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Duration is the thing which sinks so many newbies i.e. if it's
overbought/oversold it must therefore go down/up. However all of us see
divergences which go on and on and on ... I've got charts with divergences
which have persisted for the past several years of the bull market.
Indicators which use fixed length time frames are particularly susceptible
to this problem when they encounter strong, extended cycles. I suppose that
one might try using indicators with adaptive timeframes, however that
approach will tend to suffer from failing to recognize the sudden reversal
which frequently follows extended periods of divergence. So far, I've found
it easier to use discretion than to find indicator(s) which solve all of the
riddles.
Earl
-----Original Message-----
From: Ron Augustine <RonAug@xxxxxxxxxxxxx>
To: omega-list@xxxxxxxxxxxxxx <omega-list@xxxxxxxxxxxxxx>
Date: Saturday, November 07, 1998 9:00 AM
Subject: Duration Analysis?
>
>Has anyone worked with this concept? Any specifics as to how it's
>calculated and quantified?
>
>The following was posted to one the TSC forums:
>
>"Tom DeMark's book, New Market Timing Techniques, explores a concept called
>"duration analysis." He uses duration analysis to determine whether or
not
>an overbought/oversold condition on an oscillator is indicating price
>reversal or price continuation. According to his work, a "mild" overbought
>condition (i.e., one that lasts less than five to six consecutive days)
>precedes price reversal, whereas a "severe" condition (i.e., one that lasts
>more than six consecutive days) precedes price continuation.
>
>Obviously, there's a little more to it than that, but you get the idea.
>(Interestingly, my charting of the S&P just fulfilled the severe criteria
>last Friday). It's a fairly simple concept, although the book itself is
>pretty darn complex."
>
>
>
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