Tuesday, April 27, 2010

Triangulation and Time Price Harmonics

When analyzing charts time is as important as price, in fact the interaction between price and time are of paramount importance when attempting to determine market pivots. The charts below show that three major indexes are extremely close to Time-Price Harmonics (TPH) which could be an indication of an impending change of trend in the equity markets.
Much has been written about Fibonacci retracement levels, but as most students of the market are painfully aware these retracement levels don't always indicate market pivot points when price amplitude is used exclusively.
However when the element of time is factored in to the analysis results that are consistent with the PHI multiples can be demonstrated as well. This is accomplished by comparing the triangulation of bull and bear campaigns to each other.

S&P 500

Duration of Bear Market: October 11 2007-March 06, 2009 = 512 days
Duration of Bull Market: March 06,2009 - April 26,2010 (recent high) = 416 days
TIME RATIO = 512/416 = .8125
Amplitude of Bear Market 1576.09- 666.79 = 909.30
Amplitude of Bull Market 1219.80 - 666.79 = 553.01
PRICE RATIO = 553.01/909.30 = .6081

Time Price Harmonic = .8125 * .6081 = .4941



S&P 400 MidCap

Duration of Bear Market: July 13 2007-March 06, 2009 = 602 days
Duration of Bull Market: March 06,2009 - April 26,2010 (recent high) = 416 days
TIME RATIO = 602/416 = .6910
Amplitude of Bear Market 926.67 - 397.97 = 528.70
Amplitude of Bull Market 852.90 - 397.97 = 454.93
PRICE RATIO = 454.93/528.70 = .8605
Time Price Harmonic .6910 * .8605 = .5946

Dow Jones
Duration of Bear Market: October 11 2007-March 09, 2009 = 512 days
Duration of Bull Market: March 06,2009 - April 26,2010 (recent high) = 416 days
TIME RATIO = 416/512 = .8215
Amplitude of Bear Market 14198.10-6469.95 = 7728.15
Amplitude of Bull Market 11258.01-6469.95 = 4788.06
PRICE RATIO = 4788.06/7728.15 = .6196

Time Price Harmonic = .8125 * .6196 = .5034

Both the DOW and the S&P 500 are near the 50 percent TPH, while the MIDCAP S&P 400 is approaching the 61.8 percent harmonic.

right click the mouse for graph enlargement options

Creases in the Bubble.

On Tuesday, the S&P 500 closed @ 1183.71 below the 21 day ema of 1192.35. This suggests that a correction--at the very least--is commencing.
The close, last week's low and 21 day ema are as follows:
S&P 500: 1183.71, 1197.87, 1192.35
S&P 400: 825.61, 808.94, 819.65
DJIA: 10991.99, 10940.60, 11014.14


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