, quack, snake, slither, and crap they see instead. If they could garner a context of the market and it's possibilities, then they would have something to spend time working on to get rich instead.

    Consider the following. Look at the market and look at your operating level. The market tells you what is there for the taking. Your operating level tells you how well you take that which is there to take. In music terms, we often decide where we can play and be on the beat or ahead of it. We choose not to play where the beat is too fast and the music looks too hard to read and translate into playing.

    A solution not often used nor considered, is to sit in where the money can REALLY be made but to ONLY play when the sheet music is easy to read. It is a question of when to sideline and when to play. No band wants such musicians, but we could care less about "being in the band". "Being in the band" is the stuff you read here about how "hot$hit" a trader says he is. It is the BS about competition with others. Nobody is competing with anyone. It is not a possiblility in trading at any time whatsoever.
    The deal is to make it when you are capable, sit out and learn when it is tough. This is the alternative to going to a slower fractal for the action there.
  3. Awesome post! I LOVE IT! (No pun intended.)

    You're on a roll, Jack, you're on a roll . . .:)
  4. The first thing that really grabbed my attention when I started
    studying the markets was its fractal nature... but I could not
    get my head wrapped around the ftactal generator making
    everything go.

    After reading Jack's stuff (and I think SCT is at the heart of
    *all* of it... rockets, stop logs, 1,2,3 channels, everything) --
    he is really handing over the keys to the kingdom. Accumulation
    and distribution happens on different scales and time frames for
    different reasons -- but it is all interelated and it all can be
    expressed in terms of SCT.

    Some people may not see it but I do. Thank you Jack.

    The difficulty that I (and others) struggle with is how it all fits
    together... but if you have a guiding principle that is sound
    things begin to fall into place as long as you keep yourself on
    the path.

  5. I just realized that when I spent all that time looking for a fractal
    generator I focused on price formations -- but price formations
    are only a derivative of the activity. I was looking for order in the
    wrong place -- the real meat.. the generator is accumulation
    and distribution.


    Just like a coastline which takes its fractal shape through the
    repeated interaction of water and earth. The shape is
    incidental -- an afterthought or a precursor but not the NOW!

    WOW this is a big moment for me.

  6. Sorry guys this is a "eureka" moment for me......

    When I first started trading I made a Moebius strip out of
    paper and I used to play with it while I was watching the
    intraday stuff. I knew that there was a connection somehow!
    Today I finally figured it out.

    If you don't know what it is a Moebius strip is a twisted loop.

    Do this:

    cut out a 1 inch wide strip of paper. Color one side red for
    distribution and the other side green for accumulation.
    Twist it and tape the ends. Voila! a working model of the
    market. Da Vinci would be proud.

  7. Thanks for the detailed reply. I find that having the right "context" can be very helpful in staying relaxed during SCTing. It gives me perspective that allows me too ace ends of trends.

    I like the use of IT's being 5-8 days. I have been looking through past IT's and have found that they follow the textbook way of a "trend". This means pts 1,2,3 and second pt 3. Understanding this allows one to understand the BO's into new IT's after the second pt 3 channel. Very Kewl stuff indeed.

    I know that their is an important relationship between the trend slope and duration of trends and its reversals. This is also related to longer term accumulation and distribution as BA_Trader discussed. I think immediate A/D depends on what side of the IT trend channel you touched last.

    Currently I have us in a downward sloping IT. We are on day 6 of the IT without having a second pt 3 yet. I anticipate a second pt 3 in the next few days followed by a BO(or FTT) and a change in IT trend to lateral or long.

    I am not sure exactly what consititutes a lateral IT. Most IT's that i have looked through is at least slightly sloped up or down.

    What angle of pts 1 and 3 constitutes the difference between a lateral from up or down?
  8. I agreed that IT is textbook. Having this understood, as the posts here indicate by what you post, instills something.

    You move to understanding that things do not "fall apart" and powerfully, you "get It" thoroughly that there is a "defining context".

    This means, that as you monitor, your senses summon powerful and strong emotions. You do not have surprises as the dynamic unfolds.

    The rountine of 1. gathering data, 2. doing analysis then 3. deciding based upon beliefs, and 4. taking timely actions; it all takes on a quality kind of meaning. Quality of trading. By not leaving out one or more parts by skipping to action based on a single monitoring sensory impact that has an unexpected emotional component, you remain "relaxed". Actually you remain in total control and continually achieve capital appreciation as the market hands it to you. You are fortified, continually.

    Currently I am processing two persons up to a multiple contract level. What you are becoming handles this in a similar manner.

    Making tick after tick as 12.50 and 25.00 cash flows accumulating, then, changes to 50 and 100 dollar accumulating flows in the same monitoring time warp. By having engrained in the routine, complete data gathering on three levels (sandpaper's coarse, medium and fine), then the analysis focuses on continuity of translation or "seeing" the "blockers" begin to appear showing the arrival of end effects; beliefs are complete and there are no "out of the box" occurances, action is like peeling out of a flight formation into the next one. It is like NOT keeping pressure on the stick or wheel or tiller or down hill leg and to just "let it out" and then slipping into the follow-on actions for merging into a new series of translations.

    It is process not anything else that you continually assimilate.

    Last quarter we had an IT set of trends that were demonstably classic. The LT channel formed a top of R. First IT's reversed on the top of R. For humor go back and pick off all the ET threads that sprouted. Then some threads blew out rational volume analysis.

    After the IT reversal from short to long on the right side of the LT we traversed on up to top of R again. A lateral channel formed and hung along the top of R for over 6 days before easing off into a messy short and failure to travrse.

    This lateral allowed SCT to really slalom in the IT as well as intraday. This is a place where pulling money out is very "regular" and "uniform" and in an "unchanging context". Like sailing out and around of Singapore. "Equitorial sailing in warm waters. (regular and uniform but it still takes 45 minutes to get an undated chart).

    The quarter proceeded with IT's that were okay and normal. Then we came to the period when the right line was approaching the top of the R. The IT became a FTP and so we got to "see" intraday trading be affected. Trend fader when into Holy CRAP and the P,V in the Price and volume journal fouled up again just like when the commentary on the volume during the lateral IT fouled up. Same players, same screw ups.

    The quarter ended with the top of R being something that wasn't going to be broken (see deflation issues I post) and the LT right line had to take the "heat". It took three consecutive hits and BO'ed into this Quarter.

    Notice to your credit you were questioning thoroughly and continually the "issue" of IT reversals vs. LT BO down then. El perfecto.

    Now we have two Quarters to manage in 2004 before summer ends and politics rage. This quarter will be important for learning. the summer quarter will be duller.

    Do last Q over one more time. You will have several aha's.

    Keep a copy of LT for this Q on a clip board. Annotate and put another print on top of it as each few days go by. This keeps "context". As we get off top of R, we will be "in the box" more and more comfortably.
  9. I've got the same IT lines drawn up on my charts. The coolest
    thing for me on Fri was watching the CCC coming through the
    midday period up against the right side of the IT trendline.

    2pm - budget report 2:01 - 2:02 volume surge followed quickly
    with a pop through that R.

    Then...oops volume is pooping out... nothing to sustain the BO...
    I watch for the pullback... the ST trend channel for the day has
    "tacked" to starboard the S lows hold it and it hangs around
    that S through the close.

    We're in an UP ST channel and the market showed us the slope
    and the right hand side on Fri. I won't decide for the market
    what Monday will do... but I know where I am in the matrix of
    possibilities and what my adjacent squares are.

  10. dkm


    Could you post chart examples please? It would make the thread much easier to follow :)
    #10     Mar 15, 2004