1- DETERMINE THE TRADING TREND
The trading trend is set by the dominant cycle in the next longer
weekly cycle in the S&P; Index averages 20 weeks from bottom to bottom. The
weekly cycle sets the trend for the daily cycle; therefore, the tops and
bottoms of the weekly cycle will be trend reversals for the daily trading
direction of the weekly 10DS oscillator is a prime indicator of the trading
trend in the daily chart. A rising oscillator indicates an uptrend; a declining
oscillator indicates a downtrend.
tops and bottoms tend to occur as the blue Bressert
Double Stoc (DS) oscillator tops and bottoms, and trend reversals are
usually confirmed by the 10DS
Mechanical Buy and Sell Signals.
1, the weekly cycle tops and bottoms are identified by the up and down
weekly cycle, and the daily trading trend, are up from cycle bottom A
to cycle top B. From cycle top B to cycle bottom C,
the weekly cycle and daily trading trend are down.
also provide a visual picture of trend.
2 - The Dynamic Trend Indicator (DTI) Trailing Stop shows the downtrend.
|In Chart 2,
the Dynamic Trend Indicator
plots a green weekly Trailing Stop on the daily chart from the weekly cycle
bottom at A to show an uptrend. From the weekly cycle high at "X",
the green DTI Trailing Stop shows the downtrend.
3 - The
EMA Trend Indicator is used to confirm the trading trend after a trend reversal.
|Chart 3 shows
the EMA Trend Indicator.
When the red EMA line rises above the blue EMA line, the trend is up. When
it drops below the blue EMA line, the trend is down. This does show trend,
but not until well after a trend reversal.
- When both the EMA and MA %Diff lines are moving up, the trend is usually
up; when both are moving down, the trend is usually down. A divergence in
direction often shows trend reversals.
4 shows the red EMA %Diff
line, and the green MA %Diff
line that turn much more quickly than the EMA Trend Indicator at trend reversals,
and give a clearer picture of trend. When both are moving up the trend is
usually up, and when both are moving down the trend is usually down. A divergence
in direction as at "X" in which the red EMA %Diff went higher, while
the green MA %Diff was moving down, often shows trend reversals.
- When the trend is up, downside retracements to the green DTI line can
often be bought when the blue Double Stoc oscillator is oversold; when the
trend is down, upside retracements to the green DTI line can often be sold
as the Bressert Double Stoc oscillator is at a high level indicating the
market is overbought.
|Chart 5 combines
the EMA %Diff and MA %Diff with the DTI
Trailing Stop. The combination of the two shows a fast up trend from
the weekly cycle bottom. (A marks the Friday of the blue weekly buy
setup bar in Chart 1; B, the Friday of the weekly purple sell setup
bar; C, the Friday of the blue weekly buy setup bar). The green DTI
lines also show trend. When the trend is up, retracements to the green Dynamic
Trend Indicator line can often be bought when the oscillator is oversold;
when the trend is down, retracements up to the green DTI line can often
be sold as the Bressert Double Stoc oscillator indicates the market is overbought.