Price Time Volume Investing

This is the first in a series of posts meant to provide a guide to those who have been emailing about my “method”. What I do is very simple. All that is needed is a price data and a tool to plot it. Stockcharts.com works well as it provides both the data an the tool. I also use Gannalyst (which provides more flexibility and Gann specific widgets than are at Stockcharts.com). If you use a different tool that works well please add a comment with a link to point us to where we can learn more.

Therefore, I suppose step one of the process is to find a tool that works for you.

Step two is to find a significant range to use for analysis. A range is a high to low or low to high. Of course, the low/high at the end on a large move (such as the October 2002 bear market low) is the best place to start. The March 2000 high is also an obvious range.

It turns out that the Mar00-Oct02 range has provided significant trading keys over the previous five years. The range from the blast off in 1995 to 2000 also has provided much information (such as the bear market bottom). I will use these two ranges over the next few weeks to show how some simple analysis could have made you aware of the possibility of subsequent turning points. Not all setups work out. But some are so obvious months in advance that it pays to plan what you will do if they happen work out as expected.

With a range over several years it works best to use weekly (or even monthly charts). But you can also find significant shorter term ranges using daily, hourly, or even minute-by-minute charts. In a perfect world, we should develop many charts spanning ranges from 30 years to 30 minutes. The best setups (the ones that work out as expected) are the ones that show a move occurring on a specific week (or even day) on multiple charts. So the answer to the often asked question: “how many ranges should I use?” - is as many as you have time to manage. I watch 5-10 on the SPX. The very long term charts requires little time as it takes months for a new trend to emerge. The daily charts can be time consuming. The hourly charts are exhausting. The daily and weekly work goes much faster with a tool designed for Gann type analysis.

Another way I find significant range is to use Elliott wave analysis. The beginning of wave 1 is a great place to start a range. The end of wave 5 is a great place to end that range. Often, wave 3 occurs at one half of the price and one half of the time of the total range. This is a good validation technique for your chosen range. The fact an A-B-C correction is following the five wave trend is also makes this formation a significant range to analyze and monitor.

I will continue with step 3 (Add Time Analysis Angles) in my next post in this series. You can find all my method posts using the category on the right sidebar or the How To tag.

Post Modified: July 3rd, 2008 at 12:36 am

Tags:   A-B-C Correction · About · Elliott Wave Analysis · How To · Price-Time Balance · Square of RangeNo Comments