CYCLES AND TREND What are they ?

Grey1

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Cycle and Trends . What are they ….

The purpose of cycle analysis is to find the turning points in the market for a given time frame. If you knew these turning points then you could buy low and sell high and achieve the impossible and make loads of $$$ every day .. How is that possible ? Well , that is not an easy subject to master but if you did then you have got yourself a treasure map .

Ok ,, lets talk about trends, I discussed this few years back on this BB and called it BIRTH OF TREND.. Trends are born from cycles. Just the way a baby is born from a mother and not the other way . cycles give birth to trend and not the other way round ,,

Trends how ever don’t not live for ever ( just like the baby ) they get to a certain age and mature .., once they mature ( in TA we call them exhaustion ) they calm down and form the HIGH and LOW of the cycle.

So what grey1? What is that good to me ?

Well if you want to catch the trend you have to know a bit more about the cycle that the instrument is going through … In another word if the cycles is near its HIGH then it is not clever to take the LONG position and be on the wrong side of the cycle. Is it ?

Well how do I know

a) How do I know what side of the cycle I am ?
well you should have known about this subject before opening a broker account. You should use oscillators to identify where you stand with dominate cycles and hence the dominant time frame ...

b) what is the dominant time frame ?

Answer;- you can use an eyeball and approximate means of finding the dominate time frame by looking at @ what time frame the price last formed top or bottom and assume the future behaviour be the same or use more advanced techniques to identify periodity and hence find the nodes.. ( I refer you guys to read on dominate cycles period by Ehler and his book Rocket Science for traders )
Once you find the nodes then you know on what side of the nodes you will be and hence you can have a clear view of market or stock direction .

c) What TA indicator Do I need to measure cycle periodity ?

Answer:-- you don’t measure periodity with indicators.. you measure them with oscillators such as RSI,,,, CCI or what ever which gives you OB /OS levels. Of course there are more intelligent oscillators than RSI and CCI around


Now lets say you have got yourself an awesome oscillator..

This will be your strategy

IF Price hit HIGH of the day and turning in HIGHER TIME FRAME ( CYCLE) then Trend is born in lower time frame ..
IF price hit high of the day but still rising then move to next time frame up and look for reversal .

I hope this is clear.

I have tried to make this as simple as I could to avoid people walking away from the subject.

Grey1
 
After a reversal to day this was the result of cycle analysis .. The rest is history just check the closing price against the signal .
 

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Grey1 said:
IF Price hit HIGH of the day and turning in HIGHER TIME FRAME ( CYCLE) then Trend is born in lower time frame ..
IF price hit high of the day but still rising then move to next time frame up and look for reversal .

Grey1

Just a bit of clarification Grey1 (there's always someone asking questions..! :) )- in todays scenario -when the dow sold off and was close to -40 and the MACCI were showing OS in different TF- to spot a reversal-would the correct way be to look for a buy signal in the 5 or/& 10min TF (if trading in 1 min TF)?

Regards

Raj
 
Hi Grey1.

Thanks for sharing this. Could you please tell me what was the Period of the Dominant Cycle at the time of, say, the AMZN trade (17.05 ish - yesterday - for the stock and INDU)? This would be a great help in trying to validate by own measurements which are around 26 for stock and 22 for INDU.

Thanks again,

Steve
 
Grey1 said:
Cycle and Trends . What are they ….

The purpose of cycle analysis is to find the turning points in the market for a given time frame. If you knew these turning points then you could buy low and sell high and achieve the impossible and make loads of $$$ every day .

I discussed this few years back on this BB and called it BIRTH OF TREND.. Trends are born from cycles.

Trends how ever don’t not live for ever ( in TA we call them exhaustion ) they calm down and form the HIGH and LOW of the cycle.

Well if you want to catch the trend ... In another word if the cycles is near its HIGH then it is not clever to take the LONG position and be on the wrong side of the cycle. Is it ?

a) How do I know what side of the cycle I am ?
well you should have known about this subject before opening a broker account. You should use oscillators to identify where you stand with dominate cycles and hence the dominant time frame ...

b) what is the dominant time frame ?
Answer;- you can use an eyeball and approximate means of finding the dominate time frame by looking at @ what time frame the price last formed top or bottom and assume the future behaviour be the same or use more advanced techniques to identify periodity and hence find the nodes.. ( I refer you guys to read on dominate cycles period by Ehler and his book Rocket Science for traders )
Once you find the nodes then you know on what side of the nodes you will be and hence you can have a clear view of market or stock direction .

c) What TA indicator Do I need to measure cycle periodity ?
Answer:-- you don’t measure periodity with indicators.. you measure them with oscillators such as RSI,,,, CCI or what ever which gives you OB /OS levels. Of course there are more intelligent oscillators than RSI and CCI around

Now lets say you have got yourself an awesome oscillator..

This will be your strategy

IF Price hit HIGH of the day and turning in HIGHER TIME FRAME ( CYCLE) then Trend is born in lower time frame ..
IF price hit high of the day but still rising then move to next time frame up and look for reversal .

I hope this is clear.

I have tried to make this as simple as I could to avoid people walking away from the subject.

Grey1
Hi Grey1,

Thanks for your explanations, really appreciate it. Your statements made this Strategy much clearer.

Previously, I’ve mistakenly tried to match the Market’s multi-TF (MTF) as they turned and passed thru +/- 100 MACCI. Now I understand why I didn’t find many to fit this scenario (as I previously understood it).

Your explanations helped me to understand that it is the MACCI’s “most deepest Valley” or “Highest Peak” in MTF’s that mattered, and they can best be seen from the higher TF’s (higher TF meaning from 30, 15, or 10-Min). Once this is found in the higher TF (with the MACCI turn) and have matches with the lower TF’s then a search for a stock can commence.

Today, 1/5/07, at 11:30-ish was when the Market’s 30, 15, 10, & 5-Min TF’s were all O/S (clearly their lowest valley), while the 3-Min’s was at 11:17 ET, and the 1-Min at 11:10 (all O/S). Therefore the proper time to go Long (IMO) was after 11:30-ish, that is after they turned up. The turns started at 11:23 for the 3-Min, 11:35/11:40 for the 5-Min, and at 12:00 for the 10-Min. But, obviously the turns all occur sooner in the lower TF’s.

I reviewed your ERTS Long Trade (Grey1) from this past Wednesday, and have analyzed its Peaks & Valleys, as well as the times (MTFs) they passed thru – 100 MACCI for reference, in an attached excel file. Also attached in MS Word, are Charts in MTFs, with annotations.

My eyes opened wide & I saw the light while I was doing this review the other day, and started to better understand what you were saying. The ERTS trade followed the Market step by step in direction as well as being O/S. FWIW, have the following Market TF’s on my monitors, 1, 3, 5, 10, 15, & 30-Min, although in my platform (RT), I can only obtain data (to utilize codes in these fixed TF's) in 1, 5, 10, & 15-Min TF’s. So for this analysis, I used my charts, but during trading hours, I mainly use my coded tables (work still in progress) to tell me when & which chart to look at (top down 1st).

Grey1, I assume I have it right. Would appreciate any comments.

Thanks again,

NasTrader
 

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Thanks for sharing you analysis Nas :)

From your work what would you say the dominate TF was for ERTS?
 
samtron said:
Thanks for sharing you analysis Nas :)

From your work what would you say the dominate TF was for ERTS?

Hi Samtron,

I would say that it was the 10-Min, since it was the highest TF where the MACCI turned up from bottom. The 15-Min TF started it's turn up after the trade, or around 15:15. Also, I'd say that this applied to the Market as well. Grey1 must have gotten his signal after ( 1 ) 10-Min bar (I'm guessing) at 14:35, from his fine tuned Engine. Again this is my interpretation.

By the way Samtron, what are you doing up so late on a Friday night ? LOL

Cheers,

NasTrader
 
samtron said:
Thanks for sharing you analysis Nas :)

From your work what would you say the dominate TF was for ERTS?
Hi Samtron

At 8pm on the 3rd I measure the dominant period (for ERTS) as 23. Does this stack up with yourself?

Cheers

Steve
 
Guys, for some reason I am not getting any email to say that some one has replied to my post . Hence i was under the impression people have just read the post and left it at that .

I think NAS explained a lot of the concepts that I have refered to in his research .

Grey1
 
Nastrader said:
Hi Samtron,

I would say that it was the 10-Min, since it was the highest TF where the MACCI turned up from bottom. The 15-Min TF started it's turn up after the trade, or around 15:15. Also, I'd say that this applied to the Market as well. Grey1 must have gotten his signal after ( 1 ) 10-Min bar (I'm guessing) at 14:35, from his fine tuned Engine. Again this is my interpretation.

By the way Samtron, what are you doing up so late on a Friday night ? LOL

Cheers,

NasTrader
Nas thanks for the feedback, most helpful.

BTW Friday night is (my) "pub night", and I was just checking tw2 after getting back in :)
:eek:
 
evostik said:
Hi Samtron

At 8pm on the 3rd I measure the dominant period (for ERTS) as 23. Does this stack up with yourself?

Cheers

Steve
Going purely on Nas's excellent contribution, I think I would agree with Nas and say the 10, but here again thats only my interpretation of Grey1 post.
 
Grey1 said:
Cycle and Trends . What are they ….

I refer you guys to read on dominate cycles period by Ehler and his book Rocket Science for traders ). Once you find the nodes then you know on what side of the nodes you will be and hence you can have a clear view of market or stock direction .

Grey1
Hi Grey1,

Your reference to J. Ehlers Book “Rocket Science for Traders” was interesting ( the book costs about $67 to $75 (US) at Amazon & Trader Library, Opps that was yesterday, I just chk'd Amazon and the price now is $52.50). I did a Google search and found some interesting topics that J. Ehlers wrote. Many are presentations on this subject of Cycles and Instantaneous Trend lines. But his reference is in the use of Sine Waves mostly, and not MACCI, but mentions oscillators without too much detail, from what I was able to find.

This subject and his many descriptions are too numerous, so I’ll just attach a few of the items I found, which members of this thread may be able to review & then find links to his own web site. J. Ehlers makes his references about Cycles and Trends in Easy Language, which can be found in the attachments listed below. It also seems, that his book may not be necessary to purchase, since the codes are listed on his web site (and attachments). I would assume that you were mostly referring to Ehlers Cycles, which he describes. One thing I did find that a few of his codes may have errors, and some may not have been corrected, so be careful. I found out about the errors from Amazon's reader reviews of his book. There were many book reviews, and most were very positive, but the book is very technical as noted from the reviews. The attachments are in MS Word.

Grey1 - I have one question. Are J. Ehlers Sine Wave algorithyms worth using, and have you included any of his codes into your Engines ?

Thanks Again Gray1,

Nas
 

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  • J. Ehlers Web Sites & Book Review.doc
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  • Profitable Adaptie trading Systems, J., Ehlers.doc
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  • Instantaneous Trendline, J Ehlers.doc
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  • Stock Systems that Work, J. Ehlers.doc
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Nastrader said:
Hi Grey1,

Your reference to J. Ehlers Book “Rocket Science for Traders” was interesting ( the book costs about $67 to $75 (US) at Amazon & Trader Library, Opps that was yesterday, I just chk'd Amazon and the price now is $52.50). I did a Google search and found some interesting topics that J. Ehlers wrote. Many are presentations on this subject of Cycles and Instantaneous Trend lines. But his reference is in the use of Sine Waves mostly, and not MACCI, but mentions oscillators without too much detail, from what I was able to find.

This subject and his many descriptions are too numerous, so I’ll just attach a few of the items I found, which members of this thread may be able to review & then find links to his own web site. J. Ehlers makes his references about Cycles and Trends in Easy Language, which can be found in the attachments listed below. It also seems, that his book may not be necessary to purchase, since the codes are listed on his web site (and attachments). I would assume that you were mostly referring to Ehlers Cycles, which he describes. One thing I did find that a few of his codes may have errors, and some may not have been corrected, so be careful. I found out about the errors from Amazon's reader reviews of his book. There were many book reviews, and most were very positive, but the book is very technical as noted from the reviews. The attachments are in MS Word.

Grey1 - I have one question. Are J. Ehlers Sine Wave algorithyms worth using, and have you included any of his codes into your Engines ?

Thanks Again Gray1,

Nas
Hi Nas

Just so you know, erratas to the book are also included at the Mesa website.

Cheers
Steve
 
How to Identify the up/dn trend of the market cycle in RS

The only time I can correctly identify the indu phase in the cycle is after the EE has given the signal in various TFs and a new trend starts (i.e looking at the RS). Based on G1s post on the higher and lower TFs , I try to identify the cycle i.e. whether indu is going up or dn (till exhaustion) and I find that only when I have monitored the numbers for a period of time I can (sometimes only) correctly identify the correct direction from the RS. Based on the previous discussion on this topic (in Gareth's log), it is clear that when Grey1 (and many other professionals) view the RS, they almost immediately get the idea about the direction of the market cycle (i.e if all the TFs in the macci are going up or down till exhaustion).

Pl. can someone elucidate as to how can the market direction be identified by looking at the RS in terms of cycles at any instant (not at cycle tops or bottoms but lets say the middle of the cycles)- (eg- at 1430 in the UK once the market opens or maybe if you look at the RS in the middle of the trading day, without an idea about the previous movement)? G1 has said that the higher TF indicate the direction and the lower TF the entry point-can someone please give RS examples to elucidate this point?

Many thanks

Raj
 
rajibde said:
The only time I can correctly identify the indu phase in the cycle is after the EE has given the signal in various TFs and a new trend starts (i.e looking at the RS). Based on G1s post on the higher and lower TFs , I try to identify the cycle i.e. whether indu is going up or dn (till exhaustion) and I find that only when I have monitored the numbers for a period of time I can (sometimes only) correctly identify the correct direction from the RS. Based on the previous discussion on this topic (in Gareth's log), it is clear that when Grey1 (and many other professionals) view the RS, they almost immediately get the idea about the direction of the market cycle (i.e if all the TFs in the macci are going up or down till exhaustion).

Pl. can someone elucidate as to how can the market direction be identified by looking at the RS in terms of cycles at any instant (not at cycle tops or bottoms but lets say the middle of the cycles)- (eg- at 1430 in the UK once the market opens or maybe if you look at the RS in the middle of the trading day, without an idea about the previous movement)? G1 has said that the higher TF indicate the direction and the lower TF the entry point-can someone please give RS examples to elucidate this point?

Many thanks

Raj

Raj
I may be wrong but it seems that you are trying to use RS the wrong way around. Perhaps Grey1 will correct me if I've got the wrong end of the stick.

The RS gives you the strength of the stock relative to the market. That doesn't tell you anything about the market itself.
You have to identify the market turning points and trends in other ways.
e.g. Once you have a Long market move identified, then the stocks with Strong RS will be outperforming the market and, on the face it, better bets than those with neutral or Weak RS.

(One thing I don't know because the code is locked - e.g. when the market is going down and the RS says Strong, does that mean that the stock is going down faster than the market, or slower ?)

Cheers
Glenn
 
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Glenn said:
Raj
I may be wrong but it seems that you are trying to use RS the wrong way around. Perhaps Grey1 will correct me if I've got the wrong end of the stick.

The RS gives you the strength of the stock relative to the market. That doesn't tell you anything about the market itself.
You have to identify the market turning points and trends in other ways.
e.g. Once you have a Long market move identified, then the stocks with Strong RS will be outperforming the market and, on the face it, better bets than those with neutral or Weak RS.

(One thing I don't know because the code is locked - e.g. when the market is going down and the RS says Strong, does that mean that the stock is going down faster than the market, or slower ?)

Cheers
Glenn

Hi Glen,

Thank you for your reply- G1 had suggested to use the RS only and not look at the charts so as to be able to keep the emotion out of the trade- now with this in view, I had raised the question.

On your question about the strength- the way I would interpret 'strong' when the market is going down will be that- the stocks which show 'strong' are the ones which are going down at a lesser rate than the market- hence they are exibiting inherent strength-consequently they would be the likely 'long candidates' when the market turns.

Cheers

Raj
 
rajibde said:
Hi Glen,

Thank you for your reply- G1 had suggested to use the RS only and not look at the charts so as to be able to keep the emotion out of the trade- now with this in view, I had raised the question.

On your question about the strength- the way I would interpret 'strong' when the market is going down will be that- the stocks which show 'strong' are the ones which are going down at a lesser rate than the market- hence they are exibiting inherent strength-consequently they would be the likely 'long candidates' when the market turns.

Cheers

Raj

OK so you mean Radar Screen, not Rel Strgth ( lol) - misunderstood sorry.
I don't use macci how you describe so I can't help sorry.

From memory (and I'm probably wrong about this too !) I think Iraj meant that you can watch a stock move towards exhaustion in the macci instead of in the chart and then you don't get spooked by all the ups and down in the chart. You just wait for +/- 100 to arrive and then exit - easy peasy :)

Cheers
Glenn
 
Hi Guys,
Interesting discussion,

I think traders of Grey1 calibre have photographic memories and can remember instantly what the 10 min Macci, for example, was say 10 minutes ago and therefore can quickly decide if the current 10 minute Macci is ><=
I have toyed around with a bit of code that attempts :) to compute the same sought of thing, it then color codes the background, basically the code tries to determine the slope of the Macci in real time, it then paints the bg accordingly. Its still under development. lol
 
You can color code MACCI on RS. For example, to catch a descending MACCI, the codings can be done as :

If MACCI<MACCI[1] and MACCI < MACCI[2] then Plot1 ( MACCI, red );

In this instance, MACCI numbers will be red colors if MACCI is lower than two previous bars.

The same can be done for ascending MACCI and other timeframes. Hope this helps..

regards,
 
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