Ivan,
Yikes...I mentioned "v+1" in reference to cats on the 56 thread and got 7 PMs asking what kind of coded lingo that was.
Well...here goes,
A v+1 top signal is the most reliable exit signal yet discovered (by the master of ceremonies on this thread, of course) for cats. That's cats as in...Post gap, dead cat exhaustion bottom. You know...the ones that gap down 30% or more, run down, or up and down, or sideways for at least another 15 trading days. Then sometime after the 15 days a PGDCEB will signal a buy on a new low with volume greater than each of at least the 3 previous days. After that buy signal, the exit (v+1) is when you see the upswing after the buy signal hit a day where volume is again greater than each of the 3 previous days.
So....you get stock that gaps from 10 to 7 with a low that day of 6 1/4.
During the next 15 days it drifts sideways or down.
After 15 (or more...but at least 15) days it has a day where the low is 6 and the closing bid is 6 3/16 on volume of 1.2 million while volume on each of at least the 3 previous days was less than 1.2 million.
That is the buy signal.
Normally, the price will start an uptrend. That bottom it made on the signal day is an exhaustion bottom (for at least the short term).
There is a relationship here with Elliot wave theory in that
Wave one is the initial bounce off the bottom...
Wave two is a bit of a pullback that tests that bottom and if it's a GOOD SOLID test, the price will NOT go lower than the signal day low...
Wave three kicks in and a real move starts...
Now we get to v+1.
As wave 3 takes effect, the price makes a move that takes it higher than the wave one top.
Wave three WILL peak. There's always a peak on any stock.
The signal for the peak of a PGDCEB buy signal is the day when volume is greater than each of at least the three previous days...again (symmetrical to the bottom signal).
The "+1" means that the sell will come the next day.
Volume signal + 1 day.......v+1
Thanks for allowing me to indulge myself with "theory".
As a real life example, PETM is on the cusp of a v+1 top.
The volume on 12/10 was greater than that of each of the 5 previous days. So far that would imply that Monday will be a sell.
Using v+1, wave one peaked on Mon 11/8. The previous Fri (11/5), volume gave a top signal. The ensuing bottom for wave two came on Fri 11/12. Now Elliot stuff gets a little nebulous so suffice it to say, a reaction pop off the wave two bottom (here again there is a v+1 exit signal for the top of this reaction pop) leads to a pullback that sets an acceleration in uptrend. The anchor for that acceleration is 11/24. From 11/24 wave 3 kicks in.
Once wave 3 starts, there is a greater need to pay more attention to trendlines. A v+1 day occurred on 12/1 but the pullback from there did not violate the acceleration that marked the start of wave three. That activity was initial verification of a viable wave three. A sell on v+1 there would have netted a decent profit over the timeframe involved (from a reasonably acceptable entry at $3 on the 10/13 buy signal to a reasonable exit of 5 1/4 for v+1 exit on 12/2.......75% in a little over 6 weeks).
The activity on 12/10 gave another buy signal on the volume supported break of the short term downtrend with a high confidence factor offered by the fact that the 11/12 to 11/24 trend acceleration had not been violated. The reasonable to expect buy price was 5 3/8.
Another possible trend acceleration has been set up now from the low on 11/24 to the low on 11/26.
Now here's where it really gets interesting. That acceleration can be considered an ACT (yes...the IL/ACT/RR kind of ACT).
From that ACT, the IL should be pretty obvious to seminar attendees (L2 is the PGDCEB signal day low and T2 is the top of Elliot wave one..........funny how that stuff happens, eh?). Remember though, just because an IL exists, there's nothing to say that the stock will actually go there. It's just nice to know that an IL is lurking out there.
SO...what's the point of all this typing????
Pay attention to the trendlines. Get tight on them if PETM goes after the IL. If 12/10 is a v+1 signal, a break of the intraday trendline (15 mins will do fine imo but 10 might work) will get you out at the top. If 12/10 is a signal that PETM is going to go after the IL...the intraday trend will most likely not break.
Yikes huh?
Doug R |
