Showing posts with label Price. Show all posts
Showing posts with label Price. Show all posts

Saturday, March 2, 2024

ICT Seasonality | Michael J. Huddleston

 
 
We are in the quiet part of the year still.
Spring is coming to the markets very soon.

The year, if viewed as a single range ... we are in the Accumulation phase still.
Don't blow your equity before the salad days return.

January to April is the yearly Accumulation.
April to May is the Manipulation.
May to November is the Distribution.
December resets the yearly range.

Power of 3

Now go lose sleep over it in your charts.

You won't appreciate this until you pour
over all markets and asset classes and then your ass will hit the floor.
 
 
 
Time is more important than Price.

 
 
 
There are two sets of instructions that the algorithm follows:  

AMD-X and X-AMD
 
A = Accumulation (required for a cycle to occur)
M = Manipulation
D = Distribution
X = Reversal or Continuation

Saturday, March 11, 2023

Six Types of Market Days | Mind Over Markets

In Mind Over Markets (1st ed. 1990) James F. Dalton, Eric T. Jones and Robert B. Dalton describe six types of market days repeatedly seen across all financial markets, but no two days are ever identical: "The labels we will give these patterns are not as important as understanding how the day evolves in relation to the initial balance and the confidence with which the other time-frame has entered the market. Think of the initial balance as a base for the day's trading. The purpose of a base is to provide support for something, as the base of a lamp keeps the lamp from tipping over. The narrower the base, the easier it is to knock the lamp over. The same principle holds true for futures trading in the day time-frame. If the initial balance is narrow, the odds are greater that the base will be upset and range extension will occur. Days that establish a wider base provide more support and the initial balance is more likely to maintain the extremes for the day."


The Initial Balance is traditionally defined as the price range of the first hour of the day, which is extremely important to professionals on the floors of the exchanges. They use the initial balance high and the initial balance low as important points of reference in order to facilitate trade between buyers and sellers.
 
ooOoo
 
1. Trend Day
The Trend Day is the most aggressive type of market day. On a bullish Trend Day, the open usually marks the day’s low, while the close usually marks the day’s high, with a few ticks of tolerance in either direction. On a bearish Trend Day, the open will usually mark the day’s high, while the market will usually close near the session’s low. The market will typically start fast and the farther price moves away from value (roughly 70% of the prior day's range), the more participants will enter the market, creating sustained price movement on increased volume. Initiative buying or selling is responsible for this type of market day, as these participants are confident they can move price to a new area of established value. Price conviction is strongest during Trend Days
 
Trend Days have the widest price range (high price minus low price), meaning it is costly positioning against the market or failing to recognize the pattern early enough to enter alongside the market. Trend Days only occur a few times a month, but catching these moves certainly makes money. The Trend Day is usually preceded by a quiet day of market activity, which is usually a day with a small range of movement (Toby Crabels NR4, NR7, ID - see HERE and HERE). However, rare as they are, a Trend Day is oftentimes followed by  another Trend Day.

2. Double-Distribution Trend Day
While the Double-Distribution Trend Day is a trending day, it lacks the confidence or conviction of a Trend Day. Instead, this type of day is characterized by indecision at the start of the session. The market will usually open in a quiet manner, trading within a fairly tight range for the first hour or two, thereby creating a narrow initial balance.

If the initial balance is too narrow, price will break free from the range and auction toward new value, creating range extension, which is any movement outside the initial balance. After the initial balance of the Double-Distribution Trend Day has been defined, price will break out from the range and auction toward new value, where it will form a second distribution of price. This is the market’s attempt at confirming whether new value has indeed been established. The Double-Distribution Trend Day opens quietly, trading within a tight range. Eventually, price breaks free of the range and begins trending toward new value, igniting initiative buying or selling. Once the market finds new value, it then builds out another range before ending the day. The ranges formed at both the beginning and end of the day is where the term “double-distribution” comes from, as the bulk of the day’s volume resides at one of these extremes, essentially forming a double distribution of trading activity.

The initial balance is the base for any day’s trading but extremely important to the Double-Distribution Trend Day. A narrow initial balance is easily broken, while a wide initial balance is harder to break. The fact that the initial balance is narrow on this type of day indicates that there is a good possibility of a breakout from the initial range, indicating that you will likely see a move toward new value.

3. Typical Day
The Typical Day has a wide initial balance established at the outset of the day. Price rallies or drops sharply at the beginning, moving far enough away from value to entice responsive participants to enter the market. The responsive players push price back in the opposite direction, essentially establishing the day’s trading extremes. The market then trades quietly within the day’s extremes the remainder of the session. The opening rally or sell-off is usually sparked by reactions to economic news that hits the market early in the day. This opening push creates a wide initial balance, which means the day’s "base" is wide and will likely go unbroken.

4. Expanded Typical Day
The Expanded Typical Day is similar to the Typical Day in that it usually begins with early directional conviction. However, price movement at the open is not as strong as that seen during a Typical Day. Therefore, the initial balance, while wider than that of a Double-Distribution Trend Day, is not as wide as that of the Typical Day, which leaves it susceptible to a violation later in the session.
 
Eventually, one of the day’s extremes is violated and price movement is seen in the direction of the break, which is usually caused by initiative buying or selling behavior. The initial balance was wider than that of a Double-Distribution Trend Day, but not so wide as to challenge the width of the Typical Day. When the base of the day is neither wide nor narrow, it can be a coin flip whether a breakout will occur. The fact that the initial balance is not wide introduces the potential for failure at some point during the day at one of the extremes. In this particular case, initiative sellers overwhelmed the bottom of the day’s initial balance and extended price movement to the downside. Selling pressure essentially expanded the day’s range, thereby introducing the namesake for this type of day. The initiative selling pressure led to continued weakness the rest of the day, as price moved to establish lower. During an Expanded Typical Day, both the upper and lower boundaries of the initial balance are susceptible to violations. On any given day, one, or both of the boundaries can be violated, as buyers and sellers attempt to push price toward their own perceived levels of value.
ooOoo
 
The last two types of days seem similar, but they have distinct differences that set them apart from each other. The Trading Range Day and the Sideways Day even sound similar, but the difference lies within the participation levels of both buyers and sellers.

5. Trading Range Day
A Trading Range Day occurs when both buyers and sellers are actively auctioning price back and forth within the day’s range, which is usually established by the day’s initial balance. The initial balance is about as wide as that of a Typical Day, but instead of quietly trading within these two extremes throughout the day, buyers and sellers are actively pushing price back and forth. Buyers and sellers will stand at the extremes of the day and will enter the market in a responsive manner when price reaches the outer limits of the day’s range. Responsive sellers will enter shorts at the top of the range, which essentially pushes price back toward the day’s lows, while responsive buyers will enter longs at the bottom of the range, which pushes price back toward the day’s highs. This pattern will continue until the close. A Trading Range Day offers easy facilitation of trade and gives traders amazing opportunities to time their entries.

6Sideways Day
During a Sideways Day price is stagnant, as both buyers and sellers refrain from trading. This type of session usually occurs ahead of the release of a major economic report or news event, or in advance of a trading holiday. There is no trade facilitation and no directional conviction. This is a non-trend Day with a very compressed range, oftentimes an inside day, and the risk-reward ratio for day traders is not favorable. The initial balance is rather narrow, which at first indicates the potential for a Double-Distribution Trend Day. However, the initiative buying or selling required for a Double-Distribution Trend Day never enters the fray, which leaves the market very quiet for the rest of the session.
ooOoo
 
Jan Firich (2012)

The market will typically alternate between high and low range sessions. The fact that the market rallies after the formation of a narrow value area causes the value area for the next session to be extremely wide. A wide value area will typically lead to a Trading Range or Sideways Day behavior. When this occurs, the initial balance is usually larger, as the market establishes the extremes for the day’s trading activity, which usually results in a Typical, a Trading Range, or Sideways Day

References:

Friday, October 14, 2022

The Name of God & The Rule of Nine | Martin A. Armstrong

Martin A. Armstrong (2008) - Just about everyone knows the "666" omen, but strikingly, most do not know the number of the name the Jews gave to God - "Jehovah." If we use the old Hebrew system we can find the number of God. Yod = 10, He = 5, and Van = 6. Therefore, the name of God in Hebrew He Van He Yod equals 5 + 6 + 5 + 10 = 26. The number of the name assigned to God by the Jews is 26.
 
 
I explained that I discovered the 8.6 year cycle by adding up the total number of financial panics between 1683 and 1907, which created a time-space of 224 years. I found that there were 26 financial panics and then divided that into the 224 years to obtain an average. That produced the 8.6 year frequency. Only when it began to project to specific days, then I decided to study much deeper. There is, the fact that it appeared to be intricately complex running concurrent with countless other cyclical behavior be it natural or man himself in a sort of time-space tube created by an interdependent, self-referral field network whereby, the output of each and every iteration becomes the input for the next generation perpetuating patterns of order in such a dynamic structure, that one cannot see the order of the whole for the mask of superficial chaos. There simply is yet a separate and distinct core frequency of 26 running through the center of the field causing not merely Phase-Transitions, but also Phase-Shifts and Phase-Cancellations when two cycles indeed collide of equal yet opposite forces.

1929 - 1955 - 1981 - 2007

The above sequence of dates provides a simple demonstration of the interesting relationship of 26 to the Economic Confidence Model. The high on the last Private 51.6 year Wave was 1929.75. If we simply take the annual count of 26, we produce the above time series, The great expansion of U.S. debt began from the 1955 post-war target where spending without regard to maintaining the ratio to gold may safely be defined as the start of the perpetual. spending. The next target 1981, was the high of the Public Wave of 51.6 years marked by the peak in interest rates and the open battle against inflation. This brings us to 2007, where the model has correctly given the high 2007.15 that targeted to the day, the start of this economic decline.

Previously, we looked at two time series, one beginning from 1775 marking the start of the American Revolution, contrasted with 1788 that marked the beginning of the federal government with the Constitution. The differential between these two series is half the 26 cycle - 13 years. It is twice 26 that produces the number 52 that we will see is central to the Maya, but was also the observation of the commodity cycle noted by Kondratieff - the Russian economist. We can see that the timing interval of 26 is a critical and interesting number to say the least.
 
Another kabala number of mystery has been attributed to the famous Gaon from Vilna who discovered that the Hebrew
word for truth (taf-mem-aleph) produces the number taf = 400, mem = 40, and aleph = 1 added together 441 = 9.
It was argued that God created the world based upon truth, which is the number 9. If you take any number greater
than 9, add the individual numbers, and subtract the original, we end up with a number divisible by 9.

 
Whether 26 is the "God Cycle" is interesting. Hipparchus of Rhodes observed around 150 BC that the equinoxes moved with time. This is where the Sun's path crosses the celestial equator. He realized that these were not fixed in time and space but traveled in a cyclical manner. The movement was extremely slow in a westerly direction. This amounted to but less than 2° in about 150 years. This slow movement is known as the "Precession of the Equinoxes" and requires generations to even observe. It is less than 2° movement every 150 years, bringing this also to a virtual number of close to 26,000 years to complete one cycle.

Chinese Stock Indices, Gann Time Theory & Solar Terms | Tianbao Zhou et al.

Tianbao Zhou, Xinghao Li & Peng Wang (2021) - Stock indices proved to be rather predictable to some extent. Therefore, according to the study, investors can invest in ETFs that belong to the indices as an ETF is completely coincidental with the index it belongs to. Furthermore, ETFs provide investors with a variety of options of risk and profit. The Shanghai ETF is smooth whereas the Second Board 50 Fund fluctuates a lot. Investors are able to get a high profit from individual stocks as well through implementing the results of this study. The correlation between the turning points of indices and the Chinese 24 solar terms was positive (r = 0.9878).

Turning points always occur near solar terms. Through testing n-day extreme points with a different n value, the sharp turns of the trend often happened near the solar terms, and if we choose 4 days as the valid time radius, the probability is about 80%. Investors should be alert for four days before and four days after a solar term. If the price is too high (low), it is more likely to be affected by the coming solar term, and the higher (lower) the price is, the more instability the trend then would have. However, solar terms are not always strong turning points, but they might cause weaker turning points. In other words, solar terms might not cause a sharp reversal of the stock trend; strong turning points were just some exceptions. Usually, the turning points were not that strong but sufficient for medium-term and short-term investors. The alert period provided investors with a good strategy for short-term and medium-term trading. When judging the upcoming reversal, it should be dynamic. 
 
 
[...] Eight of the Chinese 24 solar terms are very prominent, namely, Chunfen (6), Xiazhi (12), Qiufen (18) and Dongzhi (24), which represent the most vigorous time-points in each season and are the most important four solar terms; the other four are Lichun (3), Lixia (9), Ligiu (15) and Lidong (21). These four represent the beginning of each season and are the second important four solar terms.
 

To our surprise, the importance of these eight solar terms exactly coincides with the wheel of the cycle theory in Gann theory. In Gann’s wheel, the most important four angles are 90°, 180°, 270° and 360° (0°), and the corresponding time-points of each year are exactly the four solar terms of Chunfen (6), Xiazhi (12), Qiufen (18) and Dongzhi (24). The second important four angles, 45°, 135°, 225° and 315° exactly correspond to the four solar terms of Lichun (3), Lixia (9), Liqiu (15) and Lidong (21). Regardless of the angle in Gann theory or solar terms, they all point to a common rule, that is, the stock trend is most likely to turn at these eight points. We can summarize the above results as follows: variable or more significant extreme points often occur at the solar term point, and the solar term point usually makes the stock trend turn according to its strength, and the turning strength is large or small.
 
[...] the Chinese traditional culture, human society is affected by natural factors at every moment, and one of the factors is time (including the time cycle, time-points and time periods). Despite the fact that the absolute price of a stock is generally supposed to be unpredictable, the turning points and reversal of trend of stock indices have rules to follow. 
 
Gann theory suggests that the cycle of time is almost everywhere in the stock market, like our pulse cycle and four seasons of the year. Nobody denies the existence of the time cycle as it retains its rationality and regularity in the nature. Whether or not we know, the regular shocks and vibrations in the stock market caused by time do happen.

[...] we only analyzed the trend and turning points of the Shanghai Index rather than a certain stock or an absolute stock price. We supposed that the index is a wide and general performance of the stock market which eliminates many extreme and irregular cases. Many theories have focused on calendar effects, and all of them show the effort in searching for the independent time factors over regular human factors that may affect the stock market. However, such a division of time is so modern that the turns do not always fall on them. 
 
Besides the solar terms, in China, we have 12 zodiacs (corresponding to a 12-year cycle), lunar months (corresponding to the monthly change of the moon), 10 heavenly stems and 12 earthly branches as well as the constellation of both the Chinese version and the Western version. Thus, we can see that throughout the history, ancient people were always doing tremendous work in summarizing many kinds of time cycles in order to survive, forecast and develop their civilization.
 

[...] The 24 solar terms in each year and their links accurately fitted the trend of the stock in that year. Using 24 price data-points instead of nearly 250 daily data-points of the whole year could make the daily data of high frequency more concise and easier to process. With 250 high-frequency daily data-points, there is strong volatility, which leads to the obvious heteroscedasticity of the data and increases the complexity of data analysis. 
 
The use of 24 solar terms instead of annual data also greatly reduces this unstable and irregular fluctuation. This also coincides with Gann theory. The forecast of future trends in the all-terms group and the eight-terms group was precise, but there remained a gap with the absolute price. We were only able to forecast the time-points and the turning points; as for the absolute price, we hardly made it. This is because the stock market involves a great deal of instability and is extremely complicated.



[...] as we were inspired by Gann, Elliott and the Chinese 24 solar terms, we would rather look for those that do not change, and that is the key to have a better understanding and cognition of our real world, of course, including the stock market. For this reason, it is the higher dimensional time factor and time cycle that produce an overwhelming impact on the stock market, so it reminds us of taking into account the importance of time when conducting such a study. That is why Gann summarized a tremendous amount of time periods to inform the possible reversal in the capital market while the ancient Chinese figured out 24 divisions of a year as 24 solar terms which all solely point to time.

In addition, the ancient Chinese elaborated a complex system, and there are actually many  other divisions of time, years, months, etc. in the Chinese culture. For example, the ten heavenly stems and the twelve earthly branches decide what a year would be like, and that is a 60-year cycle as there are 60 different combinations of one out of the ten heavenly stems with one out of the twelve earthly branches. By the way, one combination is called Gengzi, which is supposed to be the year of disasters and conflicts; the latest Gengzi year was 2020.