Personal Research

[Trader Question]

I have checked all daily bars that crossed over the daily PLdot on the S&P 500 between 11-17-200 and 12-10-2001. There were 63, if my count is accurate. This is all bars, irrespective of the type of trading, including bars in congestion action as well as trend reversals or congestion exit action trading. I discovered the following:

70% of all bars that cross over the PLdot have the strong nearbys located at the ET/EB not at the PLdot.
22% have the strong nearbys located at the PLdot.

This little exercise ignores all other P&L lines, areas, zones, 3 time periods, etc. It's just a snapshot of history.

Now if a dotted line is being set up and you have already pinged in the new direction and you want to get on board for the last time for the crossover you may miss the boat if you wait for the nearby to get to the PLdot. It may have gone over already or the PLdt line has "grabbed"it when the hour changed.

However, we must not commit too early as we learned in the lessons. We must wait for that terrific rule of "2 to 3 dots back" to eliminate its own block (reference: Lesson 26).

What I have found is that there is an exciting moment as the 2/3dot block has cleared out and the nearby is still at the ET/EB. Unless I forgot to check the HTP or check where the pressure is coming from and suddenly price takes off in the other direction. Goodbye dotted line, hello frustration. Just another learning experience!

Next, I did a study of 84 daily crossovers 2000-2001 again S&P to check what happened after the crossovers.

If the crossover bar immediately becomes a c-wave bar, there is a 70% chance of a trend run of at least 3 bars, only 30% chance of congestion action. The trend run will have an average of 5 or 6 bars, ranging form 3 to as much as 10 or 12.

If the crossover bar closes in the area "PLdot to ET/EB" there is a 50 % chance of congestion action ensuing. Of coursse there is also a 50% chance of a trend run. Again, there will be 5 or 6 bars in the trend run.

J.F.

[pldot]

Thanks for sharing this with me.
It is an excellent example of personal research, and you are starting to see how the probabilities will fall and what to watch for. Keep those HTP's in mind, for very often they call the shots!