Q......
Hi Tom,
I must congratulate you on your very informative site for Mr. Licello's excellent book.
As I am new to the AIM method, I hope you can find the time to answer this question:
I am glad you have the IW because it attempts to answer the question
"is it a good time to buy?". I am trying to get a better feel for the IW oscillator as it is showing raising risk (+8) as of 11/16/98 while every other part of IW and its components are showing a neutral signal. From the explanation page, the IW oscillator is the difference between the raw data minus the smoothed data. But from the values given for the IW and the IW components, I don't see a difference of +8 for the raw values. How are the IW components added together?
Also can you make the graphs for the Historical graphs of IW and its
components bigger so we can see the graphs better. Better yet overlay the Nasdaq Composite Index to see the IW calling every turn.
Thanks in advance for your time.
Regards,
Jay
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A.........
Good morning Jay,
I trust you had a good Thanksgiving! We did at my house! Sorry I didn't get back to you sooner, but the answer to your question isn't a quick one.
First, when the Oscillator is rising consistently, it indicates that the IW's smoothed moving average value is lagging the rise in market risk. The IW's AVERAGE value since 1982 is just about exactly 40% for stocks and 27% for mutual funds. So with the IW showing 31% and the Oscillator currently showing +6, if all things were to remain the same for about 13 weeks, the IW would slowly rise to 37% - still below the average value.
I'm sorry for the confusion on the way the Components and the Idiot Wave don't add up. First, the component values are the "instant" values where the IW is based upon the moving average of the components. Next, the IW composite represents how the various components are manipulated to get their approximate weighting closer to equal. It's the weighting that isn't represented in the raw data. I guess I never thought of presenting the weighted values instead of the raw values. Maybe it would make more sense if I did!
The IW database was first built in the DOS version of Lotus 123. It is still run there! All the graphs were created in WYSWYG inside the 123 spreadsheet. I've been attempting to recreate these graphs in Lotus for Windows and Excel but haven't had much luck (because I've not taken the time). I can't capture the IW graphs directly from the DOS program, so I have to print and then scan them. The lost resolution is quite apparent. If I get the data successfully represented in a Windows format, I can then capture the high resolution graphs for display at the web site. I started fiddling with this over 6 months ago, but just don't seem to get the time to learn the newer software. I apologize! I'll see what I can do about including the Nasdaq Comp. index with the components as well as with the IW.
As you get started with AIM, if you have questions, please just fire away. I'll get back as quickly as possible.
Best regards, Tom |
