Showing posts sorted by relevance for query larry williams. Sort by date Show all posts
Showing posts sorted by relevance for query larry williams. Sort by date Show all posts

Monday, July 4, 2022

In Any Bar Chart Only 8 Possible Range Patterns | Larry Williams

Larry Williams presented a free session at the November 2014 Las Vegas Traders Expo in which he discussed 8 possible Range Patterns. He showed that from any bar to the next there are only 4 possible outcomes:

  1. Down Range: Last Bar's high is lower than prior Bar's high; and last Bar's low is lower than prior Bar's low.
  2. Up Range: Last Bar's high is higher than prior Bar's high; and last Bar's low is higher than prior Bar's low.
  3. Inside Range: Last Bar's high is lower than prior Bar's high; and last Bar's low is higher than prior Bar's low. On a Daily S&P500 Chart this occurs approximately 12% of the time.
  4. Outside Range: Last Bar's high is higher than the prior Bar's high; and Bar's low is lower than the prior Bar's low. On a Daily S&P500 Chart this occurs approximately 12% of the time.

Price action cannot occur in any other way. Within these 4 Range Patterns each last bar can either be an up bar or a down bar. So there are actually 8 possible Range Patterns:

1. Down Range, Down Day
2. Down Range, Up Day
3. Up Range, Down Day
4. Up Range, Up Day
5. Inside Range, Down Day
6. Inside Range, Up Day
7. Outside Range, Down Day
8. Outside Range, Up Day

Using these 8 patterns some powerful strategies can be created. Larry Williams presented back-tested statistics associated with trading these patterns using a simple entry and exit technique. He stressed that they were not the best entry or exit techniques but shown because they were easy to understand and program. This strategy is intended only to show where we have a bias or advantage in the marketplace.

  • Entry: At market close
  • Stop Loss: Based on $ Stop
  • Exit: First Profitable Opening

His message was that we could go home and verify using our own software. His results for testing this on the e-mini S&Ps from 2002 forward [to 2015] were as follows:


So, the Down Range, Down Close day [1.] offers the best potential short term 'long' setup based on net profit. This was the take-home message of the presentation.

Larry further dug into the Down Range, Down Close setup to uncover which day of the week offered the best trade: The stats support the 'Turnaround Tuesday' concept.


And further investigating by Trading Day of Month revealed that 1, 17, 19, 22 and 23 were the best days, showing 92% winners and $47,500 net profits with 107 trades.

It was also found that a Down Range Larger Range day was better than a Down Range smaller Range day. $205 Avg 80% Win, vs $33 Avg 85% win,

Also naked close was better than a covered close (naked close meaning that the close was outside of the previous day’s range). $155 Avg 83% Win vs $30 Avg 83% Win

And combining these two concepts:
Down Range, larger range, Covered close: $60 Avg, 83% Winners
Down Range, larger range, Naked close: $215 Avg, 85% Winners

References:

Monday, December 18, 2023

2024 US Stock Market Outlook │ Larry Williams

 
Larry Williams' 2024 projection for US Stocks:
 
First week of January to last week of February - UP
 Last week of February to last week of April - DOWN
 Last week of April to last week of Juli - SIDEWAYS-TO-UP
First day to last day of August - UP
First week to third week of September - DOWN  
  Third week to fourth week of September new high of the year - UP
Fourth week of September to first week of November - SIDEWAYS-TO-DOWN  
 First week of November to first week of December - UP
 First week to third week of December - DOWN
 Third week to last trading day of December printing the yearly high - UP
 
The December 2023 Low is a key price level in Q1 of 2024. 
 
Larry Williams identified June 2024 in the current decennial pattern 
 as "the sweet spot with 90% accuracy" to buy and hold until December 2025.
 
 

Reference:

Sunday, July 10, 2022

3 Bar Patterns | The Smallest Fractals of Market Structure

"Any time there is a daily low with higher lows on both sides of it, that low will be a short-term low. We know this because a study of market action will show that prices descended in the low day, then failed to make a new low, and thus turned up, marking that ultimate low as a short-term point. A short-term market high is just the opposite. Here we will see a high with lower highs on both sides of it. What this says is that prices rallied up to the zenith of that middle day, then began to move back down, and in the process formed a short-term high. For our purposes in identifying short-term swing points, we will simply ignore inside days and the possible short-term points they produce." This is how Larry Williams defined market structure. His concept is universal and applies to all bars of all time frames.

  • A Short-Term High (STH) is a bar with a high greater than or equal to the high of the bar to the left and greater than the bar high to the right. Neighboring bars should not be inside. If they are inside bars, the bars that follow them should be analyzed.
  • A Medium-Term High (MTH) has Short-Term Highs to the left and and to the right that are below the high of this bar.
  • A Long-Term High (LTH) has Medium-Term Highs to the left and and to the right that are below the high of this bar.

And for the lows it’s all vice versa: 

  • Short-Term Low (STL) = bar with higher lows on both sides
  • Intermediate-Term Low (ITL) = higher STL on both sides
  • Long-Term Low (LTL) = higher ITL on both sides

In other words: 3 bar patterns are the smallest fractals and building blocks of market structure. Since price is always either in consolidation, in an uptrend or in a downtrend 3 successive price bars must form either a directional pattern (higher highs, higher lows or vice versa), a continuation pattern (inside bar) or a reversal pattern (outside bar, pin bar, head & shoulder, M&W patterns) (see also HERE):

  
References:

Sunday, November 12, 2017

90% Bullish Larry Williams Trading Setup for S&P500 Futures


One of Larry Williams' Long-Term Secrets to Short-Term Trading is about an Outside Day with a down close [Day 1] followed by an Inside Day [Day 2]. This is a very reliable bullish short term trading setup: Bought the next day at the open [Day 3], this setup is profitable in the S&P500 90% of the time. Expect the ES/Emini to rise above Day 1 (HERE).

Monday, May 30, 2022

Daily Range = Accumulation + Manipulation + Expansion + Distribution (AMD)

Accumulation (A) of positions generally occurs during the Asian session. The accumulation is characterized by being a consolidation.

Manipulation (M) usually occurs at the opening of the London session (sometimes at the NY open). It consists of taking the price to the opposite side of the true directional Expansion of the rest of the day.

Distribution (D) occurs when Market Makers liquidate (exit) their positions.

This AMD-Principle is represented in every bar of every time-frame (monthly, weekly, daily, 4 Hour, etc.) with a price value at which it starts trading (opening price), the highest price value (high), the lowest (low), and  a value of the time it ends trading (close). The AMD-Principle can be observed in all financial markets - Forex, stocks, indices, commodities, bonds, etc.


Michael J. Huddleston a.k.a. The Inner Circle Trader:
“The origin behind this idea was inspired by my mentor Larry Williams.
He made a point in one of his lectures that he wished he knew
how traders could be buying below the open on an up day or sell above the open on a down day.
And I took that as a personal challenge, and spent the first quarter of my 25 years
of my career as a trader mastering just that concept.
I felt that it was enough for me to work towards cracking that code.
And I think I've done it.”
 
References
 
See also:

Tuesday, December 26, 2023

2024 S&P 500 Election Year Seasonal Pattern │ Jeff Hirsch

 2024 is an Election Year and the sitting President is running for office again. 
In this constellation the S&P 500 typically tends to (1.) trend higher from early January into mid February;  
(2.) decline into late March; (3.) rise up for the rest of the year, especially after elections.
Also take note of Larry Williams' re-election pattern.
 
The S&P 500's average annual return during Election Years is 11.6%. Since 1833 the fourth year in the Decennial Pattern has been up 13 vs 6 times down with an average annual return of 5.22%. Over the past 30 years, January gains have occurred 17 times (57%), while losses numbered 13 (43%), barely better than the flip of a coin. In bull markets, New Moons are bottoms, and Full Moons are tops. In bear markets, New Moons are tops, and Full Moons are bottoms. More often than not, stocks will rise from around the 7th to around the 14th calendar day of a month, fall from the 14th to the 20th, and rise from the 20th to the 25th.
 
In 1967 Yale Hirsch published the first Stock Trader’s Almanac and presented the Four Year Presidential Election Cycle as an significant and predictive indicator of stock market performance. The outcomes are relatively steady, regardless of the president’s political leanings in office at the time, and the year after each presidential election marks the start of a new four-year stock market cycle. Considering annual returns of each year in the four year cycle, the Pre-Election Year (2023) is considered best, and  the Election Year second. The most predictive period of the year is November 19th to January 19th. Wayne Whaley coined it a 'Turn of the Year (TOY) Barometer'. If the return of this 2-month period is greater than 3%, a bullish signal is given, and the market is very likely to do well over the following 12 months. If the return is 0-3%, the signal is considered neutral; and if the return is negative, the signal is bearish, and returns very poor. Currently the S&P 500 still trades some 6% above the November 19 level.
 

The 250 year US empire live cycle concluded in 2023. Demise by folly overstretch. Uni-polar global supremacy is over, and Russia, China and Iran stronger than ever. A multi-polar world of worlds now knows how to deal with a paper-tiger gone mad. All star-spangled striped monsters check-mated, defeated and unveiled 24/7 along the many battle fronts on the globe. Project Ukraine lost. Now supervising genocide in Palestine. Yemen's Ansar Allah controls the Bab al-Mandab and launches full front attacks against the hegemon. An emerging Muslim alliance will liberate the Holy Land. Iran may shut down the Gibraltar strait any moment. The Taliban will enter Jerusalem and flatten Tel Aviv. Zionist Saudis and emirs doomed. Revolutionary Shia will root them out. The fever pitch increases. As some discard all this as hysteria and Islamist war propaganda, the dollar hegemony is rapidly melting away under the world island's rising sun. 2024 will be a remarkable 'election year'. W.D. Gann projected 'major panic, breadlines, soup kitchens, despair, and unemployment' into the US of 2024. And US astrologer L. David Linsky sees the home-front ready for more mayhem, upheaval, war and regime change. Plenty of opportunities along the lines and times in the above seasonal roadmap for 2024.
 
 
The Kitchin Cycle and the Benner Cycle are bullish for all of 2024 and 2025 (historically the fifth year outperforming all other years in the decennial pattern). In the current decennial cycle Larry Williams identified June 2024 as "the sweet spot with 90% accuracy" to buy stocks until December 2025.
 
 
 
 
 
In January 2024 the Sensitive Degrees of the Sun are:
Jan 02 (Tue) = Earth at perihelion = positive = high
Jan 06 (Sat) = negative = low
Jan 19 (Fri) = negative = low
Jan 30 (Tue) = positive = high

The Turning points in the Geocentric Bradley Barometer are (+/-1 CD):
Jan 04 (Thu) = Low
Jan 13 (Sat) = High
Jan 22 (Mon) = Low
Jan 29 (Mon) = High

The SoLunar Rhythm during January 2024: 

 
Additional References:
Seth Golden (Dec 26, 2023) @ X
 
 Last time the S&P 500 was up 9 consecutive weeks was in 2004 and before that two 9-week win streaks in 1989 and in 1994,
before that a 12-week win streak in 1985. The next years' returns were:
1986 = 14%
1990 = -4.5%
1995 = 34%
2005 = 3%
 
 

Tuesday, July 26, 2022

Range, 3 Day SMA, Day Counts & Reversal Harbingers

A day in which there is a new high followed by a lower close is a downwards reversal day (RB). An upwards reversal day is a new low followed by a higher close. A reversal day by itself is not significant unless it can be put into context with a larger price pattern, such as a clear trend with sharply increasing volatility, or a reversal that occurs at the highest or lowest price of the past few weeks. Short-term reversals are likely after wide-ranging (WR4) and narrow-ranging days (NR4), especially when the open, high, low and close of the daily price bar are altogether above or below of a simple three-day moving average line of daily close prices.

A wide-ranging day is likely to be the result of a price shock, unexpected news, or a breakout in which many orders trigger one another, causing a large increase in volatility. A wide-ranging day could turn out to be a spike or an island reversal. Because very high volatility cannot be sustained, a wide-ranging day will likely be followed by a reversal, or at least a pause. When a wide-ranging day occurs, the direction of the close (if the close is near the high or low) is a strong indication of the continued direction. An outside day (OB) often precedes a reversal. An outside day can also be a wide-ranging day if the volatility is high, but when volatility is low and the size of the bar is slightly longer than the previous bar, it is a weak signal. As with so many other chart patterns, if one day has an unusually small trading range, followed by an outside day of normal volatility, there is very little information in the pattern. Context and selection are important.

An inside day (IB) is one where the high is lower than the previous high and the low is higher than the previous low. That is, an inside day is one where both the highs and lows are inside the previous day’s trading range. An inside day represents a narrow range consolidation and lower volatility. In turn, lower volatility is most often associated with the end of a price move. After a burst of activity and a surge of direction, price has reached a point where buyers are already in and price has moved too far to attract more buyers. Volume drops, volatility drops, and an inside day follows. An inside day is definitely followed by a breakout, either into a continuation of the previous trend or into a change of direction. 

Sunday, August 13, 2023

The Central Pivot Range & Floor Trader Pivots | Trading Strategy

Floor Trader Pivots have been around for a long time and many traders have used these pivots to master the market for decades. Larry Williams re-popularized the formula by including it in his book, How I Made One Million Dollars Last Year Trading Commodities (1979). He described the "Pivot Price Formula" that he used to arrive at the next day's probable high or low. The concept of the Central Pivot Range was developed by Frank Ochoa (2010) based on Mark Fisher's Pivot Range (2002).  

Here is is one example of a trading strategy: Buy at the Central Pivot Range's support in an uptrend and sell at resistance in a downtrend. Filter all Floor Trader Pivots except S1, R2, and the central pivot point when the market is in an uptrend. In a downtrend, all pivots are filtered except R1, S2, and the central pivot point. If the market is trending higher, one should look to buy at support at either S1 or the central pivot range with the  target set to a new high at either R1 or R2.
 
Likewise, if the market is trending lower, look to sell at resistance at either R1 or the central pivot range with the target set to a new low at either S1 or S2. It takes a lot of conviction to break a trend and push prices in the other direction, which means to be able to identify the change in trend early enough, to profit from a very enthusiastic price move, which can last a day, or even weeks. Once a severe breach occurs through the first layer of the pivots, one typically sees a shift of the trend toward the opposite extreme. That is, a bullish trend becomes a bearish trend, and a bearish trend becomes a bullish trend. Two key buying or selling zones, S1 and the central pivot range in an uptrend, and R1 and the central pivot range in a downtrend.
 
CPR as a Magnet for Price - The central pivot range (CPR) can have an amazing magnetic effect on price that can lead to a high percentage fill of the morning gap. If price opens the day with a gap and the centrals are back near the prior day's close, you typically see a fill of the gap a high percentage of the time, given the right circumstances. The central pivot point is reached 63 percent of the time at some point during the day. When the market gaps at the open, the trade inherently has a 63 percent chance of being a winner. Gaps that are too large don't tend to fill as easily as those that are moderate in size. Pivot range placement should be at, or very near, the prior day's closing price. If the range is too close to price, however, it could hinder the market's ability to fill the gap. Don’t wait all day for a gap to fill, because the longer the trade takes, the more unlikely it is to fill. Gap fills in general, seem to work best during earnings season. If price gaps up to R1 resistance, or down to S1 support, these pivots can serve as a barrier to a breakaway trade, which leads to a higher percentage of filled gaps. A gap down requires much more confirmation, conviction, and volume in order to fill the gap on most occasions.
 
Breakaway Strategy - When the market has formed a narrow-range day (NR4, NR7) in the prior session, the pivots are likely to be tight, or narrow. Narrow pivots foster breakout and trending sessions. If the market opens the session with a gap that is beyond the prior day's price range and beyond the first layer of the indicator, the chances of reaching pivots beyond the second layer of the indicator increase dramatically. Price opened the day with a gap that occurred beyond the prior day's price range and above R1 resistance. When this occurs, one should study price behavior very closely in order to determine if the pivot that was surpassed via the gap will hold. If the pivot holds as support, you will look to enter the market long with your sights set on R3 as the target. The third and fourth layers are 30 percent more likely to be tested when price gaps beyond the first layer of the indicator. When trading the Breakaway Strategy using the Floor Trader Pivots, one should typically like to see the gap occur beyond the prior day's range and value, preferably just beyond the first layer of the indicator. In addition, the gap should occur no farther than the second layer of the pivots.  
 
CPR Width Forecasting  - Pivot Width is the distance between the top central pivot (TC) and the bottom central pivot (BC). Since the prior day's trading activity leads to the creation of today's pivots, it is extremely important to understand how the market behaved in the prior day in order to forecast what may occur in the upcoming session. More specifically, if the market experienced a wide range of movement in the prior session, the pivots for the following day will likely be wider than normal, which usually leads to a Typical Day, Trading Range Day, or Sideways Day scenario. Conversely, if the market experiences a very quiet trading day in the prior session, the pivots for the following day are likely to be unusually tight, or narrow, which typically leads to a Trend Day, Double-Distribution Trend Day, or Extended Typical Day scenario.  
 
 
Pivot width analysis works best when the range of movement is distinctly high or low, thereby creating unusually wide or narrow pivots If the pivot width is not distinctly wide or narrow, it becomes very difficult to predict potential trading behavior with any degree of certainty for the following session. An unusually narrow pivot range usually indicates the market is primed for an explosive breakout opportunity. A tight central pivot range can be dynamite. Be aware when a day has the potential to start off with a bang. A day that has a wide range of movement, like a Trend Day, will lead to the creation of an abnormally wide pivot range for the following session. In this instance, you typically see a quieter atmosphere in the market, as dictated by the wide-set pivot range. Sometimes, a wide-set pivot range leads to nice trading range behavior that allows you to pick off quick intraday swings in the market, much like the Trading Range Day. The key to trading a day when the centrals are wide is to identify the day's initial balance after the first hour of trading. If the initial balance has a wide enough width, you are likely to see trading range behavior within the high and low of the first sixty minutes of the day. If the initial balance coincides with key pivot levels, you have highly confirmed support and resistance levels that offer great opportunities for short-term bounces.

The market has a much better chance to reach pivots beyond the second layer of the Floor Pivots indicator if the central pivot range is unusually narrow due to a low-range trading day in the prior session. Conversely, a market is less likely to reach pivots beyond the second layer of the indicator if the central pivot range is unusually wide due to a wide-range trading day in the prior session.
  
CPR Trend Analysis - Buying the dips means buying the pull-backs within an uptrend, while selling the rips means selling (or shorting) the rallies within a downtrend. One of the best ways to buy and sell pull-backs in a trend is to play the bounces off the central pivot range, which is the method many professionals use. A strong trend can usually be gauged by how price remains above the bottom central pivot (BC) while in an uptrend, and below the top central pivot (TC) while in a downtrend. Once price violates this paradigm by closing beyond the range for the day, you see either a change in trend or a trading range market develop. Pull-back opportunities usually occur early in the session, with follow-through occurring the rest of the day. Any pull-back to the range early in the morning is a buying or selling opportunity depending on the direction of the trend. Once in the trade, the goal is to either ride the trade to a prior area of support or resistance, or to a new high or low within the trend.


Two-Day CPR Range Relationships - Understanding how the current central pivot range relates to a prior day's CPR will go a long way toward understanding current market behavior and future price movement. Where the market closes in relation to the pivot range gives you an initial directional bias for the following session. The next day's opening price will either confirm or reject this bias Higher Value relationship. Current day's pivot range is completely higher than the prior day's pivot range.
 
 
Two-Day Unchanged CPR Range = Sideways or Breakout Bias - The current pivot range is virtually unchanged from the prior day's range. Of the seven two-day relationships, this is the only one that can project two very different outcomes, posing a bit of a dichotomy. On the one hand, a two-day neutral pivot range indicates that the market is satisfied with the facilitation of trade within the current range. When this occurs, the market will trade quietly within the boundaries of the existing two or three day trading range. On the other hand, however, a two-day unchanged pivot range relationship can indicate the market is on the verge of a major breakout opportunity, similar to when the market has formed two, or more, points of control that are unchanged. The outcome is typically driven by the opening print of the current session. If the market opens the day near the prior session's closing price and well within the prior day's range, the market will likely lack the conviction necessary for a breakout attempt. If the opening print occurs beyond the prior day's price range, or very close to an extreme, the chances are good that a breakout opportunity may lie ahead.

Daily CPR Width and Range Relationships.

Outside CPR Range = Sideways Bias - This happens when the current day's pivot range completely engulfs the prior day's range. This two-day relationship typically implies sideways or trading range activity, as the market is happy with the current facilitation of trade in the current price range. A wide range will usually indicate trading range behavior This relationship is much more telling if the current day's pivot range is significantly wider than the prior day's range. Otherwise, merely engulfing the prior day's range without the necessary width may lead to the same result, but with less accuracy.

Inside CPR Range = Breakout Bias - It occurs when the current day's pivot range is completely inside the prior day's range. This two-day relationship typically implies a breakout opportunity for the current session, as the market is likely winding up ahead of a breakout attempt. If the market opens the day beyond the prior day's price range, there is a very good chance that initiative participants will enter the market with conviction in order to push price to new value. If the market opens the day within the prior day's price range, a breakout opportunity could still be had, but with much less conviction. This two-day relationship doesn't occur frequently. On the days when it develops, usually lead to major trending sessions. If the prior day's pivot range is noticeably wider than the inside day pivot range, you are more likely to see a breakout opportunity, especially if the current day's pivot range is very narrow. If both pivot ranges are virtually the same width, but technically meet the inside requirement, the rate of success will noticeably drop.

Daily CPR Width and Range Relationships and Floor Trader Pivot Levels.

Higher CPR Range = Bullish Bias - Current day's pivot range is completely higher than the prior day's pivot range. The most bullish relationship of the seven two-day combinations Initial directional bias will be bullish. However, how the market opens the day will either confirm or reject this initial bias. If the market opens the day anywhere above the bottom of the pivot range, you will look to buy a pull-back to the range ahead of a move to new highs. This is especially the case if price opens above the top of the range. As long as the market opens the following day above the bottom of the pivot range, but preferably above the top of the range, any pull-back to the range should be seen as a buying opportunity.

Lower CPR Range = Bearish Bias - It occurs when the current day's pivot range is completely lower than the prior session's range. This is the most bearish two-day relationship and typically leads to further weakness should the current day's opening price confirm the directional bias. If price opens the session below the central pivot range, you will look to sell any pull-back to the range ahead of a drop to new lows within the current trend. If price opens the following session below the top of the pivot range, but preferably below the bottom of the range, any pull-back to the range should be a selling opportunity. It must be reiterated, however, that just because a two-day relationship implies a certain behavior in price, this bias must be confirmed by the opening print. While a Lower Value relationship is the most bearish two-day relationship, perhaps the biggest rallies occur when the opening print rejects the original bias.

Overlapping Higher CPR Range = Moderately Bullish Bias - This offers a moderately bullish outlook for the upcoming session. The top of the range is higher than the top of yesterday's range, but the bottom of the range is lower than the top of yesterday's range. The same closing and opening price dynamics are in effect for this relationship as well.

Overlapping Lower CPR Range = Moderately Bearish Bias - The current day's bottom central pivot is lower than the bottom of the prior day's range, but the top of the current day's range is higher than the bottom of the prior day's range.It indicates a moderately bearish outlook for the forthcoming session. If price opens within or below the pivot range, price should continue to auction lower. Any pull-back to the range should be seen as a selling opportunity.
 
Weekly CPR Width and Range Relationships.
 
References: