range vs trend and how to predict it

Yes, Razor and flip. There is no holy grail though, the only free lunch is synergy, but this definately has shown some merit the past few years. For example, put up a Mini Russel daily chart, ER2. Plot the indicator with the 8ema. Look at Sep 6, when it broke out over the EMA this year. The following days on the most part expanded in range and you definately got a few openX closeX. It then broke back down below and then broke out again on Sep19. The following days exploded in volatility and were openX CloseX as well. Spend some time with it, and you generally want it to have been beneath the EMA for quite a few days before considering it a decent breakout. I hope this getting leaked wont affect its consistency...
 
Quote from travis:

Here I would like to sum up all the ideas I talked about in the preceding threads, and come up with a conclusion.

The system will weigh pre-open range, pre-open volume and weekday, estimate whether today is a range or a trend day, and then trade accordingly - within support and resistance on a range day, and beyond such levels on a trend day.

Look at the attached picture and tell me if it makes sense to you that on a given day an intraday system should be permitted either trend or range trading and never both.

According to this concept, this week would have seen trades within support and resistance on thursday and friday, and trades beyond S & R on the first three days of the week. (That is, it would have done so provided that the "pre-open weighing" method worked and predicted correctly which were trend and range days).

On the picture, you see daily candlesticks of the Dow Jones for this week. You can also see "micro-seasonality" at work. Just as August and December, also Thursdays and Fridays tend to be range days, and they were on this occasion.

By the way, it can't be seen in the picture, but this week confirms my assertions and tests that say that the larger is the range on a day, the larger is the volume (it happens on monday, tuesday, wednesday). Also, I have verified once more that pre-open volume is directly proportional to the final daily volume, and that the pre-open range is directly proportional to the final daily range. In other words, the "pre-open weighing" method predicted correctly the whole week.
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The answer is not in the charts. The anwser lies in the news. Go find your trend days and look to see what the news was. What reports were given that day. Look to see if it was end of month, qtr, year. Look to see if it was during earnings. Look to see what happend that day. Go look for events that cause trending days.

John
 
John,

Interesting perspective.....some TA purists will argue that before an economic release day that things will tighten up as everyone sits on hands before the release and then once the news is out the the range expansion will begin....this will obviously be shown in the charts as range bound days prior to the economic report (trading under the 8ema) followed by an expansion day (where it breaks above the 8ema).....the TA purists will argue it's all in the charts / price action :D
 
Quote from Razor:

John,

Interesting perspective.....some TA purists will argue that before an economic release day that things will tighten up as everyone sits on hands before the release and then once the news is out the the range expansion will begin....this will obviously be shown in the charts as range bound days prior to the economic report (trading under the 8ema) followed by an expansion day (where it breaks above the 8ema).....the TA purists will argue it's all in the charts / price action :D
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Charts are shadows of events that drive money flow into its proxies, stocks, bonds, gold etc.

Get the list of monthy reports. Do some research on which ones are real movers. Pay attention of the end of month, first day of next month, end of qtr, first day next qtr. Pay attention to earnings the 6 weeks or so after the qtr ends.

John
 
John,

Thanks again for the interesting points. I am going to look into this.

apex,

Can you double check your ER2 daily chart for the Sept 6th break above 8ema, I don't see it (something could be setup wrong on my charts). I see the break on Sept 19th and continuation above after the break. I have posted a pic of my chart:

2it5y6f.png



Cheers :D
 
http://biz.yahoo.com/c/ec/200636.html

That is a link to the reports due out on the sept 6, also was that labor day?

Sep 6 8:30 AM Productivity-
Sep 6 10:00 AM ISM Services
Sep 6 10:30 AM Crude Inventories 09/01
Sep 6 2:00 PM Fed's Beige Book


http://biz.yahoo.com/c/ec/200638.html is for the 19th.

Sep 19 8:30 AM Building Permits
Sep 19 8:30 AM Core PPI Aug -
Sep 19 8:30 AM Housing Starts
Sep 19 8:30 AM PPI


John


See this is the non random nature of the markets. When markets move their are reasons for it. If a market appears to be trending ask yourself why should it be. If they reports out there that support the move jump on board and don't fade.

If no news to support a move in any direction the play support and resistance.

Learn to understand what news is important and which is not.

John
 
John,

I like this idea. Do you have a general list of important news releases that can give clues to possible trend moves ?
 
Quote from Razor:

John,

I like this idea. Do you have a general list of important news releases that can give clues to possible trend moves ?
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I don't know them that well, however I found a web site one time that went through all of them and what day of the month they came out and which are really important and which ones are not.

I will look for it again and I find it I will post.

However, now matter what the standard myth is about a certain report it has to be taken in context of the general climate.

For instance, a big reduction in oil inventories won't matter as much when oil is 30 bucks a barrel like it will at 75 bucks etc.

John
 
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