The Principle of Contraction/Expansion | Toby Crabel

 

Price always moves from Consolidation to Expansion, never from Consolidation to Reversal or from Consolidation to Retracement. After an Expansion, two possible scenarios can occur: either a Retracement or a Reversal, followed by another Expansion or Consolidation. That’s it—it happens over and over again. 

» The principle of Contraction/Expansion is defined as the market phenomenon of change from a period of rest to a period of movement back to a period of rest. This interaction between the phases of motion and rest are constantly taking place, with one phase directly responsible for the others' existence. «

 

Toby Crabel, 1990
 

In his study 'Day Trading with Short Term Price Patterns and Opening Range Breakout' Toby Crabel defined the following range contraction and expansion patterns:

NR4 - The narrowest daily range relative to the previous three day’s daily ranges compared individually.
NR7 - A day with a daily range that is narrower than the previous six day’s daily ranges compared individually.
WS4 - (Widespread 4) A day with a daily range that is larger than any of the previous three day’s daily ranges.
WS7 - (Widespread 7) A day with a daily range that is larger than any of the previous six day’s daily ranges

             compared individually.

His key findings were: A cumulative total of Gross Profits for the contraction patterns vs expansion patterns on trades in the direction of the move off the open showed $710,000 for contractions on 7,313 trades and $102,000 for expansions on 7,524 trades. Profits were seven times larger for ORB (Opening Range Breakout) trades after contractions than expansions.

» Clearly something is going on here. The suggestion from these results is that one should be looking to go with a forceful move off the open after a contraction and not willing to do so after an expansion. In fact, fading price action off the open, with trend, after an expansion is a consideration. Other patterns can help with the decision on whether to fade a move off the open along with previously mentioned market context. If nothing else, one should be aware of the dangers of ORB trades the day after a big directional day. Caution is necessary after expansions. This is when the most attention is given to the market by the novice trades who invariably get caught in whipsaws and trendless markets. «  

Bitcoin - Inside Bar Narrow Range 4 (ID/NR4)
in monthly, weekly, daily and 4 hour bar charts.

» An object at rest stays at rest and an object in motion stays in motion with the same speed 

and in the same direction unless acted upon by an unbalanced force. «
Isaac Newton's 'First Law of Motion', 1687

 

Reference:
Toby Crabel (1990) - Day Trading With Short Term Price Patterns And Opening Range Breakout.

Jack Corsellis (2023) - Toby Crabel - Secret Trading Strategies of Billionaire Trader Revealed. (video)

Jarrod Goodwin (2023) - Testing Toby Crabel's Narrow Range NR4 Breakout Strategy on Daily and 4 Hour Time Frames. (video)
Ali Casey (2023) - Toby Crabel's Narrow Range NR4 Pattern. (video)

Swing Points as Trend Change Indication | Larry Williams

A trend change from up to down occurs when a short-term high is exceeded on the upside, a short-term trend change from down to up is identified by price going below the most recent short-term low. Figure 8.1 depicts such trend changes in a classic manner, study it well because reality comes next! Here are a couple of pointers on this technique. Although the penetration of one of these short-term highs, in a declining market, indicates a trend reversal to the upside, some penetrations are better than others.

 Figure 8.1 — Classic patterns of trend change.

» There are only two ways a short-term high or low is broken. «

 Figure 8.2 — Breaking a short-term high or low.

There are only two ways a short-term high or low is broken. In an up trending market, the low that is violated or fallen below will be either a low prior to making a new rally high, as shown at (A) in Figure 8.2, or a low that occurs after decline of a high that then rallies making a lower short-term high; it then declines below the low prior to the rally that failed to make a new high, as shown at (B). The better indication of a real trend change is the violation of the low shown at (A). By the same token, a trend reversal to the upside will occur in one of the two following patterns: In (A), the rally peak prior to a new low is violated to the upside, or in (B), the market makes a higher low, then rallies above the short-term high between those two lows. In this case, again, the (A) pattern is the better indication of a real trend reversal.

Figure 8.3 — T-bonds (15-minute bars)

With that in mind, look at Figure 8.3, which shows a 15-minute bar chart of the September Bonds in 1989. The major trend moves were adequately captured by this technique. [...] You can use this technique two ways. Some traders may simply buy long and sell short on these changes in trend. That's a basic simplistic approach.

Quoted from:
Larry Williams (2000) - Day Trade Futures Online.

2024 Declinations of the Sun, the Moon & the Planets | Parallels & Extremes

» Every parallel or contra-parallel is very important to the strength of a business chart. «
Kaye Shinker, 2006.

 

A parallel aspect is formed between two or more planets at the same declination or distance north or south of the ecliptic. If the planets are both north or both south of the ecliptic, the Parallel Aspect is read as a Conjunction. If they are at the same declination but one is north and the other south of the ecliptic, then the Contra-Parallel Aspect is read as an Opposition. Parallel and contra-parallel aspects are strongest when the orb is small (±1 degree). They magnify other aspects between planets and nodes. The assumption is that extreme declinations - especially lunar ones - are intense energy points, and when reached, some sort of a perceptible short-term effect or reversal would manifest in daily and 4 Hour charts. The nature and magnitude of the effect is related to the market's  position/stage in the daily and weekly market maker cycles.

 Parallel @ Maximum Declination North (±1 degree):
June 20, 2024 (Thu) = Summer Solstice = Sun @ Maximum Declination North
[June 21, 2024 (Fri) = Full Moon + Solunar High]

June 21, 2024 (Fri) = Mercury @ Maximum Declination North + Out-of-Bounds
June 21, 2024 (Fri) = Venus @ Maximum Declination North + Out-of-Bounds

June 21, 2024 (Fri) = Quadruple Witching Day

 

Maximum Declination South & Contra-Parallel to the above:
June 22, 2024 (Sat) = Moon @ Maximum Declination South + Out-of-Bounds

ooo0ooo

 

Declinations Ephemerides can be found e.g. HERE & HERE

 

See also:

TPR (August 24, 2019) - S&P 500 Index vs Mercury, Venus & Moon Declinations | August 2019.
TPR (December 1, 2018) - S&P 500 Index vs Lunar Declination and Latitude | December 2018.
TPR (March 10, 2018) - S&P 500 Index vs Mercury - Venus Parallel of Declination | March 27 (Tue).
TPR (November 25, 2017) - S&P 500 Index vs Declination Speed | December 2017.

citlacom (2021) - Bitcoin vs Lunar Declination.
M.G. Bucholtz (2020) - Declination – W.D. Gann’s Powerful Tool.

Christeen H. Skinner (2017) - The Beginner’s Guide to the Financial Universe. 

An Introduction to the Role of the Sun, Moon and Planets in Financial Markets.

Larry Pesavento & Shane Smoleny (2015) - A Trader’s Guide To Financial Astrology.
Sergey Tarassov (2007) - Declinations: How they Affect the Stock Market. A Case Study.

Kaye Shinker (2006) - The Textbook for Financial Astrology – Part 1.

 

An Outside Look at Inside Days | Larry Williams

First, lets define what constitutes an inside day. An Inside Day is exactly the opposite of an Outside Day. That is, today’s high is less than yesterday’s high and today’s low is greater than yesterday’s low. Hence the terminology inside day, as all of today’s price range or trading activity took place inside of yesterday’s range. An inside day is usually thought to be an indication of congestion. A price could not exceed the previous day on the upside nor could it break below the previous day’s low on the downside.

 » Inside Days are one of the most reliable forecasting patterns to occur in the marketplace. «

 

Chartists and authors have not paid very much attention to the inside days over the years. They have made note of them, but this is the first time, to my knowledge, that anyone has made a serious study of the impact of inside days. And, wouldn’t you just know it … inside days are one of the most reliable forecasting patterns to occur in the marketplace!

  » In a study of nine major commodities covering 50,692 trading sessions, I noted 3,892 inside days,

suggesting we will see these days appear about 7.6 percent of the time. «
Larry Williams, 1998.

There does seem to be some validity to this. The following chart shows what happens when we have an inside day with a down-close while prices are lower than they were 10 days ago. In the Standard and Poor’s, 71% of the time you were higher the next day. This may not even be as significant as the fact that 71% of the time you were higher 20 days after this occurrence. In the Value Line, price is higher 50% of the time after the occurrence, and in Treasury Bonds it’s higher 75% of the time. The pattern in Silver was not nearly as bullish, which surprises me because I had used this trading technique in Silver with some success … which just goes to show you! In Silver, on 36% of the time you were higher 20 days following the occurrence of the pattern. Soybeans were higher 57% of the time, Bellies 50% of the time and the Swiss Franc, where so far we have not found a pattern that forces prices higher, you were up only 22% of the time.

'Inside Days in the S&P 500' - Toby Crabel, 1990.

For a moment though, let’s take a look at just the occurrence of an inside day. What happens when we simply have an inside day with a down-close? Does that, on its own merit, forecast any significant market activity? The results are on the next few pages [of 'The Future Millionaire's Confidential Trading Course']. What can you find?

Then there’s the other side of this coin. What happens if we have an inside day with an up-close? Does this forecast positive action? It appears that it does to some extent. Study the tables for yourself. I have gone to the computer to give you the results for almost all possible configurations of the inside days. While, quite frankly, much of the data suggests random-gibberish-behavior, others are relationships that you can find and successfully trade with. What you need to focus on here is not that the patterns will always work for you, but that patterns, like methods, systems and tools, will give you the much needed odds that lead to successful speculation.

 

I have not exhausted all possible ways of looking at inside days with down-closes, though I have looked at the majority of the relationships one can study. There are others. As an example, what happens if the prices are higher, or if prices are lower following an inside day five days later. Does that mean that the down trend will continue? One could also ask the questions about an outside day following an inside day. Is this a particularly bullish pattern? (It is.) As you can see, your opportunity for research here is unlimited. If you have a computer, some data, and a desire to study the markets, here is fertile ground for you to come up with your own great ideas.

Quoted from:
Larry Williams (1995) - An Outside Look at Inside Days.

An excerpt from 'The Future Millionaire's Confidential Trading Course'.

 

See also:

Toby Crabel (1990) - Day Trading With Short Term Price Patterns and Opening Range Breakout. 

Toby Crabel (1990) - Inside Days in the S&P 500. 

Larry Williams (1998) - Long-Term Secrets to Short-Term Trading, 2nd Edition. 

Johnan Prathap (2011) - Three-Bar Inside Bar Pattern.

Outside Bar Trading Setups | Larry Williams

In his book, 'Long-Term Secrets to Short-Term Trading', 2nd Edition, Chapter 7, Larry Williams provides price action patterns to profit. Larry Williams says that there are two daily bars that most confuse retail traders, the Inside Bar and the Outside Bar: 

 

» What the public 'sees' on their charts as being negative is most often apt to be positive for short-term market moves and vice versa. A case in point is an outside day with a down close. The day's high is greater than the previous day's high and the low is lower than the previous day's low and the close is below the previous day's low. This looks bad, like the sky is indeed falling in. In fact, the books I have read say this is an excellent sell signal, that such a wild swing is a sign of a market reversal in favor of the direction of the close, in this case down. [..] The problem is these outside day patterns do not occur as often as we would like! The next time you see an outside day with a down close lower than the previous day, don't get scared, get ready to buy ! « 

After an Outside Day with a Down Close lower than the previous day, BUY!
After an Outside Day with an Up Close higher than the previous day, SELL!

An Outside Bar is a bar that broke the previous bar's high and the previous bar's low. For related trading setups Larry Williams specifically looked for outside bars on the daily time frame that closed below the previous daily low or closed above the previous daily high. After such a bar prints, a reversal in the price action should be expected. According to Larry Williams, Outside Bars only appear 7% of the time on the daily time frame.

This is what an outside bar with a down close looks like:

According to Larry Williams, this will be a buy set up in theory. Here we can see it looks bearish to the public eye because the close is below the low. This indeed can be a turning point. Enter long on the next daily open. The stop loss is below the low of the outside bar.
 
This is what an outside bar with an up close looks like:

 

This is a sell set up. It looks bullish to the public eye because the close is above the high. This indeed can be a turning point. Enter short on the next daily open. The stop loss is above the high of the outside bar. 

 
Targets should be logically related to buy side/sell side liquidity levels (previous highs and lows), Imbalances/Fair Value Gaps and/or 50% swing retracement levels. Consider only setups offering risk-to-reward ratios ≥ 1:2.

 

Don't expect every single Outside Bar setup to be a winner. Other setups and filters can nullify or optimize it (e.g. Oops Pattern, Smash Day, Day of the Week, trading in Premium or Discount, actual outside bar small range or large range, swing high or swing low recently broken, occurrence in 3 Day Cycle and 3 Week Cycle, close above/below 9-Day EMA, etc.). The video below shows Outside Bar Trading Setups on timeframes also smaller than the daily.

Reference:
Larry Williams (1998) - Long-Term Secrets to Short-Term Trading, 2nd Edition.

D'onte Goodridge (February 2, 2023) - Outside Bar Model by Larry Williams. (video)

D'onte Goodridge (March 15, 2023) - Turning Points on the Higher Time Frame. (video)

Ali Casey (2022) - Larry Williams' Outside Day Strategy. (video)

The Five Stages of the Revolutionary Cycle | Martin Armstrong

Governments fall when the police no longer offer them protection. [...] The Revolutionary Cycle takes place in five stages:

Stage 1: Whistleblower Disagreements; Discontentment Grows
Stage 2: Initial Conflict Begins; Economy Begins to Decline
Stage 3: Civil Unrest Peaks
Stage 4: Revolution
Stage 5: Recovery

The FIRST STAGE in a revolution is always the rise of intellectual whistleblower disagreement, which the government simply ignores as a passing phase. This stage is the realization of corruption and injustice of governmental rule. Perhaps the symbolization of this was the revelation of Edward Snowden [2013 – present] that the government was violating the constitution and abusing its power against the people, constructing a 100% surveillance state [...]

 » The former head of state is often publicly killed, and typically all their ministers. «

The SECOND STAGE is where the intellectual debates prove pointless, and the initial conflict begins. This corruption has run its course, and governments have transformed justice into their own self-interest. This stage is usually accelerated by governments raising taxes in the midst of an economic decline. [...] This is when history will typically produce some leader who can be a moderate who sees the problem and will often try to reason in order to reach a resolution that is ignored by the government. This further intensifies the feelings of injustice, especially in light of the economic decline. [...]

The THIRD STAGE is where it often becomes an outright war in the streets as governments seek to retain power and refuse to see the error of their ways. [...]

 2024 - 2026

The FOURTH STAGE is retribution in a domestic revolution in direct confrontation with the government and head of state. [...] The former head of state is often publicly killed, and typically all their ministers.  [...]

 » Hang everyone. That's the only solution. «
Washington D.C. – May 31, 2024

The FIFTH STAGE is typically the recovery stage, where a new form of government emerges from the ashes. [...] During this recovery stage, the radicals are usually overthrown, and sometimes, a new head of state emerges, such as Napoleon or Oliver Cromwell. [...] Divisions emerge once again between opposing political views. At this point, there is the restoration of a sense of nationalism, but the cycle of corruption slowly begins to take root. 

 

We [the USA] are currently in the SECOND STAGE of the Revolutionary Cycle and rapidly heading toward STAGE THREE as discontent grows.
 

Quoted from:
Martin A. Armstrong (June 6, 2024) - Police Officers Wanted – The Revolutionary Cycle in Swing.

 

The end is nigh, draw or mate? – June 6, 2024

 

See also:

L. David Linsky (October 24, 2023) - War and Regime Change soon in the US.

Martin Armstrong (May 8, 2024) - It is unlikely that we can avoid a Third World War.

Rachel Kleinfeld (February 22, 2023) - US secession is a great idea — for Russia.

 Serge Bernard (2016) - From Conquest to Affluence to Collapse: The 250 Year Empire Life Cycle.

John Bagot Glubb (1978) - The Fate of Empires and Search for Survival.  

Alexander Chizhevsky (1924) - Physical Factors of the Historical Process.

Nasdaq and S&P Top on June 12 | Barry Rosen

While Dow Transports and Industrials gave early topping signals and Russell has been struggling, NQ and the S&P have not given it up yet. We are still friendly stocks for about a week until S&P cash hits 5,400 and not in trouble unless S&P cash takes out 5,250 now. NASDAQ 100 June futures went and held key support at 18,240 on Friday. The S&P only managed a 3-wave fall although it did hit 5,193 —a bit deeper than we had liked. The astonishing close last Friday kind of thing funds love to see and so often 1st of the month buying comes in. 

S&P 500 (Daily Bars), Monthly Pivot Levels and 9-Day EMA.

 June 5 = Weekly Reversal Up.

 

 Nasdaq (Daily Bars), Monthly Pivot Levels and 9-Day EMA.

 June 5 = Weekly Reversal Up.

Cycles look positive the week of June 3rd and into the FOMC [Wednesday, June 12]. We had alerted you for secondary highs into the FOMC and they are starting to manifest. We are clear about a fall from June 12th into June 20th and then will evaluate the pattern. Because the market only fell in 3 waves and NQ fell to the minimum support area, new highs on NQ to 19,200-19,300 are very likely. 

 

Quoted from:

Barry Rosen (June 5, 2024) @ X

 

See also:
Jeffrey A. Hirsch (June 1, 2024) - June Better in Election Years: Average Gains Range from 0.9% DJIA to 1.9% NASDAQ.

The Sixth Wave and 2032.95 | Martin Armstrong

Here is the Economic Confidence Model at the very high end to all the questions about how high up the fractal structure can be defined.

 Martin Armstrong's Fractal Design of Time.

We are in the grand Public Wave overall that peaks in 2032.95. This is the equivalent of the wave that picked the Peak of Rome in 175 AD. So here, too, this is a wave where the government will fight very hard to hold control, for that is the dominant 309.6 character, while the final wave on the next fractal level is a Private Wave of 51.6 years. This is the people fighting back as they lose confidence in the government. The two forces are at war right now. The worse the environment becomes for the people, the more authoritarian governments will become. Each wave of 8.6 also alters back and forth between Public and Private.

This is why I warn it is time to try to reduce the amplitude by waking up. We achieved this briefly with the Age of Enlightenment. Government then fought back and reclaimed control. We replaced monarchy with ministers. Nothing changed otherwise. We will fight the good fight once again and seek to triumph with a new age of Enlightenment. Will we win? Who knows. But we have to try. What comes after 2032 is a private wave – the opportunity to reclaim our liberty once again. Here is that chart.

 

 » It has been propaganda that we live under a democracy. The people have no right to vote on critical issues.  

Republics historically are the most corrupt forms of government. «

The last Sixth Wave marked the peak of the Roman Empire. Every historian has drawn the line to mark the beginning of the Fall of Rome took place with the death of Marcus Aurelius in 180 AD. Talk about almost getting to a new age, he sent an ambassador to China. This has been revealed by books from the Tang Dynasty. The East and West knew each other. Merchants ran the trade routes. This would have been the beginning of a major global economy back in 180 AD. Marcus’ death ended the golden age and expansion of the world economy. He was followed by his crazy son, Commodus. With the death of Commodus, the Praetorian Guard actually auctioned off the position of emperor to the highest bidder. Since he was just nuts, they got to rule Rome, and it went to the heads, to the point that corruption was in the open.

 

» Our idea of managing our political-social-economy. «

I have told the story of how I used to meet with people who wanted to run for President at the behest of those in the Republican Party. Then in 1999, I was asked to fly down to Texas to meet with George Bush, Jr. I was told that this was different. They had me meet with various potential candidates to vet them out and give my opinion if they could handle the job from understanding the global economy. So what was different with Bush, Jr., was the fact they told me he was “stupid.” I was shocked. I asked why would you want to make someone stupid president? I was told he had the “name.” That is when they asked me to be the chief economist in the White House. I declined, for our business was way too global for that. They told me the plan was to surround him with good people. That is how Cheney took the role of President and moved his office in the White House.

 » The 8.6 year frequency is fractal in nature and it may indeed 

work from different dates other than the formal dates we show on the ECM. «

I have been told similar traits with Obama. He was told they would let him play with the social stuff but leave everything else to them. The bureaucracy tasted power under Bush, and they were not about to let that go. Obama missed more than 60% of his daily security briefings. Biden is, at best, a part-time president who no one believes is truly running the nation because he simply is not mentally capable of doing so. This is the Praetorian Guard running the world.

Quoted from:
Martin A. Armstrong (June 4, 2024) - The Major Fractal Wave of the Economic Confidence Model & 2032.95.

 

» By no means try to use this for a individual market unless that market lines up with the ECM. «

The 18 Year Economic Cycle │Akhil Patel

Akhil Patel was the special guest presenter at the Foundation for the Study of Cycles' June 3 'Masters Working Group' interactive session. Author of 'The Secret Wealth Advantage', Patel discusses how the 18 year cycle affects the markets and how it can transform investing strategies. Patel is one of the world’s leading experts in economic, financial, and property cycles. He has been working for over a decade to produce unique research that combines an in- depth understanding of business, real estate, and stock market cycles. 

 

Reference:
Akhil Patel (June 4, 2024) - Significance of the 18-Year Cycle. (video)

 

See also:
The 18.6 Year Real Estate Cycle.  

2024 in W.D. Gann's Financial Time Table.

US-Stock Market Seasonality - June Better in Election Years │ Jeff Hirsch

Over the last twenty-one years, the month of June has been a rather lackluster month for the market.

DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. NASDAQ and Russell 2000 have fared better logging average gains of 0.4% and 0.8% respectively. Historically the month has opened respectably, advancing on the first and second trading days. From there the market then drifted sideways and lower near or into negative territory just ahead of mid-month. From there the market rallied to create a mid-month bump that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.

 

In election years since 1950, June has followed a similar pattern to the recent 21-year period, but gains have been notably stronger, and all five indexes finish the month positive. Average June gains in election years range from 0.9% by DJIA to 1.9% by NASDAQ.

Quoted from:
Jeffrey A. Hirsch (June 1, 2024) - June Better in Election Years: Average Gains Range from 0.9% DJIA to 1.9% NASDAQ.

 

 

BofA - Historically, June-August is the 2nd best 3-month period for the S&P 500. 

In election years, it's the strongest.

BofA - It would not be surprising to see a bounce-back in the S&P 500 in early June, 

as historically, this period has demonstrated a trend of positive returns.

Goldman Sachs - Bullish mid-May through Labor Day. Choppy summer solstice to late July.

 

Solunar Rhythm in June 2024.

 

In Bull Markets, New Moons tend to be Bottoms, and Full Moons Tops. 

 In Bear Markets, New Moons tend to be Tops, and Full Moons Bottoms.

 

 The Quarterly Theory

 

 

See also:

Wayne Whaley (May 28, 2024) - During June the S&P 500 tends to be true to the trend.
Wayne Whaley (May 26, 2024) - Top Ten S&P 500 Seasonal Periods after a +5% January-May.

Martin Biber (May 16, 2024) - S&P 500 Cycles - Top May 25th [+/-] & Correction into Mid-June.

Michael J. Huddleston (2024) - ICT Seasonality.

Robert C. Miner (April 26, 2024) - The S&P and the Election Year Cycle.

Larry Williams (Dec 15, 2023) - 2024 US Stock Market Outlook.

Daye (2023) - The Quarterly Theory.