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Group:
I am at a loss for understanding the proper techniques described
in the literature for 'rephasing the cycle'. Anyone who has studied
Taylor's ideas knows that the market does not repeat in a simple
cycle of buy day, sell day and sell short day. Here is the problem
I'm having.
1. In "Street Smarts", Chapter 8, LBR introduces the 2-Period ROC
in an attempt to figure out "which day should be a buying day and which day
should be a shorting day". Her rules state that "we want to
go home long if we have been on a sell signal and the price then closes
above this pivot number". The inverse for a sell signal. Her
charts on page 62 and 63 then show how this indicator highlights the two to
three day market cycles to wit: "Notice how nicely Taylor's
rhythm sets up. Point 2--buy day, exit the next day. Point 3--sell short
day, exit the next day. Point 4--buy day, exit the next day. Point 5--
sell short day, exit the next day, etc". Note I pose a question below
that this indicator logic seems to beg her own question.
I have to believe that Linda got this idea from Angell who introduced
what he called the 'Trend Momentum Indicator' in his treatsie titled
"The LSS 3-day Cycle Method: A Day-Trading Approach To The
Markets". The method of calculation, to my understanding, is identical to
the 2-Period ROC.
I am confused about how to use this indicator to rephase the cycle
as discussed by Angell in a section similiarly titled: 'Rephasing the
Cycle'. Although I have read and studied the material, I am still not
certain exactly how to rephase the cycle. Either I am scotomized
from seeing what Angell is trying to describe or his multiple descriptions
and explanations are not clearly written. For example,
he states that "the rule for rephasing the cycle when you use the trend
momentum indicator is simple: each time the trend mometum in-
dicator changes direction, the cycle is rephased. Rephasing involves
going back ten days and taking the lowest low as the new L-day (Buy
Day) and then counting ahead, L-day, S-day, SS-day, and so on."
Further along he says: "Let's say that before rephasing, today was
designated as a SS day; after rephasing, following today's close,
however, today's SS-day becomes an L-day, or Buy Day. Hence,
tomorrow's anticipated cycle day is the following day in the cycle, the
S-day, or Sell Day". Huh? What about the previous 10 day bit? His
attempted explanation, it seems to me, gets more complicated and
at this point I'm not sure if further quotes serve any useful purpose.
What further complicates this issue is once the 'Trend Momentum
Indicator' (2-Period ROC) indicator has fliped or changed directions,
isn't it AFTER THE FACT that now you know the day in question was
a Buy Day AFTER a change to UP and a SS Day AFTER a change to DOWN?
Finally, how does one use this indicator to rephase the
cycle?
Does anone care to provide what must be a simple explanation which
for some reason I cannot seem to understand? Thank you for your
time and attention.
Charles
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