Try this and you might get the picture. Don't worry that you don't get it yet. This stuff requires a mind that is working. Draw a sawtooth chart for several teeth. number it as follows: It may take a few tries for you. At the trough (bottom of tooth) put numbers on each side close to bottom. On the left side put a ) (zero). On the right put a 7. Now go to the top (peak). Put a number on each side. On the left put a 4 on the right put a 3. I spoke of the 7's, 0's and the 1's. You can't tell the difference between a 0 and a 1. Lok at the line between 3 and 0. Find the middle, fill in 2 and 1 so they form a sequence downward to the trough. Now you see that the 1 becomes a zero in a couple of days. You probably feel that the whole down part of the cycle is the same. I don't think you could get over that very easily. So far you are making quite a jerk of yourself with your posts. I feel having three lists in five seconds that group stocks according to where they are in the cycle for parts 1, 0, and 7 of the cycle is the greatest three lists you could have. try filling in the rest of the numbers. Now you see that if you could score you would know three things: where you are in the cycle; what is next. and how long it takes to get through the cycle. You may use P, V and A/D to do this. In binary base, P stands for 100,' V stands for 10's and A/D stands for units. All coefficients of the power of two are either 1 or 0. Increasing, up and A stand for 1 and decreasing, down and D stand for 0. starting at the bottom you have 1 1 1, then, 1 1 0 then 101, then 100 before the top, then over the top to 011, then 010, then 001, then 000. The decimal equivelants are 7,6,5,4,3,2,1,0. It is like counting backwards as time passes. three lists of 1, 0, and 7 for me men I make a lot of money. Try to guess what number you sell at?? See the mathematical symmetry as well. when do all three binary digits change at the same time? When do pairs change?? when does only one change. See it is in perfect symmetry. What does that tell you? It tells you how P, V and A/D work in a trading cycle. You can write the boolean expressions for all of this and put them in software. There is only one missing as I would guess you can see too. Let me know when you figure out what is missing. For those who get headaches reading my stuff, there are two cures.
Still more questions: ************************************************* Lok at the line between 3 and 0. Find the middle, fill in 2 and 1 so they form a sequence downward to the trough. Now you see that the 1 becomes a zero in a couple of days. ************************************************* Can you explain a little more here? I think you want me to draw a line between 3 and 0. But what "trough" are you talking about? Are you talking about the next minimum(s) that occurs between 3 and 0? ************************************************* In binary base, P stands for 100,' V stands for 10's and A/D stands for units. All coefficients of the power of two are either 1 or 0. Increasing, up and A stand for 1 and decreasing, down and D stand for 0. ************************************************* Now I assumed when I first read this that P was Price, V was Volume and A/D was Advance/Decline. That is what you meant, right? If so, are these supposed to tie into 8, 4 and 2 additively on the zig zag of a chart?
I've got a few more questions after re-reading the "M" chapter. (I know I'm asking a gazillion questions - lemme know if it's too much.) 1. Were you saying in an earlier post that you really don't care about the long term or even intermediate trend per say as long as the major indices show the short term rally market analysis that WJO describes? 2. If so, then why do you need the "sawtooth-type/zig zag" analysis? It sounds like you're doing relatively short term swing trades and a short term rally market analysis should suffice for that time frame, right? 3. Were you implying in the earlier post that you exclusively trade in C&H patterns or is that just one you were using for illustrative purposes? 4. I get the impression that you do "rally market analysis" on individual issues. But this is different than HTMMS, right? He's more of indices person as far as the "M" goes, right?
the scoring is for individual stocks. The rally attempt analysis applies to market trends. You can use it on the major indexes. The indexes so have trends that are of various lengths but the RAA is generally used to determine the state of the long term trend.
*** separate the two items: market and individual stocks. The rally attempt analysis is part of M of CANSLIM.
I need to wait on this for a while. If quacktrader does get back another humorous comment in a week or so we will know he has a headache or something. There is a color example of this floating around somewhere on one of the bulletin boards people keep of my stuff. Maybe you or someone can find it. It shows how the three variables work. Your 8,4,2 comment is wrong it is the powers of two that are 4,2, and 1. Think of the decimal system which goes 100, 10 , and 1. the powers of the base start like this: 0,1,2,3,4,5 etc. and the 0 power of any base is always the same, namely 1. I am trained in the same manner as Ed Seykota and Soros so I have an orientation to systems and how they function. The scoring comes from assessing the importance of variables, their frequency of variation and periodicity stuff. Long ago I learned that you cannot under any circumstances apply any macro theory to the markets. Markets are all microcosms that function just like something with a memory. This drives the analysis to biology and physics. Electrical engineering is nice to have too because of the periodicity. All the formations can be explained in wave theory as a synthesis as opposed to what GANN and those guys do. They use segments of varying things and really screw it up. They even get into prediction which is crazy place that doesn't work. The antidote to perdiction turns out to be anticipation.
No prob. I've got a bunch of new things to look into. And anybody who's a EE is all right by me. (That was my undergrad and grad degree.)
it takes two posts. This is the scoring the next one is a graph. they show how the P, V relationshipworks as well.