The ACD Method

Quote from Maverick74:

There really are no magic levels. As I've said before, ACD is a price action based system. Our levels could be off by 5 or 10 ticks but I'm pretty certain we would be in agreement about the relative strength or weakness of any given product.
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But you are making specific calls to the pip/tick and noting how price has reacted to those levels. Certainly you can adjust the time frame in question and get different levels, but that's not a novel observation.

How is what you're saying different from "a cup & handle can be measured on different time frames"?

In other words, how are the principles of ACD any different from those of TA?
 
Quote from Samsara:

But you are making specific calls to the pip/tick and noting how price has reacted to those levels. Certainly you can adjust the time frame in question and get different levels, but that's not a novel observation.

How is what you're saying different from "a cup & handle can be measured on different time frames"?

In other words, how are the principles of ACD any different from those of TA?
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Sure. The levels I use in particular will work very well when volatility is pretty constant as it's a volatility based system. But they don't have to be to the tick. There are many unique factors that distinguish ACD from standard TA. The opening range cycles are "significant" and can be quantified. The system adjusts to current volatility. The time confirmation confirms volatility and price. And the volatility allows one to have price targets. At the end of the day, it either helps you read price action or it doesn't. Like I said, the levels are not magic. I taught the system to many guys in my office and the levels didn't do shit for them.

Because of the simplicity of the system it's very easy to compare different products against each other. That's very hard to do with standard TA. So AAPL has a cup and handle but GOOG doesn't. So what do you do? NFLX broke it's 50 day moving average but so have 50 other stocks. So now what?

As an option trader, I see the market through the lens of volatility. That is probably why ACD is so intuitive to me. If one is enamored with fundamentals or oscillators, this will be hard to pick up.
 
Quote from Samsara:

But you are making specific calls to the pip/tick and noting how price has reacted to those levels. Certainly you can adjust the time frame in question and get different levels, but that's not a novel observation.

How is what you're saying different from "a cup & handle can be measured on different time frames"?

In other words, how are the principles of ACD any different from those of TA?
More...

I'm only a rank beginner in ACD (and its close cousin, Tony Crabel's opening range breakout), but I'll take a swing at this: The entire foundation of any opening range breakout strategy is a mathematical analysis - there are an unnaturally high number of days where the open is either the high or low of the day. The entire ACD strategy is built around exploiting that anomaly.

The follow-on observation is that, if price moves "enough" from the open, the probability of the open being the high or low of the day goes up even more. The "A" levels are rough approximations of "moving enough."

"Day" could also mean "week" or "month." Supposedly this aberration holds true for most timeframes.

Mr. Fisher also adds a bunch of other techniques on top of that (I haven't even scratched the surface there), but this simple statistical anomaly gets you 80% of the way there.
 
Mav, i'll catch catch you at Ceres on thurs or Fri (if u aint busy), let me know i'll be on LaSalle these next few days with some CBOE option guys.

Was long the aug1300Calls, sold em around $11 after we traded back below todays (7:30ct) OR on ES...and flipped and got long some 1250 Sept Puts...still holding..MAJOR LEVEL ON THE SPOOZ isnt the 200MAday, it the YR Opening Range....IMO..get at me cuz, @jdax414 twitter
 
Quote from jsmooth:

Mav, i'll catch catch you at Ceres on thurs or Fri (if u aint busy), let me know i'll be on LaSalle these next few days with some CBOE option guys.

Was long the aug1300Calls, sold em around $11 after we traded back below todays (7:30ct) OR on ES...and flipped and got long some 1250 Sept Puts...still holding..MAJOR LEVEL ON THE SPOOZ isnt the 200MAday, it the YR Opening Range....IMO..get at me cuz, @jdax414 twitter
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Thursday will be nice weather. Outdoor patio at Ceres sounds great! I'll hit you up on twitter.
 
So the monthly A down in the spoos is 1252. If we close above there today then we did not confirm and this will more then likely be a short term low for the market. Textbook wick on the monthly A down. The Wicks are the perfect signals at failed A levels. Classic.

A bounce in the market should put some pressure on bonds and that 132 level today "should" be a short term high. But we did confirm on the monthly so I would be looking to buy any failed weekly A downs in the following weeks.
 
Quote from Maverick74:

Watch the 30 year bonds. We confirmed a monthly A up and we failed at the weekly about 4 times but then broke above today. Tomorrow is the last day of the month which means we get new levels next week. I get the feeling the world is massively short bonds and the price action is very strong. These bonds could really explode to the upside regardless of the debt ceiling news. This is the trade to watch in my opinion. I think everyone is leaning the wrong way. I would look at the weekly levels next week after we get the news to take action.

Spoos are sitting on their monthly levels. We already bounced off of them twice to the tick. But with tomorrow being the end of the month, I would wait for next month's levels to take action.
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So that concludes the bond trade. The above was from Aug 28th.

fut_chart.ashx
 
Quote from Maverick74:

So the monthly A down in the spoos is 1252. If we close above there today then we did not confirm and this will more then likely be a short term low for the market. Textbook wick on the monthly A down. The Wicks are the perfect signals at failed A levels. Classic.

A bounce in the market should put some pressure on bonds and that 132 level today "should" be a short term high. But we did confirm on the monthly so I would be looking to buy any failed weekly A downs in the following weeks.
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Let me comment on this last thing. A poster was asking about absolute levels earlier. So I had 1252 for the monthly A down. It could have been 1255 or 1241 or 1260 for that matter. It's all about the price action. When I look at all the stocks I watch, I would say 80% of them put in failed monthly A downs on wicks today. Plus add the volume spike, the action in the vix (volume not price) and one could discern that today was a probable bottom barring taking out today's low tomorrow or Friday.

This was the point I was trying to make earlier about different people having different levels yet all reaching the same conclusion. It's not about the exact price level but rather how the market is acting around those price levels.
 
The TED spread over the last 3 days popped over 50% from 16 to 26 which is the high end of the "normal" range. That's a pretty big pop and demonstrated better then the VIX the fear and panic. The VIX did some very nice volume though even though we couldn't break 25.
 
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