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<font size=2>Realtraders,<br>
<br>
Do to the large number of requests for the Symmetry Wave
information, I have decided to convert it to text format and send it
directly to the RT Forum. Hopefully this message maintains its
proper formatting.<br>
<br>
Further, my write up is not a manual but simply my interpretation
on a trading method that I have been working with for several years, as
many of you know.<br>
<br>
Finally, for those who received yesterdays mailing of the
explanation, I have added some more Q&A's regarding 'overextended
wave structures' and down trending markets, see below. <br>
<br>
John Boggio<br>
<br>
NOTE: The following messages were past posting to the
RealTraders Forum which I, in part, explain the Symmetry Wave
Trading Method of analysis. They're informative, but not complete
with respect to its content. For those who really want a complete
understanding, I would recommend the book, "The Symmetry Wave
Trading Method" by Michael Gur Dillon - the developer of the trading
system.<br>
<br>
NOTE #2: The below examples were analyses which I wrote in real-time
(1995-96) and were not in 20/20 hindsight. However, I have tried
updating some of the information to give further insight and
clarification. Therefore, when reading the below information please
adjust accordingly.<br>
<br>
Thank you,<br>
John Boggio<br>
<br>
Part 1<br>
Question: What is Symmetry Wave?<br>
<br>
Essentially, Symmetry Wave (SW) or SymWave is used as a means to organize
and gain a new perspective of a market. It provides a unique insight into
the price action and overall structure of a developing trend.<br>
The avenue in which you trade using this method is to buy (lets consider
a long position) on the completion of wave 4 retracements. Wave 4
(or 6 or 8) is a retracement wave that has the same amplitude/magnitude
decline as was seen in a previous (original wave) Wave 1-2.
Basically, I measure past retracements and compare them to future
retracements to determine when a bottom may be in place. <u>What I find
interesting with Symmetry Wave, is that we are measuring the
magnitude/amplitude of chaotic behavior based on past emotional market
reactions.</u> Therefore, when we approach an oversold condition
via oscillator or indicator, and the market becomes <i>chaotic and
climatic</i>, we will know where to expect the retracement to end, thus
allowing us to combine a time and price projection into our trading
system.<br>
<br>
<br>
As an example, if you take a look at a chart of the S&P 500 Cash,
you'll see on 1/31/94 the S&P had a high at 482 and on 4/4/94 a
low of 435. This measures 47 points. If you now look at the
high of 681 on 5/23/96 and the low of 606 on 7/16/96, you get a 75 point
decline. Note: When working with proportional markets, you can
calculate declines on a point basis but as a market moves outside its
trading range (as in this case), then calculate magnitude declines on a
Percentage basis to more appropriately measure price movement and
investor behavior. Therefore, the first 47 point wave converts to a
decline of 9.75% while the second wave of 75 points converts to an
11.01% decline. As a rule, when using Symmetry Wave analysis, there
is a leeway buffer of +/- 20% of the initial wave. Therefore, if
you take the original 9.75% decline and multiply it by 20%, you get a
leeway of 1.95%.. Now, add and subtract this 1.95 to 9.75 and you
get a target zone of 7.80 11.70%. Our present decline
measures 11.01%, and therefore falls within the target zone and a bottom
may be in place! Thus we have a symmetrical match. Using the early
entry trading method, you would begin taking a long position at this
point. <br>
<br>
Question: How does Symmetry Wave differ from Elliott Wave?<br>
<br>
Answer: SymWave differs from the Elliott Wave theory in that it
organizes SIMILAR-SIZE RETRACEMENT WAVES together rather than DIFFERENT
SIZE RETRACEMENTS WAVES. This allows for a more quantitative system
for counting waves and predicting bottoms of price swings. Because
Elliott Wave theory matches different size retracement waves, it is
subjective. Therefore, Elliott Wave can have several wave counts
for a market and as the market evolves, the wave counts frequently
change. Thus making it more difficult to anticipate bottoms of price
swings. Further, Elliott Wave theory lends itself to several
variations of wave counts and often to hindsight curve-fitting of past
data. With Symmetry Wave, two similar-size waves HAVE TO BE categorized
together. Therefore, there cannot be any curve fitting to past
data. The Symmetry Wave theory is a forward-looking trading method
which anticipates the most likely support and resistance price
levels. Its large structure accommodates and explains the markets' zigs
and zags, and lets you know how far along a market has developed. Once a
market is organized using SymWave, in conjunction with the trend, it will
provide you with a new perspective on the market<br>
<br>
<br>
Question: What time frame should I use for SymWave?<br>
<br>
Answer: This analysis works for all markets, including
stocks, commodities and mutual funds. And works on ALL time frames. I
have been using it on monthly charts to intraday 20 and 60 minute charts
with great forecastability.<br>
<br>
<br>
Question: Where can I find more information?<br>
<br>
Answer: If you are looking for more info on Symmetry Wave, I highly
recommend the book, The Symmetry Wave Trading Method by Michael Gur
(developer), cost is $65 and you can contact him at 303-449-4601 to get
the book. I have no affiliation with him or any service he may
offer.<br>
<br>
Question: Could you explain overextended wave structures in greater
detail?<br>
<br>
Answer: Simply this: As a wave structure continues to repeat and
mature (past an Wave 7-8 count), it becomes less reliable in supporting
symmetrical declines. Therefore, the proper method for trading such
structures is this:<br>
1. Wait for the original Wave 1-2 to form. Where Wave 1 is a
pronounced high and Wave 2 is a pronounced low. At this point no
position is taken.<br>
2. As the market rallies from the Wave 2 bottom, it must rally higher
than the Wave 1 high. Once that takes place, you simply wait for a
pullback in price action that equals the magnitude of the Wave 1-2
retracement, +/- the 20% leeway buffer. When this occurs, your
first and most reliable buy signal is generated (the bottom of Wave
4). You could use either an early entry method to enter the market
(one in which you buy as soon as the pullback falls within the leeway
zone) or you could use a late entry method (where you wait for
confirmation of a bottom using various indicators or oscillators and the
symmetrical decline has now bottomed and is heading higher).
Personally, I like to use a combination of both methods in my
trading. I enter a partial position using the early entry method
and add to my position upon confirmation. Remember, this Wave 3-4
retracement is you MOST RELIABLE/ DEPENDABLE symmetrical wave buy
signal. Important, your protection against financial loss is to set
a protective sell stop just below the maximum leeway zone of the original
wave. Personally, I combine the maximum leeway zone with any
Fibonacci supports zones or classical chart formations to determine my
exact protective sell stop area...I hate setting it too close only to
have the market reverse and head back up.<br>
3. From the Wave 4 bottom, the price action typically leads to a
new high, higher than the Wave 3 top. Depending on the time frame
that you are following, you should move your protective sell stop into a
protective trailing stop. For short term traders, you should move
it closer to the current price action. For long term investors, you
may want to keep it just below the 20% leeway zone so as not to be
stopped out of a long term position too soon. As the market
continues to advance above the Wave 3 high, continue to let it
ride. Once the price runs into resistance or becomes overbought,
you then forecast the symmetrical retracement based on original Wave
1-2. As the market continues to correct and falls within the target
zone that we forecasted, wait for a bottom to develop. Reason; the
wave structure is now at a Wave 5-6 count (bottom) and the early entry
method is not recommended. If confirmation of a bottom takes place,
you could again go long or add to your original position.<br>
4. As the market continues to advance (form the Wave 6 bottom), moving
the trailing stop is definitely recommended, even for the longer term
investor.<br>
5. If a new high (higher than Wave 5) is made, there is a high
probability that the existing wave structure will again produce/provide
support to a future decline BUT <b><u>do not</b></u> use this Wave 8
bottom as a buy signal. As more often than not, the ensuing rally
from the Wave 8 (or let's say a Wave 10 ) bottom will eventually fail and
as such lead to a larger decline. Note, typically the price action
will find temporary support at the symmetrical target zone based off the
original wave, but that is normal considering symmetry wave is trying to
measure the investors emotional reactions to current market declines and
as such, investor are reluctant to sell as they have become accustomed to
buying the dips.<br>
6. Once you get a failure of a wave structure, whether it be at a Wave 6,
8, or 10 bottom, your next goal is to look at the larger picture to find
the next previous wave structure and then look for the current decline to
fall within THAT symmetrical structure. If it does, then
identify which wave bottom is forming and go long if it is a Wave 4 or
6. If it is a Wave 8 or 10, don't look to buy it but see if there
is a broader trend change that may be taking place.<br>
7. If the current decline does NOT match an previous symmetrical
magnitude, then you very well may be in the creation of a NEW original
wave structure. If this is the case, go to step number 1 above!
<br>
<br>
Question: Does Symmetry Wave work in a down trend?<br>
<br>
Answer: YES, just identify a bounce in a downtrend to determine the
original wave structure. Then wait for a new low (a low lower than
the first bottom) followed by a symmetrical match of the subsequent
bounce. At which point you would go SHORT (at the Wave 4
TOP). However, please remember to maintain an overall proper
perspective of the major trend and the time frame for which you are
trading. As an example of recognizing a symmetrical relationship in a
downtrend, let's take a look at the S&P 500 Cash as of 2/29/00.
Note, I am looking at a 60 minute chart.<br>
<br>
As you know the market made an all time high on 1/3/2000 at 1478
and a low on 1/5/00 at 1378. However, the rally from the 1378 (Wave
1 bottom) failed to exceed the 1478 high and on 1/14 the market
topped and began to rollover. This time at 1473 (Wave 2 TOP).
Since this decline is within the current trading range of the market, we
can use a point basis calculation. In this case the RALLY measured
95 points. From the Wave 2 top, the market continues to decline
(lower than the 1/5 bottom) and stops on 1/31 at 1350 (Wave 3
bottom). Knowing that we want to apply symmetry wave analysis to
this market, we would expect the next rally or bounce to find symmetrical
resistance 95 points +/- 19 points (20%) from the Wave 3 bottom.
Therefore, to determine the target zone, take the 1350 Wave 3
bottom and add 95 points +/- 19 point and you get a target zone on the
S&P Cash of 1426 to 1464 with an exact symmetrical retracement at
1445. Well, between the period 2/8 and 2/9/00, the market formed a
top and again rolled over at the 1443. Just 2 points from an exact
match. This 1443 resistance has now formed a Wave 4 top and a short
position can be taken. As expected the market rolls back into a
decline and continued southward to the low set 2/28/00 at 1325 (possibly
a Wave 5 bottom). If this bottom holds, how much of a rally or
bounce can I expect. Simple, 95 points +/- 19 points. At
which time the rally will probably stall and possibly form a Wave 6
top. Looking to add to a short position can be considered but based
on the fact that the OVERALL PRIMARY trend is UP, the short sale of a
Wave 6 top, should be watch closely with a tight protective stop.<br>
<br>
Personally, I am a little skeptical as to whether the 2/28 low at 1325
will hold. Reason being, as noted below, the previous bullish
symmetrical structure which measures 13.10% and originated with the
October 1998 wave structure, has yet to be achieved. To date (based
on the 2/28 low), the market has declined (10.35%) and falls just outside
the minimum leeway buffer. If a symmetrical relationship were to
come to fruition, the S&P most likely will have to
decline into the 1300-1320 level on a climatic or capitulating selloff
before an intermediate uptrend could begin. This uptrend could take
us to new highs culminating with a possible top in May/June 2000.
But don't forget that the market will run into resistance 95 point +/-
from the low....trading it according could prove profitable.<br>
<br>
John Boggio<br>
PS Please remember, if you try to use SW on a market that has made
significant gains between the waves you are measuring, then use a
percentage decline instead of a point decline.<br>
<br>
<br>
<br>
<br>
<br>
Part 2<br>
<br>
The Following is an extract of another SymWave posting. <br>
<br>
In a message dated 96-04-18 11:00:30 EDT, you write:<br>
Question: How do you know which correction to use for present
analysis?<br>
<br>
Answer: Simple, you start off with the largest wave magnitude on
long term charts and then keep on identifying smaller waves as they
develop. When I refer to waves, I am talking about a pronounced
high as a top which would be labeled as Wave 1 and then when we get a
pronounced low, that is Wave 2. If the<br>
Market makes a new high, higher than Wave 1, we begin looking for a top,
anytime in the future. Once we see a potential top and the market
corrects, we will be looking for a decline similar in magnitude to Wave
1-2. If the market does not correct in size to Wave 1-2, + or - 20%
and then begins a new upleg, we have now formed a smaller subset of
internal waves within the primary trend. This subset will now be
labeled, let's say, Wave i - ii. If a new high is again formed,
then Wave i - ii would be the primary wave structure in which we would
begin using for the next future retracement. This internal wave
formation can continue for as long as you follow the waves to a smaller
and smaller degree.<br>
<br>
Here's an example. Wave 1-2 measures 50 pts in a decline.
Then the market makes a new high above Wave 1 and then begins to
correct. The correction is only 25 points. Since the decline
did not measure 50 pts +/- 20% then a new wave is formed. This will be
called Wave i - ii (25 pts). Now the market continues to go up to
new highs and again tops and declines, let's say 15 points. Again,
this decline does not equal the 25 point decline that we are now looking
for from Wave i - ii. Hence a new wave has begun, this new wave
will be called Wave A - B and measures 15 points. Doesn't this
sound familiar to the 1995 market advance. Let's do one more.
A new high is formed above the top of Wave A (this new high will be
called wave C) and the market begins to correct. This time the
market declines 17 points. This decline "matches" the
decline of wave A -B (15 pts +/- 20%). Therefore, our trading
signal will be given at the bottom of Wave D ( or 17 pts from the
high). So, go long!! If the market continues to decline
further than the +20% leeway of Wave A - B (in this case, 18 pts (15 x
20% = 3, 3 + 15 = 18) from the high of wave C, you get stopped out of the
trade). Let's say the market holds at 17 pts and rallies but fails to
make a new high and again declines. This time the decline passes
through the 18 pt decline from the high. Hopefully, you had a trailing
stop and locked in profits on the trade. Since the decline is now
greater in magnitude than Wave A - B, our previous Wave i - ii of 25 pts
is now our target, +/- 20% of 25pts from the all-time high. If the
market trades to that level, look for a confirming bottom i.e. Fib
support, oscillators, indicators etc. and then go long. It's that
simple!! Obviously, there are more trading rules, but this should
give you a basis for using/following Symmetry Wave Analysis. As
well as my follow-up messages that I will be posting to
RealTraders.<br>
<br>
<br>
Question: Do you make use of Michael Gur Dillon’s ATR (average true
range) to classify the wave into “major" degree? <br>
<br>
Answer: I really don't use the ATR (average true range) in my
analysis. Reason, when the original wave, of whatever degree, appears
distinctive enough on the charts, I will then use that decline for my
analysis.<br>
<br>
<br>
Question: Do you consider breaking beyond a major wave to be a change of
trend? If so would you still keep track of the various waves of the
previous trend so as to know where this change in trend will be meet with
a much larger degree trend? <br>
<br>
Answer: If is understand your question correctly, once a decline
(in the case of an up trending wave structure) EXCEEDS the original wave
decline by 20% (leeway), that 'original' wave structure is no longer
valid. If it exceeds it by just a small amount, I might reconsider but
seldomly do. As this new decline exceeds the 20% level, then this decline
WILL BECOME a NEW wave structure (if it does not find support at any
other past symmetrical declines). Further, once this new decline becomes
greater in magnitude then recent past declines, all past SMALLER past
wave structures become invalid and you should not look at them for
guidance. (I think the last sentence answered your question...) <br>
<br>
<br>
Question: It seems to me that there will always be smaller trend
within larger trends and Gur only goes into one level of trend. It
appears to me the largest wave he is concerned of is the
"major" trend. <br>
<br>
Answer: Actually it has been well over a year since I read his book
and am not sure as to how many smaller structures within a trend he looks
at. But in my own experiences, I do look for various trends within
the 'major' trend and almost always incorporate them into my analysis.
The key is to remember what the longer term trend is, so that you can
keep the proper perspective.<br>
<br>
<br>
Finally, I have updated the S&P 500 Cash market to reflect current
market conditions from the crash of 1987 to present (2/27/2000).
Hopefully by reading it, you will get a better understanding of
Symmetry Wave in practical terms.<br>
<br>
The <b>Bold</b> highlighted text was rewritten 2/27/2000 and brings us up
to date with current market conditions:<br>
<br>
<b>Let me now update you on the current market, going all the way back to
1987: As for the 1987 decline, the S&P 500 Cash market measured a
high of 338 on 8/25/87 and a low at 217 on 10/20/87. This decline
is 121 points. Since this market has made such a great advance over
the last decade and the 121 point decline is not that great in today’s
terms, we need to convert this decline into a percentage basis.
Which calculates to a 36% decline, +/- 20% or a 30% to 43% target
zone. <br>
<br>
Now for the 1990 decline, our high was at 370 on 7/16/90 and our low was
at 295 on 10/11/90. This measures 75 pts but upon conversion to a
percentage basis we get a 20.3% decline. As you can see, this
decline did not fall with the 1987 target zone therefore, a new internal
wave is formed. Its target zone for future declines will be 20% of the
20.3% decline or 16.2% to 24.4%. Again, let's move forward to the
1994 high at 482 on 2/3/94 and a low at 435 on 3/31/94. It measured
47 pts or 9.75%. On a % basis, the decline will set a target zone
of 7.8% to 11.7% from the highs in the S&P 500. Hence forming a
third subset on internal wave structures since the 1987 crash. <br>
<br>
When we advance to the 1996 pullback, we had a high set at 681 on 5/23/96
and a low at 606 on 7/16/96. This magnitude decline measured 11.01%
and FALLS WITHIN the 1994 wave structure when adding the leeway buffer….a
SYMMETRICAL MATCH and buy signal is issued. Once the market completed its
decline (down 11.01%), the market ultimately rallied to a new high on
2/19/97 at 818. Once that high was formed, the market again rolled
over and on 4/14/97 corrected to a low of 734. This 1997 decline
equaled 10.27% and AGAIN found symmetrical support based on the original
1994 Wave structure, another continuing buy signal is issued.<br>
<br>
Later in 1997 the market once again rallied to a high of 983 on 10/8/97
with a subsequent low of 855 on 10/28/97. When you calculate this
drop, you get a 13.10% decline which is just slightly greater than the
original 1994 wave structure which measured 9.75% plus the leeway of 1.95
percentage points for a total of 11.70%. Therefore, technically a
failure of the 1994 wave structure occurred by a margin of 1.32%.
Unfortunately, that failure resulted in an intraday sell signal that
proved inaccurate because by the close, the index rallied 75 points from
it low and subsequently formed a bottom that propelled the market to new
highs once again. Upon looking back at this event, I would now tend
to group this October 1997 wave structure WITHIN the 1994 subset of waves
that I illustrated above. Thus making that structure an 8 wave
count, where 1994 was Wave 1-2, 1996 was Wave 3-4, February 1997 was Wave
5-6 and October 1997 was Wave 7-8. However, no new buy signal would
have been issued due to the overextension of the structure or the fact
that it declined greater than the 1994 original wave even though we can
now categorize it within that structure (more on this shortly).<br>
<br>
Once the October ’97 low was formed, the market rallied to another new
high on 7/20/98 at 1191. From that high the market began to correct
and on 8/5/98 formed a low at 1057. This decline AGAIN measured
11.25% and symmetrically matched all previous declines since 1994 as one
would expect. However, within the Symmetry Wave trading method, one
comes to understand that as a wave structure matures past a wave 6 count,
the ensuing wave structure become overextended and less reliable in
maintaining its stability. In this case, the 1994, 9.75% wave
structure is now at a 10 wave count and would be considered extremely
overextended. As such, no buy signal would have been generated (for
that matter, no buy signal would have been generated for the October ’97
decline either). Following the 8/5/98 low, the <u>market failed to
rally for several weeks</u> and then on 8/27/97 the index decisively
broke below the 1994 symmetrical support leeway zone and clearly issued a
sell signal.<br>
<br>
Now that the ’94 wave structure is completed, we must then look to the
previously larger wave which was the 1990 Wave structure which measured
20.0%. Well, guess what…the 1998 high to low measured 22.5%, with
the low being formed on 10/8/98 at a level of 923 (923/1191 = 22.5%) and
symmetrical matches the 1990 wave structure. Therefore, in today’s
terms, the 1990 wave structure is at a 4 wave count which issued a
<u>major buy signal</u> at that time.<br>
<br>
Again moving forward from the October ’98 low, the market has formed an
internal subset wave structure with a high at 1420 on 7/20/99 and a low
at 1234 on 10/18/99. This decline measured 13.10% +/-2.62% for a
total leeway of 10.48 15.72%, and would represent an original
wave structure which has yet to be match on a symmetrical basis.
<br>
<br>
</font><font size=3>Finally, the market reached an all-time high of
1478 on 1/3/2000. As of 2/28/00, the S&P 500 has declined to a
level of 1325 which measures 10.35% or just outside the anticipated
targeted symmetrical decline. Therefore, as I write this, I am
looking to be a buyer of the S&P if I can get a little bit more of a
decline in this index…somewhere around the 1300 - 1320 level in the Cash
market. <br>
<br>
If this were to occur, a new buy signal would take place at that
point. If no new highs are made, one would set a protective sell
stop below the market at approximately the 1235 level on the Cash
market. Personally, I believe we are very close to establishing a
short to intermediate term low in the Dow and S&P 500. The
ensuing rally could last until May/June 2000 at which point the summer
months could prove very troublesome for all US indices.<br>
<br>
</b>That's all Folks!!<br>
I hope the above information becomes useful in your trading style, if
not, well then I hope you at least found it enjoyable to read.<br>
<br>
Sincerely<br>
John Boggio</font><br>
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Subject: [RT] SymWave Explained 2/29/00 with additional MKT analysis
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<font size=2>Realtraders,<br>
<br>
Do to the large number of requests for the Symmetry Wave
information, I have decided to convert it to text format and send it
directly to the RT Forum. Hopefully this message maintains its
proper formatting.<br>
<br>
Further, my write up is not a manual but simply my interpretation
on a trading method that I have been working with for several years, as
many of you know.<br>
<br>
Finally, for those who received yesterdays mailing of the
explanation, I have added some more Q&A's regarding 'overextended
wave structures' and down trending markets, see below. <br>
<br>
John Boggio<br>
<br>
NOTE: The following messages were past posting to the
RealTraders Forum which I, in part, explain the Symmetry Wave
Trading Method of analysis. They're informative, but not complete
with respect to its content. For those who really want a complete
understanding, I would recommend the book, "The Symmetry Wave
Trading Method" by Michael Gur Dillon - the developer of the trading
system.<br>
<br>
NOTE #2: The below examples were analyses which I wrote in real-time
(1995-96) and were not in 20/20 hindsight. However, I have tried
updating some of the information to give further insight and
clarification. Therefore, when reading the below information please
adjust accordingly.<br>
<br>
Thank you,<br>
John Boggio<br>
<br>
Part 1<br>
Question: What is Symmetry Wave?<br>
<br>
Essentially, Symmetry Wave (SW) or SymWave is used as a means to organize
and gain a new perspective of a market. It provides a unique insight into
the price action and overall structure of a developing trend.<br>
The avenue in which you trade using this method is to buy (lets consider
a long position) on the completion of wave 4 retracements. Wave 4
(or 6 or 8) is a retracement wave that has the same amplitude/magnitude
decline as was seen in a previous (original wave) Wave 1-2.
Basically, I measure past retracements and compare them to future
retracements to determine when a bottom may be in place. <u>What I find
interesting with Symmetry Wave, is that we are measuring the
magnitude/amplitude of chaotic behavior based on past emotional market
reactions.</u> Therefore, when we approach an oversold condition
via oscillator or indicator, and the market becomes <i>chaotic and
climatic</i>, we will know where to expect the retracement to end, thus
allowing us to combine a time and price projection into our trading
system.<br>
<br>
<br>
As an example, if you take a look at a chart of the S&P 500 Cash,
you'll see on 1/31/94 the S&P had a high at 482 and on 4/4/94 a
low of 435. This measures 47 points. If you now look at the
high of 681 on 5/23/96 and the low of 606 on 7/16/96, you get a 75 point
decline. Note: When working with proportional markets, you can
calculate declines on a point basis but as a market moves outside its
trading range (as in this case), then calculate magnitude declines on a
Percentage basis to more appropriately measure price movement and
investor behavior. Therefore, the first 47 point wave converts to a
decline of 9.75% while the second wave of 75 points converts to an
11.01% decline. As a rule, when using Symmetry Wave analysis, there
is a leeway buffer of +/- 20% of the initial wave. Therefore, if
you take the original 9.75% decline and multiply it by 20%, you get a
leeway of 1.95%.. Now, add and subtract this 1.95 to 9.75 and you
get a target zone of 7.80 11.70%. Our present decline
measures 11.01%, and therefore falls within the target zone and a bottom
may be in place! Thus we have a symmetrical match. Using the early
entry trading method, you would begin taking a long position at this
point. <br>
<br>
Question: How does Symmetry Wave differ from Elliott Wave?<br>
<br>
Answer: SymWave differs from the Elliott Wave theory in that it
organizes SIMILAR-SIZE RETRACEMENT WAVES together rather than DIFFERENT
SIZE RETRACEMENTS WAVES. This allows for a more quantitative system
for counting waves and predicting bottoms of price swings. Because
Elliott Wave theory matches different size retracement waves, it is
subjective. Therefore, Elliott Wave can have several wave counts
for a market and as the market evolves, the wave counts frequently
change. Thus making it more difficult to anticipate bottoms of price
swings. Further, Elliott Wave theory lends itself to several
variations of wave counts and often to hindsight curve-fitting of past
data. With Symmetry Wave, two similar-size waves HAVE TO BE categorized
together. Therefore, there cannot be any curve fitting to past
data. The Symmetry Wave theory is a forward-looking trading method
which anticipates the most likely support and resistance price
levels. Its large structure accommodates and explains the markets' zigs
and zags, and lets you know how far along a market has developed. Once a
market is organized using SymWave, in conjunction with the trend, it will
provide you with a new perspective on the market<br>
<br>
<br>
Question: What time frame should I use for SymWave?<br>
<br>
Answer: This analysis works for all markets, including
stocks, commodities and mutual funds. And works on ALL time frames. I
have been using it on monthly charts to intraday 20 and 60 minute charts
with great forecastability.<br>
<br>
<br>
Question: Where can I find more information?<br>
<br>
Answer: If you are looking for more info on Symmetry Wave, I highly
recommend the book, The Symmetry Wave Trading Method by Michael Gur
(developer), cost is $65 and you can contact him at 303-449-4601 to get
the book. I have no affiliation with him or any service he may
offer.<br>
<br>
Question: Could you explain overextended wave structures in greater
detail?<br>
<br>
Answer: Simply this: As a wave structure continues to repeat and
mature (past an Wave 7-8 count), it becomes less reliable in supporting
symmetrical declines. Therefore, the proper method for trading such
structures is this:<br>
1. Wait for the original Wave 1-2 to form. Where Wave 1 is a
pronounced high and Wave 2 is a pronounced low. At this point no
position is taken.<br>
2. As the market rallies from the Wave 2 bottom, it must rally higher
than the Wave 1 high. Once that takes place, you simply wait for a
pullback in price action that equals the magnitude of the Wave 1-2
retracement, +/- the 20% leeway buffer. When this occurs, your
first and most reliable buy signal is generated (the bottom of Wave
4). You could use either an early entry method to enter the market
(one in which you buy as soon as the pullback falls within the leeway
zone) or you could use a late entry method (where you wait for
confirmation of a bottom using various indicators or oscillators and the
symmetrical decline has now bottomed and is heading higher).
Personally, I like to use a combination of both methods in my
trading. I enter a partial position using the early entry method
and add to my position upon confirmation. Remember, this Wave 3-4
retracement is you MOST RELIABLE/ DEPENDABLE symmetrical wave buy
signal. Important, your protection against financial loss is to set
a protective sell stop just below the maximum leeway zone of the original
wave. Personally, I combine the maximum leeway zone with any
Fibonacci supports zones or classical chart formations to determine my
exact protective sell stop area...I hate setting it too close only to
have the market reverse and head back up.<br>
3. From the Wave 4 bottom, the price action typically leads to a
new high, higher than the Wave 3 top. Depending on the time frame
that you are following, you should move your protective sell stop into a
protective trailing stop. For short term traders, you should move
it closer to the current price action. For long term investors, you
may want to keep it just below the 20% leeway zone so as not to be
stopped out of a long term position too soon. As the market
continues to advance above the Wave 3 high, continue to let it
ride. Once the price runs into resistance or becomes overbought,
you then forecast the symmetrical retracement based on original Wave
1-2. As the market continues to correct and falls within the target
zone that we forecasted, wait for a bottom to develop. Reason; the
wave structure is now at a Wave 5-6 count (bottom) and the early entry
method is not recommended. If confirmation of a bottom takes place,
you could again go long or add to your original position.<br>
4. As the market continues to advance (form the Wave 6 bottom), moving
the trailing stop is definitely recommended, even for the longer term
investor.<br>
5. If a new high (higher than Wave 5) is made, there is a high
probability that the existing wave structure will again produce/provide
support to a future decline BUT <b><u>do not</b></u> use this Wave 8
bottom as a buy signal. As more often than not, the ensuing rally
from the Wave 8 (or let's say a Wave 10 ) bottom will eventually fail and
as such lead to a larger decline. Note, typically the price action
will find temporary support at the symmetrical target zone based off the
original wave, but that is normal considering symmetry wave is trying to
measure the investors emotional reactions to current market declines and
as such, investor are reluctant to sell as they have become accustomed to
buying the dips.<br>
6. Once you get a failure of a wave structure, whether it be at a Wave 6,
8, or 10 bottom, your next goal is to look at the larger picture to find
the next previous wave structure and then look for the current decline to
fall within THAT symmetrical structure. If it does, then
identify which wave bottom is forming and go long if it is a Wave 4 or
6. If it is a Wave 8 or 10, don't look to buy it but see if there
is a broader trend change that may be taking place.<br>
7. If the current decline does NOT match an previous symmetrical
magnitude, then you very well may be in the creation of a NEW original
wave structure. If this is the case, go to step number 1 above!
<br>
<br>
Question: Does Symmetry Wave work in a down trend?<br>
<br>
Answer: YES, just identify a bounce in a downtrend to determine the
original wave structure. Then wait for a new low (a low lower than
the first bottom) followed by a symmetrical match of the subsequent
bounce. At which point you would go SHORT (at the Wave 4
TOP). However, please remember to maintain an overall proper
perspective of the major trend and the time frame for which you are
trading. As an example of recognizing a symmetrical relationship in a
downtrend, let's take a look at the S&P 500 Cash as of 2/29/00.
Note, I am looking at a 60 minute chart.<br>
<br>
As you know the market made an all time high on 1/3/2000 at 1478
and a low on 1/5/00 at 1378. However, the rally from the 1378 (Wave
1 bottom) failed to exceed the 1478 high and on 1/14 the market
topped and began to rollover. This time at 1473 (Wave 2 TOP).
Since this decline is within the current trading range of the market, we
can use a point basis calculation. In this case the RALLY measured
95 points. From the Wave 2 top, the market continues to decline
(lower than the 1/5 bottom) and stops on 1/31 at 1350 (Wave 3
bottom). Knowing that we want to apply symmetry wave analysis to
this market, we would expect the next rally or bounce to find symmetrical
resistance 95 points +/- 19 points (20%) from the Wave 3 bottom.
Therefore, to determine the target zone, take the 1350 Wave 3
bottom and add 95 points +/- 19 point and you get a target zone on the
S&P Cash of 1426 to 1464 with an exact symmetrical retracement at
1445. Well, between the period 2/8 and 2/9/00, the market formed a
top and again rolled over at the 1443. Just 2 points from an exact
match. This 1443 resistance has now formed a Wave 4 top and a short
position can be taken. As expected the market rolls back into a
decline and continued southward to the low set 2/28/00 at 1325 (possibly
a Wave 5 bottom). If this bottom holds, how much of a rally or
bounce can I expect. Simple, 95 points +/- 19 points. At
which time the rally will probably stall and possibly form a Wave 6
top. Looking to add to a short position can be considered but based
on the fact that the OVERALL PRIMARY trend is UP, the short sale of a
Wave 6 top, should be watch closely with a tight protective stop.<br>
<br>
Personally, I am a little skeptical as to whether the 2/28 low at 1325
will hold. Reason being, as noted below, the previous bullish
symmetrical structure which measures 13.10% and originated with the
October 1998 wave structure, has yet to be achieved. To date (based
on the 2/28 low), the market has declined (10.35%) and falls just outside
the minimum leeway buffer. If a symmetrical relationship were to
come to fruition, the S&P most likely will have to
decline into the 1300-1320 level on a climatic or capitulating selloff
before an intermediate uptrend could begin. This uptrend could take
us to new highs culminating with a possible top in May/June 2000.
But don't forget that the market will run into resistance 95 point +/-
from the low....trading it according could prove profitable.<br>
<br>
John Boggio<br>
PS Please remember, if you try to use SW on a market that has made
significant gains between the waves you are measuring, then use a
percentage decline instead of a point decline.<br>
<br>
<br>
<br>
<br>
<br>
Part 2<br>
<br>
The Following is an extract of another SymWave posting. <br>
<br>
In a message dated 96-04-18 11:00:30 EDT, you write:<br>
Question: How do you know which correction to use for present
analysis?<br>
<br>
Answer: Simple, you start off with the largest wave magnitude on
long term charts and then keep on identifying smaller waves as they
develop. When I refer to waves, I am talking about a pronounced
high as a top which would be labeled as Wave 1 and then when we get a
pronounced low, that is Wave 2. If the<br>
Market makes a new high, higher than Wave 1, we begin looking for a top,
anytime in the future. Once we see a potential top and the market
corrects, we will be looking for a decline similar in magnitude to Wave
1-2. If the market does not correct in size to Wave 1-2, + or - 20%
and then begins a new upleg, we have now formed a smaller subset of
internal waves within the primary trend. This subset will now be
labeled, let's say, Wave i - ii. If a new high is again formed,
then Wave i - ii would be the primary wave structure in which we would
begin using for the next future retracement. This internal wave
formation can continue for as long as you follow the waves to a smaller
and smaller degree.<br>
<br>
Here's an example. Wave 1-2 measures 50 pts in a decline.
Then the market makes a new high above Wave 1 and then begins to
correct. The correction is only 25 points. Since the decline
did not measure 50 pts +/- 20% then a new wave is formed. This will be
called Wave i - ii (25 pts). Now the market continues to go up to
new highs and again tops and declines, let's say 15 points. Again,
this decline does not equal the 25 point decline that we are now looking
for from Wave i - ii. Hence a new wave has begun, this new wave
will be called Wave A - B and measures 15 points. Doesn't this
sound familiar to the 1995 market advance. Let's do one more.
A new high is formed above the top of Wave A (this new high will be
called wave C) and the market begins to correct. This time the
market declines 17 points. This decline "matches" the
decline of wave A -B (15 pts +/- 20%). Therefore, our trading
signal will be given at the bottom of Wave D ( or 17 pts from the
high). So, go long!! If the market continues to decline
further than the +20% leeway of Wave A - B (in this case, 18 pts (15 x
20% = 3, 3 + 15 = 18) from the high of wave C, you get stopped out of the
trade). Let's say the market holds at 17 pts and rallies but fails to
make a new high and again declines. This time the decline passes
through the 18 pt decline from the high. Hopefully, you had a trailing
stop and locked in profits on the trade. Since the decline is now
greater in magnitude than Wave A - B, our previous Wave i - ii of 25 pts
is now our target, +/- 20% of 25pts from the all-time high. If the
market trades to that level, look for a confirming bottom i.e. Fib
support, oscillators, indicators etc. and then go long. It's that
simple!! Obviously, there are more trading rules, but this should
give you a basis for using/following Symmetry Wave Analysis. As
well as my follow-up messages that I will be posting to
RealTraders.<br>
<br>
<br>
Question: Do you make use of Michael Gur Dillon’s ATR (average true
range) to classify the wave into “major" degree? <br>
<br>
Answer: I really don't use the ATR (average true range) in my
analysis. Reason, when the original wave, of whatever degree, appears
distinctive enough on the charts, I will then use that decline for my
analysis.<br>
<br>
<br>
Question: Do you consider breaking beyond a major wave to be a change of
trend? If so would you still keep track of the various waves of the
previous trend so as to know where this change in trend will be meet with
a much larger degree trend? <br>
<br>
Answer: If is understand your question correctly, once a decline
(in the case of an up trending wave structure) EXCEEDS the original wave
decline by 20% (leeway), that 'original' wave structure is no longer
valid. If it exceeds it by just a small amount, I might reconsider but
seldomly do. As this new decline exceeds the 20% level, then this decline
WILL BECOME a NEW wave structure (if it does not find support at any
other past symmetrical declines). Further, once this new decline becomes
greater in magnitude then recent past declines, all past SMALLER past
wave structures become invalid and you should not look at them for
guidance. (I think the last sentence answered your question...) <br>
<br>
<br>
Question: It seems to me that there will always be smaller trend
within larger trends and Gur only goes into one level of trend. It
appears to me the largest wave he is concerned of is the
"major" trend. <br>
<br>
Answer: Actually it has been well over a year since I read his book
and am not sure as to how many smaller structures within a trend he looks
at. But in my own experiences, I do look for various trends within
the 'major' trend and almost always incorporate them into my analysis.
The key is to remember what the longer term trend is, so that you can
keep the proper perspective.<br>
<br>
<br>
Finally, I have updated the S&P 500 Cash market to reflect current
market conditions from the crash of 1987 to present (2/27/2000).
Hopefully by reading it, you will get a better understanding of
Symmetry Wave in practical terms.<br>
<br>
The <b>Bold</b> highlighted text was rewritten 2/27/2000 and brings us up
to date with current market conditions:<br>
<br>
<b>Let me now update you on the current market, going all the way back to
1987: As for the 1987 decline, the S&P 500 Cash market measured a
high of 338 on 8/25/87 and a low at 217 on 10/20/87. This decline
is 121 points. Since this market has made such a great advance over
the last decade and the 121 point decline is not that great in today’s
terms, we need to convert this decline into a percentage basis.
Which calculates to a 36% decline, +/- 20% or a 30% to 43% target
zone. <br>
<br>
Now for the 1990 decline, our high was at 370 on 7/16/90 and our low was
at 295 on 10/11/90. This measures 75 pts but upon conversion to a
percentage basis we get a 20.3% decline. As you can see, this
decline did not fall with the 1987 target zone therefore, a new internal
wave is formed. Its target zone for future declines will be 20% of the
20.3% decline or 16.2% to 24.4%. Again, let's move forward to the
1994 high at 482 on 2/3/94 and a low at 435 on 3/31/94. It measured
47 pts or 9.75%. On a % basis, the decline will set a target zone
of 7.8% to 11.7% from the highs in the S&P 500. Hence forming a
third subset on internal wave structures since the 1987 crash. <br>
<br>
When we advance to the 1996 pullback, we had a high set at 681 on 5/23/96
and a low at 606 on 7/16/96. This magnitude decline measured 11.01%
and FALLS WITHIN the 1994 wave structure when adding the leeway buffer….a
SYMMETRICAL MATCH and buy signal is issued. Once the market completed its
decline (down 11.01%), the market ultimately rallied to a new high on
2/19/97 at 818. Once that high was formed, the market again rolled
over and on 4/14/97 corrected to a low of 734. This 1997 decline
equaled 10.27% and AGAIN found symmetrical support based on the original
1994 Wave structure, another continuing buy signal is issued.<br>
<br>
Later in 1997 the market once again rallied to a high of 983 on 10/8/97
with a subsequent low of 855 on 10/28/97. When you calculate this
drop, you get a 13.10% decline which is just slightly greater than the
original 1994 wave structure which measured 9.75% plus the leeway of 1.95
percentage points for a total of 11.70%. Therefore, technically a
failure of the 1994 wave structure occurred by a margin of 1.32%.
Unfortunately, that failure resulted in an intraday sell signal that
proved inaccurate because by the close, the index rallied 75 points from
it low and subsequently formed a bottom that propelled the market to new
highs once again. Upon looking back at this event, I would now tend
to group this October 1997 wave structure WITHIN the 1994 subset of waves
that I illustrated above. Thus making that structure an 8 wave
count, where 1994 was Wave 1-2, 1996 was Wave 3-4, February 1997 was Wave
5-6 and October 1997 was Wave 7-8. However, no new buy signal would
have been issued due to the overextension of the structure or the fact
that it declined greater than the 1994 original wave even though we can
now categorize it within that structure (more on this shortly).<br>
<br>
Once the October ’97 low was formed, the market rallied to another new
high on 7/20/98 at 1191. From that high the market began to correct
and on 8/5/98 formed a low at 1057. This decline AGAIN measured
11.25% and symmetrically matched all previous declines since 1994 as one
would expect. However, within the Symmetry Wave trading method, one
comes to understand that as a wave structure matures past a wave 6 count,
the ensuing wave structure become overextended and less reliable in
maintaining its stability. In this case, the 1994, 9.75% wave
structure is now at a 10 wave count and would be considered extremely
overextended. As such, no buy signal would have been generated (for
that matter, no buy signal would have been generated for the October ’97
decline either). Following the 8/5/98 low, the <u>market failed to
rally for several weeks</u> and then on 8/27/97 the index decisively
broke below the 1994 symmetrical support leeway zone and clearly issued a
sell signal.<br>
<br>
Now that the ’94 wave structure is completed, we must then look to the
previously larger wave which was the 1990 Wave structure which measured
20.0%. Well, guess what…the 1998 high to low measured 22.5%, with
the low being formed on 10/8/98 at a level of 923 (923/1191 = 22.5%) and
symmetrical matches the 1990 wave structure. Therefore, in today’s
terms, the 1990 wave structure is at a 4 wave count which issued a
<u>major buy signal</u> at that time.<br>
<br>
Again moving forward from the October ’98 low, the market has formed an
internal subset wave structure with a high at 1420 on 7/20/99 and a low
at 1234 on 10/18/99. This decline measured 13.10% +/-2.62% for a
total leeway of 10.48 15.72%, and would represent an original
wave structure which has yet to be match on a symmetrical basis.
<br>
<br>
</font><font size=3>Finally, the market reached an all-time high of
1478 on 1/3/2000. As of 2/28/00, the S&P 500 has declined to a
level of 1325 which measures 10.35% or just outside the anticipated
targeted symmetrical decline. Therefore, as I write this, I am
looking to be a buyer of the S&P if I can get a little bit more of a
decline in this index…somewhere around the 1300 - 1320 level in the Cash
market. <br>
<br>
If this were to occur, a new buy signal would take place at that
point. If no new highs are made, one would set a protective sell
stop below the market at approximately the 1235 level on the Cash
market. Personally, I believe we are very close to establishing a
short to intermediate term low in the Dow and S&P 500. The
ensuing rally could last until May/June 2000 at which point the summer
months could prove very troublesome for all US indices.<br>
<br>
</b>That's all Folks!!<br>
I hope the above information becomes useful in your trading style, if
not, well then I hope you at least found it enjoyable to read.<br>
<br>
Sincerely<br>
John Boggio</font><br>
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>From: "Michael Watts" <mwatts@xxxxxxxxxx>
>Vincent - I'm sure many will appreciate your posting your program - but in
>the future, you might want to post it as a zip file so that it can be
>downloaded all at once?
I have reposted it as a zip file and deleted the other files.
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