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Strategies & Market Trends : Waiting for the big Kahuna

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To: bearshark who wrote (29910)	10/9/1998 10:10:00 PM
From: Vitas	Read Replies (2) of 94695

Trin 5, from the book Juncture Recognition, by W. G. Bretz, first edition, 1972 The index is calculated by dividing the number of advances by the number of declines, and by dividing the upside volume by the downside volume. The advance/decline ratio is then divided by the upside/downside ratio in order to produce the index. I use the index on a five-day moving total basis and find it most useful. Since the index does not have the long history associated with some other indicators, we cannot be very dogmatic about levels at which it indicates an oversold condition. However, it has almost invariably peaked at a ratio of about 6 or 8 around the time of a market bottom. The index usually records a ratio of 4 or less around market tops. But this is only a negative indication, because it may remain at this very low level for months without any meaning. Market bottom areas are designated quite clearly when the index rises to a hump above the 6 ratio. Sometimes during a severe market decline, the index may rise well above the 6 ratio indicating a possible rally. However, if the rally is unable to attract sufficient volume as it rises, it may fall within a few days or weeks. The difference between a temporary bottom and a major bottom should not be identified by this index - nor in fact by any single index. ----------------------------- Bill Bretz died in April this year at his home in Pompano Beach.

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