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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude -- Ignore unavailable to you. Want to Upgrade?

To: ViperChick Secret Agent 006.9 who wrote (18801)	6/25/1998 7:46:00 AM
From: Dave H	Read Replies (2) \| Respond to of 79477

Lisa, Here's an attempt at defining some terminology: SEQUENTIAL: An indicator created by Thomas DeMark to find market tops & bottoms before everyone else does. It indicates areas of low/high risk. It consists of three parts: 1) setup -- 9 consecutive days where the close is higher than the close 4 days prior in a sell sequential, or the close is lower than the close 4 days prior in a buy sequential. On a graph, this sequence looks like a very strong move in one or the other direction. For example, AMZN has had 14 days in a row so far where the close has been greater than the close 4 days prior. 2) intersection -- any time starting with day 8 of the setup, the close is inside the trading range of 3 days prior, we have the intersection. This represents a "cooling off" of the run. In our above example, AMZN has yet to achieve an intersection. Until the intersection happens, you can't go to the next step. 3) countdown -- 13 days, which don't have to be consecutive, where the close is less than or equal to the low 2 days prior in the case of a buy sequential, or where the close is higher than or equal to the high 2 days prior. COMPLETE -- a sequential is "complete" when all three stages are finished. At this point an aggressive trader would buy/sell on the next day after completion. Personally, I like to see other confirming indicators, and I also like to see perfection take place (see below). An example of a completed sequential that completed yesterday is ODSI. RECYCLED -- a sequential is recycled when at any time during the countdown or after completion but before perfection (see below) another SETUP (see above) occurs, in either direction. Technically, if the setup occurs in the opposite direction the sequential is "cancelled." For an example, PETD recycled yesterday. PERFECTION -- after a buy sequential is complete, if we have a day where the close is HIGHER than the close four days prior, this is called the perfection day, since it prevents any recycling from happening that might have started during the countdown. Notice that this is the first day of a potential sell setup. For a sell sequential, after it is complete it is perfected when a day has a close that is LESS than the close four days prior. For an example of a buy sequential that perfected yesterday, see OAKT or MMBLF. SO.....when a sequential is complete, it is still in danger of "recycling" if another setup, which could have already started during the countdown, completes before we have the perfection day, that in effect is the beginning of a setup in the opposite direction. Basically, the perfection day is another way of saying that the sequential is valid and cannot be cancelled out by a recycle anymore. However, by waiting you will have not been able to buy at the very bottom or sell at the very top, which was the ultimate purpose of the indicator in the first place. However, these days, so many sequentials recycle that I find it prudent to wait for a sequential to be perfected before acting on it. (acting before the perfection with other TA to back you up is a different story, of course!) hope this helps! dave