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Ton:
Do you have a chart showing this? It sounds very interesting.
Don Hughes
*********** REPLY SEPARATOR ***********
On 10/21/98, at 4:42 PM, A.J. Maas wrote:
>>Robert McKinnon's article, "Enhancing the Raff Regression Channel," in
>>TASC Nov. 98 describes a technique of looking at the underside of lower
>>Raff channel lines as offering resistance to rallies: ". . . once the
>>support provided by a channel bottom is overcome, the channel bottom
>>becomes a strong resistance line." (Figure 7). In case you missed it,
>>today's (Tuesday's) rally in the S&P 500 (cash) rose to just under the
>>bottoms of five (5) Raff channels, the longest one tracing back to the
>>Dec. 1994 bottom. If McKinnon is correct, this could be a portent of a
>>sharp turn to the downside in the near future.
>
>1. All trendchannels bottom lines through breaches can be seen as support
>becoming resistance (a common standard theory "old resitance becomes support"
>and visa versa, and as such nothing fancy).
>
>2. Metastock build in Raff Regression Channels(-Tool) are not the commonly
>known and used Linear Regression Channels(using as base a periods highest high
>and lowest low as its surrounding bording values).
>Raff RCs are dynamic and as such give the wrong output.
>
>3. Metastock build in Regression Line(-Tool) is dynamic too, and as such is also
>not used as a Linear Regression Line(MEDIAN) or for Linear Regression Channels.
>
>dynamic=adjusts for periodical data input
>median=middle
>
>Whatever the functionalities are of the Metastocks build-in Raff Regression Channels
>and Regression Line Tools are "beats me".
>They are dynamic and when plotted start to float in the charts and do not ever hold their
>original first start point and neither -in time- their last, are as such misleading in the way
>its North or South Regression Channel lines would be the prices or trends support &
>resistance lines, which, from this daily floating in the chart, obviously they are definitly not.
>
>The common Linear Regression Channels(see below), with as its base a periods highest
>high and lowest low as well as the Median, the line in the middle, have been used for
>centuries and provide the real support & resitance.
>And as such either Metastock has got these "mixed up" or just hasn't got around to
>build-in the proper ones.
>
>WorkAround:
>If you want the Linear Regression Channels for Support & Resistance plotted
>properly, use the APF-tool (Andrew's Pitch Fork):
>
>Use a Major Low as starting point, eg "the first point to drag the animitation from" and a
>consequtive All Time High(or last High) as top lines 2nd point and a consequtive Major Low
>as the bottom lines 3td point
>-Place the first point exactly on the Trends starting Major Low
>-Place the second(North) on the Trends highest high
>-Place the third(South) on the Trends next up Major lowest low
>
>Now you have the true Linear Regression Channels.
>
>Rules:
>-An outbreak at the top implies to draw another channel, tiled on top of the APFs 2nd point
> line, done by creating a parallel line with as its width the same distance as can be measured
> from the Linear Regression Line(=Median, line created from the APFs 1st point)
>-An outbreak at the downside also implies to draw another channel, this time attached
> to the bottom APFs 3td point line and created and measured the same way
>
>Both type of outbrakes can be seen as 'suspect' as the trend is accelerating to "unknown
>territory levels" and as such a pull back return to the former channel usualy will be made,
>and a return into the former channel can be seen and interpreted as a very weakening signal,
>with usualy, after its return into the former channel, a pull back attempt to the outer line will
>be made in an attempt to escape from the former channel. If such an attempt has been made
>succesfully, a further trends continuation can be expected, and if the attempt fails
>-another weakening sign- a return to the Median is then to be expected.
>
>------------------------------------------------------------------
>
>As you have discovered we are now at a Major intersection, with lines from all sort
>of directions, coming together at one central point. Also such suspect break to the
>downside has taken place. Here are some of the lines:
>
>Patterns & Lines:
>1095 - former first flag in downtrends support line, now resistance
>1075 - horizontal support in former Broadening Top pattern, now major resitance
>1075 - right shoulders resistance line in former falling Irregular H+Ss pattern
>1075 - flags rising support line, now resitance
>1075 - IMT diamonds falling resistance line
>1075 - Goslin48 - price levels "47 to 48 days ago"
>1070 - LRC rising former support since 1994 (APF-points: 1st 1994-Low,
> 2nd 1998-High, 3td 1996-Low), returning attempt into the former bottom
> channel, now Major resistance
>1070 - SMA200 Long Term Major support, now resistance
>1055 - ST Broadening Bottom diamonds falling resistance line, now support, outbroken
> with a current target to be set at 1200
>
>Indicators:
>MACD - around "0" level(+ =possitive, - =negative), valid trigger buy
>RSI - around 60, support, now resistance, valid trigger buy
>CMO - around +12 (+25 level =support, now resistance), valid trigger buy
>Rally Meter(Osc) - around -0.02 (+ =possitive, - =negative), valid trigger buy
>(All indicators show positive higher 2nd bottom divergences)
>
>BBands-daily chart widening(=more volatility ahead)
>BBands-weekly chart narrowing(=less volatility ahead)
>Rally Meter(LJ1-Mom) - Negative
>Rally Meter(LJ2-Regr) - Negative
>
>Most lines where former Major Support Lines being breached to the downside.
>And with "old support becomes resistance".......................................................
>
>And here is more, it is not only happening in the S&P500, but worldwide on all
>major exchanges indexes.................................
>
>And in bearish markets(Japan&HongKong) indexes as well............................
>
>The in this years top formation build up support level will now become this years
>stiff resistance..................... with the re-testing of latter former Lows to be expected.
>
>Regards,
>Ton Maas
>Ms-IRB@xxxxxxxxx
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