I previously posted a forecast of the stock Titanium Metals (TIE) using the moving average indicator’s mirror cycle forecast. Here in this post I will show the current forecast for TIE using the same method. The chart below is the 720 minute TIE chart made using Forecasting Made Easy 2012. The 720 minute chart is basically 2 bars per day. All the indicators in Forecasting Made Easy can be used to forecast market cycles by setting a historical top or bottom as the starting point for the indicator to display a forecast into the future. In the picture below I have set the moving average forecast starting point on the TIE top that occurred in the last week on October 2011. After this date the moving average is drawing a mirror cycle forecast. This forecast roughly lined up with the swing tops and bottoms at points A, B, C and D. After point D the forecast cycle makes a swing down into the first week of 2012. The forecast for TIE is for the stock to decline into the end of the year and through the first week of 2012.
The subchart I have a multi time frame momentum indicator. The green line is the 720 minute momentum indicator. The magenta line that is slightly stair stepped is the weekly momentum. Now notice the weekly momentum is in the middle of the momentum range which is 0 to 100. And notice the 720 minute momentum is at the top of the range very close to 100. So the short time frame momentum is over bought and the long-term momentum in neutral. This indicates the market is ready to make a top.
Our current set of eBooks were created using the eBookPro program. The eBookPro software is now being discontinued. This decision is beyond our control. So we are currently in the process of reformatting and upgrading our eBooks to a new format. The new ebooks will initially be available for the Barnes & Noble NOOK. MarketWarrior owners will also have the options to get the eBooks as a standalone .exe for Windows. Later the eBooks will be made available through Amazon.com for the Kindle.
Thank You for your patience.
Patrick Mikula CTA
Mikula Forecasting Company
Copyright © 2011 by Patrick Mikula All Rights Reserved
In this blog posting I am going to be discussing the Square of Nine method that is presented in Chapter 5 of the book The Definitive Guide to Forecasting Using W.D.Gann’s Square of Nine. This method will use time cycles on the Square of Nine to forecast the daily S&P500. The first step in using this method is to select the date of a major top or bottom in the past which will be used to start the Square of Nine. In this example I am using the S&P500 so I have chosen the top date from 2000, March 24. This was the major bull market top which ended the century long super-cycle. The first picture below shows a Square of Nine in MarketWarrior with the starting date set to 2000/March/24. I have circled this in red and labeled it A. The Square of Nine charts in this example are compressed because the placement of dates in the Square of Nine cells makes the square very large. The starting value on the Square of Nine is always placed outside the square and not in cell one. The starting value represents the zero point and the value in cell one is the starting value plus one.
Tip For selecting the starting date:
1) A major long-term top or bottom usually works best to start the Square of Nine. You can also use an incorporation date for a stock if you know it.
Step 2 for this method is the placement of the angle overlay on the Square of Nine. The angle overlay has a zero degree line which represents the starting point of the overlay. In this example I have selected the S&P500 bottom from 2010/August/25. On the next Square of Nine I have circled the date “10/08/25″ and the red angle line is the zero degree angle of the overlay which cross through this date.
Next lets see what this looks like on the S&P500 daily chart. The picture below is the daily chart for the S&P500 and the MarketWarrior indicator named “Sq9Chapter 5″ has been added to this chart. The vertical red line labeled B is the Square of Nine zero degree angle. This line is aligned to the date 2010/08/25 where the market bottom occurred. You should look at this price chart and the previous Square of Nine chart and understand that they show the same thing.
Tips for selecting the overlay starting point:
A major Change in Trend (CIT) or possibly a CIT that is one-back or one-foreword of a major CIT usually work the best for the overlay zero line. In the S&P500 example the major bottom occurred in July 2010 I am using the bottom that is one-foreword in August 2010.
The third step to use this method is to select the overlay angles that line up with market tops and bottoms and will be used for forecasting. The MarketWarrior indicator seen on the chart below is drawing both the calendar days count and the trading days count. When selecting the overlay angles that will be displayed you are not trying to find an angle for every market tops and bottom. You are trying to locate overlay angles that have a high probability of success finding CIT. There will usually be 1 to 4 over lay angles that have a high correlation with CIT. In this example the 4 overlay angles 0 Degrees, 60 Degrees, 225 Degrees and 300 Degrees have a high correlation with CIT in the S&P500. I have manually drawn the blue zig-zag line and placed the overlay degree values above the top or bottom points of this zig-zag line. You can see that not every turn in the S&P500 is located with this method. Also I have included the next two forecast turning point dates. These are last (0Deg) bottom and (60Deg-300Deg ) top in the zig-zag line. By mousing over the points in the MarketWarrior chart I can see they are 2012 January 16 and 2012 February 27 respectively. These are high probability turning points in the S&P500 daily chart.
Tips for selecting the overlay angles:
1) The high probability angles often have two angles from the groups (45-90-135-225-270-315) or (60-120-240-300). In this S&P500 example 60 and 300 were used.
2) There is no automatic way to select these points. It should take about 30 minutes to do this after you go through the process a few times.
It is important to work with the Square of Nine until you have an understanding of this method. But it is important to point out that it is much more difficult to see the correlation between the overlay angle dates and the market CIT points when working with the Square of Nine rather than the chart. In fact once you have an understanding of how this method works you will rarely need to use the Square of Nine but will use the chart indicator instead. On the chart below I have labeled the overlay angles that line up with my zig-zag line as C, D, E, F and G. I have added one picture below for each of these CIT that shows the CIT on the Square of Nine. In the Square of Nine pictures below I am showing the calendar days count. I do not show the pictures for the trading days count.
The Square of Nine below shows CIT point C from the chart above. The Square of Nine in this example is showing the calendar days count. This turning point date fell close to the overlay 60 degree angle in cell 4008 and was 2011/March/15. This is circled in red on the Square of Nine.
The Square of Nine below shows CIT point D from the chart above. The Square of Nine in this example is showing the calendar days count. This turning point date fell close to the overlay 0 degree angle in cell 4056 and was 2011/May/02. This is circled in red on the Square of Nine.
The Square of Nine below shows CIT point E from the chart above. The Square of Nine in this example is showing the calendar days count. This turning point date fell close to the overlay 300 degree angle in cell 4101 and was 2011/June/16. This is circled in red on the Square of Nine.
The Square of Nine below shows CIT point F from the chart above. The Square of Nine in this example is showing the calendar days count. This turning point date fell closest to the overlay 225 degree angle in cell 4136 and was 2011/July/21. This is circled in red on the Square of Nine.
The Square of Nine below shows CIT point G from the chart above. The Square of Nine in this example is showing the calendar days count. This turning point date fell closest to the overlay 60 degree angle in cell 4273 and was 2011/December/05. This is circled in red on the Square of Nine.
Patrick Mikula CTA
Mikula Forecasting Company
Copyright © 2011 by Patrick Mikula All Rights Reserved
This is the final example of using the MarketWarrior indicator AT_Planet Lines Top Bottom. This indicator will draw a planet longitude line starting from a user selected high or low. In this example I am going to use the planet Mars and the daily chart for Kohl Department Stores (KSS). When using the indicator AT_Planet Lines Top Bottom, the user must assign the Multiply setting which determines the plant line slope. This has proven difficult for some traders. To solve this problem, I am showing an easy way to set the slope of the line.
To determine the correct slope, you should find a swing from high to low or low to high that looks like an average swing for the market in which you are interested. In this case I am using the low to high swing A – B. Once you select a swing, you can adjust the setting until the planet line touches both ends of the low to high swing. In this example the red line running from A to B is the Mars line and the slope is 0.25.
Next I have drawn the blue line starting from point C. This is another Mars line with a slope of 0.25. This line is sloping down but the angle is the same. Now you can see that there was a bottom on this line at point D and there was another bottom in early September that was very close to the line. This again shows that the same slope will repeat in the same market. When a market repeats a slope from high to low or low to high, you will be able to locate change in trend points by using this method.
In this discussion I am using the weekly chart for the S&P500. This is the third discussion of the MarketWarrior indicator AT_Planet Lines Top Bottom. This indicator draws a planet line originating from a user selected starting point. The tricky issue, when using this indicator, is setting the slope value for the planet line. This is controlled with the indicator setting Multiply. Most traders are not sure how to set this value. To see the true slope of a planet line, you can set the Multiply value to 1.0. An easy way to set the slope of the planet line is to select a swing from high to low or low to high and adjust the slope until the planet line exactly touches the low and high-end of the price swing.
In the picture below, the low at A and the top at B are being used to set the slope of the Mars line. The slope has been adjusted with the Multiply value 0.84 to make the Mars line touch both ends of the price swing.
In the second picture below, I have used the exact same line and started drawing it from the low at point C. This blue line is a Mars line with a slope value is 0.84. You can see the weekly S&P500 made a bottom at point D on this line. This demonstrates that a line slope will repeat in the same market. This is a very simple and easy way to set the slope value of the planet line that any trader should be able to perform.
The Pitchfork can be used in many ways that are overlooked by most traders. Here is a way to use the Pitchfork to find strong upward moves and potential breakouts. The picture below shows the daily chart for Flextronics (FLEX). I have added a pitchfork on the most recent series of Change in Trend (CIT) points. The Pitchfork has a Median Line and an upper and lower Parallel Line. When the Pitchfork forms on a stock’s daily chart, the price will return to the Median Line approximately 80% of the time. When the Pitchfork is downward sloping as seen below, and the price holds along the Upper Parallel Line and does not return to the Median Line, it is a good indication of market strength. When this occurs the next market move should be a strong upward move. On the chart below I would expect the next market move to take this stock up above 9 dollars.
I had a customer who is using MarketWarrior ask about the current position of General Electric (GE) and if it was a good time to buy this stock. I added the Super-Pitchfork to this chart to judge the present strength or weakness of the current swings. The picture below shows the daily GE stock with the Super-Pitchfork. Notice that in the current set of swings, the price returned to the Median Line as it should, but it then immediately fell hard with two full-bar gaps in a row. Also notice the current set of swings produce a downward sloping Median Line. This shows that the current position of GE is very weak and should not be bought at this time. I would expect this stock to fall until the current set of price swings produces an upward sloping Median Line and the price can return to the Median Line and hold that price. Then the stock will be showing strength.
Below are three pictures for the weekly Alcoa (AA) chart. This will show how to use the Square of Nine method described in Chapter 3 of the book The Definitive Guide to Forecasting Using W.D.Gann’s Square of Nine for long-term trading. To use this Square of Nine method, you need to select a starting point. In this example I have selected the top in July 2007 as the starting point. This method will begin from the starting price and then will draw support and resistance price lines bases on the movement around the Square of Nine. In this example I am drawing just the -180 degree lines and the -360 degree lines.
After the top in July 2007 the price of Aloca fell until it reached a bottom at point A2. This bottom occurred against one the -180 degree lines. The label for this line is marked as A1.
The second picture shows the price moved up from the bottom at A2 and moved up to a top against another -180 degrees line. This top is labeled B in the second picture.
Finally the third picture shows the price of Alcoa has tried to break above the same -180 degree price line but has failed. This has created a choppy top above the Square of Nine line. This top is labeled C on the third chart below. After this the price fell again. I would expect this weekly chart for Alcoa to continue to bounce between these Square of Nine support and resistance levels.
This post is going to discuss one of the most common methods for the Super-Pitchfork Median Line. In this example I am using the daily chart for Alcoa Inc (AA). The Super-Pitchfork is drawn using three Change in Trend (CIT) points. These are labeled 1, 2, 3 on the chart below. When using the Pitchfork you are always watching the price action as it returns to the Median Line after CIT 3. When a market fails to return to the Median Line, it is a bearish signal that a decline may be coming. In this example the price did not touch the Median Line at point A and then it fell back. This indicated a coming decline. In addition to this, Alcoa also made a small top against a Warning Line at point B. The market then fell and made a bottom against another Warning Line at point C. This method to help locate coming declines is one of the most common and effective methods for using the Super Pitchfork. This method is also described in the book The Best Trendline Methods of Alan Andrews and Five New Trendline Techniques.