Here's another humongous system to review, to add to Rainbow Charts: my WOW translation of the TD Range Expansion Index written about in the current issue of TASC. The article is by Thomas DeMark, and editor Thom Hartle broke it all down into a lot of formulas for Excel. This is what I've come up with for WOW:
TD1:
h-ref(h,-2)
TD2:
l-ref(l,-2)
TD3:
If((h>=(ref(l,-5) or ref(l,-6))) and (l<=(ref(h,-5) or ref(h,-6))),1,0)
TD4:
If((Ref(h,-2)>=(ref(c,-7) or ref(c,-8))) and (ref(l,-2)<=(ref(c,-7) or ref(c,-8))),1,0)
TD5:
If((Fml("TD3") + fml("TD4")>=1), fml("TD6"), 0)
TD6:
Fml("TD1") + fml("TD2")
TD7:
Abs(fml("TD1")) + abs(fml("TD2"))
TDREI Expansion Index:
((Fml("TD6") + ref(fml("TD6"),-1) + ref(fml("TD6"),-2) + ref(fml("TD6"),-3) + ref(fml("TD6"),-4))/ (Fml("TD7") + ref(fml("TD7"),-1) + ref(fml("TD7"),-2) + ref(fml("TD7"),-3) + ref(fml("TD7"),-4)))*100
You get an oscillator that moves between -100 and 100 with low values indicating oversold and high indicating overbought. DeMark says this, which you may find intriguing:
"In most trading range markets, oscillators work well. But in a trending market, most oscillators suffer from a major deficiency, since they tend to move into overbought or oversold states prematurely. TD REI has been designed to reduce the likelihood of this occurring."
I thought you'd be intrigued by the rainbow system because you're interested in how moving averages work. The formulas weren't really all that complicated, as you saw when you examined them. It was the stacks of moving averages of moving averages of moving averages that made them appear inscrutable. Unfortunately, I lost July's issue of TASC, so I won't be looking into the system much further for a while. I suspect that you snuck into my TA library (bottom shelf in pantry, next to emergency flashlight) in the night and took the magazine, to get me off the sujbect. I'm having everything dusted for prints.
Brooke |
