THE TRADERS’ MAGAZINE SINCE 1982 www.traders.

com JANUARY 2025

LINEAR PREDICTIVE
FILTERS AND
INSTANTANEOUS
FREQUENCY
Using data cycles to predict
the market 8

COMBINING BOLLINGER
BANDS AND RSI FOR
SMARTER ENTRIES &
EXITS
Trend confirmation 20

INTERVIEW
Buff Dormeier 24

GOLD ETFS: IS IT A
GOOD TIME TO BUY THIS
FLASHY METAL?
How gold ETFs have fared
over the years 30

JANUARY 2025
 Vote Now!

2025 Readers’ Choice Awards

Winners will be announced in the Bonus Issue, available February 2025

If you are a current subscriber, go to Traders.com and log in to vote.

Not a current S&C subscriber? Become one today! Call 1-206-938-0570 or go to Traders.com to subscribe.
Voting ends December 31, 2024. Must use your subscriber ID number to vote.

Join us on Facebook at www.facebook.com/STOCKSandCOMMODITIES Follow us on Twitter @STOCKSandCOMM

 TRADE FUTURES WITH A LEADING BROKER
Explore the futures markets with our award-winning
platform with $50 intraday margins.

UNCOVER YOUR OPPORTUNITY

in futures trading with NinjaTrader:
Simple pricing
Low margins & commissions
Risk-free simulated trading
1,000+ third-party tools & apps
Daily livestreams &
on-demand videos
100+ technical analysis tools
24/5 live support
No deposit minimum
requirement

BETTER FUTURES
START HERE.
Open your free
account today.

Futures trading contains substantial risk and is not suitable for every investor. NinjaTrader.com/ TASC
 CONTENTS JANUARY 2025, VOLUME 43 NUMBER 1

6 Market Rap Commodities magazine for over

by Emilio Tomasini two decades.
The Traders’ MagazineTM “Unserious” thoughts on serious We interviewed Buff Pelz
topics in finance. This month: Dormeier to discuss his current
Trading Contests (Part 2 Of 2). areas of research, his recent articles
EDITORIAL in S&C, his new book, and the
editor@traders.com
FEATURE ARTICLE launch of two new ETFs in which
Editor in Chief Jack K. Hutson
8 Linear Predictive Filters And he has a role.
Production Manager Karen E. Wasserman TIPS
Graphic Designer Wayne Shaw
Instantaneous Frequency 30 Gold ETFs: Is It A Good Time To Buy
Webmaster Han J. Kim
by John F. Ehlers This Flashy Metal?
Unless your technical analysis
Contributing Editors John Ehlers,
indicator can adapt to shifts in
by Leslie N. Masonson
Anthony W. Warren, PhD.
the dominant cycle of the data, Gold had a stellar year. Could this
Contributing Writers Thomas Bulkowski, Martin
Pring, Barbara Star, Markos Katsanos, Leslie N. the indicator is doomed to failure. asset be the place to be for the
Masonson How can you adaptively tune your next few years? Here, we present
indicators and strategy algorithms a survey of gold-based ETFs
to changing market conditions, and review some statistics and
OFFICE OF THE PUBLISHER making them much more effective comparative return data to help
and reliable? How can you know you decide whether an allocation to
Publisher Jack K. Hutson
Industrial Engineer Jason K. Hutson when the market is in a state of high one or some of these ETFs may be
Project Engineer Sean M. Moore predictability? We’ll find out. suitable for your portfolio and for
your diversification purposes.
ADVERTISING SALES
19 Futures For You
4757 California Ave. S.W.
Seattle, WA 98116-4499 by Carley Garner
38 Explore Your Options
206 660-8577 Fax 206 938-1307 Here’s how the futures market
by Jay Kaeppel
advert@traders.com
really works. This month: Trading Got a question about options? This
National Sales Manager Edward W. Schramm For A Living. month: The Best Strike Price When
ESchramm@traders.com Buying A Call Option?
CIRCULATION 20 Combining Bollinger Bands And RSI
For Smarter Entries & Exits 41 Algo Q&A
Subscription & Order Service 1 800 832-4642
by Kevin J. Davey
1 206 938-0570 Fax 1 206 938-1307 by Azeez Mustapha
Got a question about system or algo
circ@traders.com
Elevate your trading strategy
trading? This month: A Critical
Subscription Manager Sean M. Moore through enhanced signal
Look At A Strategy.
WEBSITE optimization using Bollinger Bands
http://www.traders.com and RSI along with a moving 42 The Savvy Technician
Staff members may be emailed using first initial average. Here’s how. by Stella Osoba, CMT, Esq.
plus last name plus @traders.com
INTERVIEW Recognizing and applying technical
chart patterns to trading. This
24 A Conversation With month: Is The Presidential Cycle
Author­i­za­tion to pho­to­copy items for inter­nal or per­sonal Buff Pelz Dormeier Still Relevant Today For Stock
by S&C Staff
use, or the inter­nal or per­sonal use of spe­cific cli­ents, is granted
by Tech­ni­cal Anal­y­sis, Inc. for users reg­is­tered with the Cop­y­ Market Analysis?
right Clear­ance Cen­ter (CCC) Transactional Reporting Serv­ice, Buff Pelz Dormeier is a financial
pro­vided that the base fee of $1.00 per copy, plus 50¢ per
page is paid directly to CCC, 222 Rosewood Drive, Danvers,
advisor with expertise in volume 45 Strategy Corner
MA 01923. Online: http://www.copyright.com. For those analysis. He is chief technical by Dave Mabe
organ­iz­ a­tions that have been granted a photocopy license analyst for Kingsview Partners. As Got a question about using trading
by CCC, a sep­ar­ ate sys­tem of pay­ment has been arranged.
The fee code for users of the Transactional Reporting Serv­ice
a portfolio manager for Kingsview strategies? This month: The Smart
is: 0738-3355/2025 $1.00 + 0.50. Partners as well, he designs Way To Scale Up A Strategy.
Sub­scrip­tions: USA: one year (13 issues) $89.99; customized portfolio strategies
Magazines shipped outside the US require additional post­
age as follows: Canada, US$15 per year; Europe, US$25.50
for advisors and their clientele.
per year; all other countries US$39 per year. Sin­gle copies of Dormeier is also an index specialist DEPARTMENTS
most past issues from the cur­rent year are avail­a­ble pre­paid with Monarch Funds. Monarch 46 Traders’ Tips
at $8 per copy. Prior years are avail­a­ble in book format (with­
out ads) or digitally from www.traders.com. USA funds only.
Funds are advised by Kingsview 52 Advertisers’ Index
Washington state res­id ­ ents add sales tax for their locale. Wealth Management LLC, an SEC- 52 Editorial Resource Index
VISA, MasterCard, AmEx, and Discover accepted. Subscrip­ registered investment adviser. 53 Futures Liquidity
tion orders: 1 800 832-4642 or 1 206 938-0570.
Technical Analysis of Stocks & Commodities™, The
In 2007 he won the Charles 54 Classified Advertising
Traders’ Magazine™, is prepared from information believed H. Dow award for his technical
54 Traders’ Resource
to be reliable but not guaranteed by us with­out further research. He regularly speaks at
verification, and does not purport to be complete. Opinions
expressed are subject to revision without notification. We
industry conferences and his work
are not offer­ing to buy or sell securities or commodities has appeared in a variety of media
discussed. Technical Anal­ysis Inc., one or more of its officers, and technical journals. He has
and authors may have a position in the securities discussed
herein.
contributed occasional articles to
The names of products and services presented in this Technical Analysis of Stocks &
magazine are used only in an editorial fashion, and to the
benefit of the trademark owner, with no intention of infring­ This article is the basis for
ing on trademark rights. n Cover: Shutterstock AI Generator/Olga_TG/Shutterstock TIPS Traders’ Tips this month.

Copyright © 2024 Technical Analysis, Inc. All rights reserved. Information in this publication must not be stored or reproduced in any form without written permission from the publisher. Technical Analysis of Stocks & Commodities™
(ISSN 0738–3355) is published monthly with a Bonus Issue in March for $89.99 per year by Technical Analysis, Inc., 4757 California Ave. S.W., Seattle, WA 98116–4499. Periodicals postage paid at Seattle, WA and at additional mailing
offices. Postmaster: Send address changes to Technical Analysis of Stocks & Commodities™ 4757 California Ave. S.W., Seattle, WA 98116–4499 U.S.A. Printed in the U.S.A.

4 • January 2025 • Technical Analysis of Stocks & Commodities

 Trade US Stocks
and Options
Around the Clock
React immediately to market-moving
news and trade over 10,000 US stocks
and ETFs, plus US equity index
options, when it’s convenient for you.

The best-informed
investors choose Interactive Brokers

ibkr.com/around-clock

Member - NYSE, FINRA, SIPC – Supporting documentation for any claims and statistical information will be provided upon request.
Any discussion or mention of a stock or ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider
associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider
whether it is suitable for your particular circumstances and as necessary, seek professional advice. Options involve risk. For more info see ibkr.com/occ

06-IB24-1677CH1680
 MARKET RAP
THE WORLD OF RETAIL TRADING
Emilio Tomasini is a professional trader and was an adjunct professor
of corporate finance at the University of Bologna in Italy for almost 20
years. In this column, he shares his sometimes “unserious” thoughts
on serious topics in finance. Through his writings, he aims to help
retail traders better understand the leap from unprofitable to profit-
Emilio Tomasini
able trading, firmly believing that the right answers can only come if
the right questions are asked. Since 1996, he has published a weekly newsletter on Nasdaq stocks on his website,
www.emiliotomasini.com, using a trend-following strategy based on the principles he has learned during his 30+
year career in the financial markets.

TRADING CONTESTS (PART 2 OF 2) ability to make money. participant might short sell, say, a
Last time in part 1 of this look at It’s not about conspiracy theories, given amount of German stocks cor-
trading contests, I explored the but we need to address the doubts you, responding to another participant’s
motivations that drive retail traders the reader, may have had about trad- purchase of the DAX.
to participate in trading contests. ing contests and competitions while The second method is when the
The reasons, all legitimate, include reading this. And it boils down to a same participant competes under
pursuing self-improvement, gaining direct question: Can a person cheat pseudonyms with different accounts
social recognition, and promoting in a trading competition? I would say in the championship using different
their products/services/software. yes, a contestant could. And when trading methodologies, thus increas-
However, the fundamental question cheating occurs, it doesn’t involve ing the chances of winning. Serious
remains: Can the performances tampering with rankings by using contests prohibit the participation
achieved during a trading contest be false returns but rather, by increasing of the same individual or connected
trusted? Phrased this way, it might the chances of a participant’s victory legal entities with multiple accounts.
seem like an uncomfortable but ul- However, it is often impossible to
timately marginal question, given the trace the beneficial owner of a com-
vast difference between unverified There must always pany, complicating matters signifi-
claims of performance and those in be a third-party cantly. Nevertheless, if the organizer
a broker-verified championship. But is complicit with the participants,
here’s where the crux lies.
organizer who this possibility becomes impossible
First and foremost, it’s crucial clearly understands to uncover from the outside.
to distinguish between a contest the purpose of a There are also other scenarios
organized by a brokerage and one championship. that undermine the credibility of a
organized by an impartial third party. contest, such as an organizer who
A brokerage has a vested interest in turns a blind eye to money transfers
participants producing spectacular in an evidently unfair manner com- via market transactions on illiquid
performances by any means, legal pared to other participants. instruments. Believe it or not, even
or otherwise, as it serves to prove Here are some ways cheating can mediocre scalpers can trade shares
that money can be made in the stock occur. The first and most basic, yet at agreed prices during moments
market, particularly by the brokerage’s impossible to detect, is when two of extreme market illiquidity, such
clients. There is some evidence that participants take a long and a short as lunch breaks, days with reduced
several real-money trading contests position on the same market simul- hours, summer holidays, or pre-
organized in Europe at the beginning taneously but not necessarily on the market sessions. Therefore, contest
of the third millennium had the same instrument. For example, the organizers see one account grow
complicity, if not the connivance, first participant short sells the S&P while another decreases, and without
of brokerages in falsifying results 500 while the other buys the DAX. cross-referencing the trades of all
or allowing unethical behavior to The final offsetting of these positions participants, it becomes clear that
produce impressive performances, will occur at slightly different times spectacular but actually nonexistent
suggesting the participants’ supposed to avoid suspicion. Alternatively, one returns are being certified.
6 • January 2025 • Technical Analysis of Stocks & Commodities
 MARKET RAP
ABLETREND Trusted Reliable Signals
for Volatile Markets Since 1994
Winning a contest
remains something
Up Over 140%
to be considered and Buy on Blue & Sell on Red Since Featured
appreciated. Provides Simple Entry
& Favorable Risk/Reward
Get Free Email Alerts for Fresh Signals
But again, there must always be from our Chart Library
a third-party organizer who clearly
understands the purpose of a cham-
pionship, a purpose that goes beyond
the mere commercial interests of the
Fresh SSb Signal
organizers. I believe that some two Posted on 6/6/2024
decades ago, it was the financial
industry’s annoyance with one par- Fresh Sweet Spot Buy (SSb)
ticular now-defunct event, which had Posted on 1/18/2024
neither high connections nor masters,
that led to its demise. In the view of
some in the financial industry, it is
more beneficial to them to have some
“corporate” types of contests where
Updated Daily
the interests of a brokerage can be Intraday & Swing Trading
better served rather than an organizer
with a strong backbone.
So, does winning or organizing Traders Rave Over AbleTrend
a trading contest make someone a
fraudster? Absolutely not. A contest
winner deserves to be listened to care-
ABLETREND 7.0 COLLECTED BY
fully, especially if they win multiple SINCE 1994

years in a row with the same declared

methodology. Amid the deafening
noise on social media from many
self-proclaimed traders, winning
a contest remains something to be
considered and appreciated.
In conclusion, I can assert without
fear of contradiction that winning
a contest immediately places you
among the most serious market play-
ers compared to the rest of the market.
However, we cannot go so far as to
claim that simply winning a contest
bestows a halo of sainthood. TEST DRIVE THE LATEST SIGNALS

THESE RESULTS ARE BASED ON SIMULATED OR HYPOTHETICAL PERFORMANCE RESULTS THAT HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE THE RESULTS
SHOWN IN AN ACTUAL PERFORMANCE RECORD, THESE RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, BECAUSE THESE TRADES HAVE NOT ACTUAL-
LY BEEN EXECUTED, THESE RESULTS MAY HAVE UNDER-OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF
LIQUIDITY. SIMULATED OR HYPOTHETICAL TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT
OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THESE BEING
SHOWN. THE TESTIMONIAL MAY NOT BE REPRESENTATIVE OF THE EXPERIENCE OF OTHER CLIENTS AND THE TESTIMONIAL IS NO GUARANTEE OF FUTURE
PERFORMANCE OR SUCCESS. TECHNICAL ANALYSIS OF STOCKS & COMMODITIES LOGO AND AWARD ARE TRADEMARKS OF TECHNICAL ANALYSIS, INC.

January 2025 • Technical Analysis of Stocks & Commodities • 7

 DIGITAL SIGNAL PROCESSING

Using Data Cycles To Predict The Market

Linear Predictive Filters And

Instantaneous Frequency
Unless your technical analysis indicator can adapt to The short answer is that the indicators and rules
shifts in the dominant cycle of the data, the indicator have static parameters, but the price data has a dy-
is doomed to failure. How can you adaptively tune namic time variation. The price data has a complex
your indicators and strategy algorithms to changing waveform in the time domain.
market conditions, making them much more effective From Fourier theory, the complex waveform can
and reliable? How can you know when the market is equally well be described in the frequency domain.
in a state of high predictability? We’ll find out. Figure 1 shows approximately one year of the emini

S
S&P futures contract, with the measured spectrum
POILER ALERT: We are going to take a in the frequency domain in the first subgraph. The
relatively deep dive into DSP (digital signal wavelength of spectral components is displayed along
processing) in this article. But the dive will the vertical axis of the subgraph, and the amplitude
be worth it because it will answer the most of the spectral components are shown in color—from
vexing question of technical traders. That question white hot, through red hot, down to ice cold in black.
is: “Why did my technical indicator or algorithmic The spectrum display is in time sync with the price
trading rule suddenly fail after looking so good in chart. From an overview perspective, we see the market
backtest?” had a 32-bar dominant cycle period in fall 2023 that
SHUTTERSTOCK AI GENERATOR/OLGA_TG/SHUTTERSTOCK

TRADESTATION

FIGURE 1: MEASURED SPECTRUM. Shown here is approximately one year of the emini S&P futures contract, with the measured spectrum in the frequency domain in
the first subgraph. The wavelength of spectral components is displayed along the vertical axis of the subgraph. The measured spectrum shows major shifts in the domi-
nant cycle in price data. Unless your technical analysis indicator can accommodate or adapt to major shifts such as these, the indicator will fail to keep working.

by John F. Ehlers
January 2025 • Technical Analysis of Stocks & Commodities • 9
 is demonstratably worthless, at least with intraday data.
Using patterns is subjective and the statistics on the suc-
Indicators and rules have static cess of using patterns for price prediction is abysmal. In
my opinion, the use of numerology, position of the planets,
parameters, but the price data and the like is just black art.
has a dynamic time variation.
Band-limited signals
We must put some constraints on the data input if we
radically changed to a 25-bar dominant cycle period in expect to have a solution at all. One of these constraints
the runup of the winter and spring of 2024. There was a is that the data must be band-limited. The data spectrum
shift of the dominant cycle period in May, and yet another theoretically contains all wavelengths. But we must limit
major shift in July. the range of the spectrum to eliminate phenomena such as
Unless your indicator could accommodate or adapt to aliasing or data that is irrelevant to our trading activity. For
these shifts, it is doomed to failure. A typical technical example, keeping a 50-year trend in the data complicates
analysis approach is to use one kind of indicator until it our solution for intraday trading with little or no benefit.
fails—then adjust the parameters or use another indicator In the big picture, most indicators such as the RSI,
to fit the new market conditions. One of the results of our stochastic, MACD, and CCI, are band limiters. They
dive will be to recognize and adjust to the market changes eliminate the zero frequency and long wavelength com-
as they occur. ponents in the data spectrum. They all involve smoothing,
which attenuates the shorter wavelength components in
The problem to be solved the spectrum. However, each of these indicators introduce
Market data can be described as the drunkard’s walk. The artifacts that are not well controlled. These artifacts in-
solutions to the drunkard’s walk problem are either the clude scaling, lag, and preferential amplification of some
wave equation or the diffusion equation, depending on your
choice of random variables. These equations are partial A SIMPLE 2-POLE PREDICTOR, IN EASYLANGUAGE CODE
differential equations. There is no closed form solution {
for them because they are boundary value problems, and Simple Predictor
(C) 2024 John F. Ehlers
the boundaries cannot be defined for price data. In my }
opinion, the market seems to vary between a wave equation
solution and a diffusion equation solution as a function of Vars:
Q(.35),
time. The diffusion equation solution is nearly synonymous HP(0),
with randomness, so there is no solid predictability. The LP(0),
good news is that we can make effective predictions if the c0(0), c1(0), c2(0), sum(0),
market is in a wave equation mode. Predict(0);
Mathematical tools have been developed to help solve //one octave bandpass filter between 15 and 30 bar cycle
differential equations. LaPlace transforms were developed periods
to solve them as if they were algebraic equations. LaPlace HP = $Highpass(Close, 15);
transforms have a complete solution for transient condi- LP = $SuperSmoother(HP, 30);
tions. Fourier transforms are just like LaPlace transforms //LP = Sine(360*CurrentBar / 20);
except they are constrained to solve for only so-called
steady state conditions. Fourier transforms require the use c0 = 1;
of complex variables. Fourier transforms can equally well c1 = 1.8*Q;
c2 = -Q*Q;
describe a problem in the time domain or the frequency sum = 1 - c1 - c2;
domain. Z transforms are the “kissin’ cousin” of Fourier c0 = c0 / sum;
transforms, but are restricted to sampled data. Z transforms c1 = c1 / sum;
are particularly simple, using the notation that Z−1 means c2 = c2 / sum;
one unit of delay. Predict = c0*LP - c1*LP[1] - c2*LP[2];
So, in a nutshell, we want to solve the drunkard’s walk
problem with Z transforms because we are dealing with Plot1(LP);
sampled data. Price and its rate of change are about all Plot2(0);
Plot3(Predict);
we have to work with. The use of volume to predict price
10 • January 2025 • Technical Analysis of Stocks & Commodities
spectral components. The transfer response is the ratio of the output to the in-
I prefer to use a bandpass filter to band-limit the price put. So, substituting, cross-multiplying, and using mixed
data used for analysis because the lag response and phase notation, we get:
response are predictable and it provides nearly unity gain
across the filter bandwidth. I use a second-order highpass In = (1 − (c1*Z−1 + c2*Z−2))*Out
filter and a second-order lowpass filter to independently
set the filter band edges because they provide much bet- Further changing notation as EasyLanguage delay, the
ter attenuation for out-of-band signals than a first-order equation becomes:
filter. The filter bandwidth should be on the order of an
octave or more to accommodate the variations in the data In = Out − c1*Out[1] − c2*Out[2]
dominant cycle, such as shown in Figure 1.
In general, the bandpass filter parameters are fixed while In this context “In” is the new data point. In other words,
the spectral aspects of the input data are variable. If the it is the prediction.
wavelength of the input data is longer than the period at A simple predictive filter is coded in the sidebar “A
the center of the filter, the filter output will be leading Simple 2-Pole Predictor, In Easylanguage Code.” Cod-
in phase relative to the input. Correspondingly, if the ing for the highpass and SuperSmoother functions are
wavelength of the input data is shorter than the period at given in the next two sidebars, “Highpass Function, In
the center of the filter, the filter output will be lagging in EasyLanguage Code,” and “SuperSmoother Function, In
phase. That is just how filters work, and there is no fix EasyLanguage Code.”
for that. The phase slope across the filter is a function of At zero frequency Z−1 = 1, and we want to have unity
the filter bandwidth and the order of the filter. This is one gain at this frequency. Therefore, each of the coefficients
reason why higher-order filters are not used in technical must be normalized to their sum for this to happen. You
analysis. Their phase response can cause a 180-degree can uncomment one line of code to get a deterministic
flip in output phase when the dominant cycle period of sinewave having a 20-bar wavelength and its prediction.
the input data shifts just a little. You can also play with the value of Q. If you make Q too
Think of a bandpass filter this way: it is a simple
mathematical manipulation. A one-bar difference is a
highpass filter in the frequency domain, and is analogous
to a derivative in calculus. An average is a lowpass filter
in the frequency domain and is analogous to an integral
in calculus. So, a highpass filter followed by a lowpass
filter is basically the same as a derivative followed by an
integrator. The reciprocal calculus operators cancel, so the
filter output is a replica of the input signal. That is about as
close to an indicator without distortion as you can get.

Linear predictive filters

The transfer response of a linear filter is expressed as a
rational fraction of Z−1 polynomials. A predictive filter is
where the polynomial is only in the denominator. From
the first law of algebra, any polynomial can be factored
into zeros of the polynomial. Since the linear predictive
filter polynomial has zeros in the denominator, these are
called poles. Thus, a linear predictive filter has an all-pole
design. There is no divide-by-zero problem with these fil-
ters because the poles lie in the complex Z plane and filter
operation is constrained to the unit circle in that plane.
So here is a simple example of how it works. The transfer
response is:

H(Z) = 1 / (1 − (c1*Z−1 + c2*Z−2))

January 2025 • Technical Analysis of Stocks & Commodities • 11
 across the filter coefficients, knowing the filter response
is the same as the spectrum of the input data.
One of the results of this The MESA process is computationally intensive. As
dive will be to recognize and I recall, a single analysis took 30 minutes to an hour on
an Apple II decades ago. It was so bad that I mapped
adjust to the market changes the computing register to the display register to watch it
as they occur. working just to know that the computer had not crashed.
I must say it was fascinating to watch the computer work
at the bit level.
small, there is not much of a prediction. If you make Q
too large (but less than 1), the filter becomes a peaking Griffiths
filter and the prediction becomes erratic. Of course, the Lloyd Griffiths described an adaptive technique for esti-
prediction can be extended by making the first prediction mating the frequency domain structure of digital signals
be a new data point and then running the process again. that have a narrow band, rapidly time-varying spectrum.
So, making a predictive filter is simple. The trick is how This data description can easily describe price data for
to compute the coefficients. trading. Griffith’s approach is vastly more computationally
simple than the maximum entropy approach and probably
MESA produces better practical results due to time continuity. The
MESA is an acronym for “maximum entropy spectral Griffiths approach also uses a linear predictive filter but
analysis.” The MESA algorithm uses an all-pole filter. The with coefficents that are adaptive. The filter coefficients are
coefficients were computed using the Levinson recursion continuously updated with each new data input sample.
algorithm for a selected time block of data by maximizing The Griffiths approach is described with reference to
the entropy of the denominator polynomial. The block of the code in the sidebar, “Griffiths Predictor, In Easy-
data would be moved forward one bar and the process Language Code.” The data signal is first band-limited to
was repeated to get the time-based output. This process accommodate the range of wavelengths we see in Figure
created a filter that absolutely provided the best solution 1. If we were interested in position trading, we would set
for the selected block of data. The spectral analysis part the upper bound wavelength to 125 (about half a year) or
was obtained by (conceptually) running a sweep generator more. In my examples we are interested in swing trading

HIGHPASS FUNCTION, IN EASYLANGUAGE CODE SUPERSMOOTHER FUNCTION, IN EASYLANGUAGE CODE

{ {
Highpass Function SuperSmoother Function
(C) 2004-2024 John F. Ehlers (C) 2004-2024 John F. Ehlers
} }

Inputs: Inputs:
Price(numericseries), Price(numericseries),
Period(numericsimple); Period(numericsimple);

Vars: Vars:
a1(0), a1(0),
b1(0), b1(0),
c1(0), c1(0),
c2(0), c2(0),
c3(0); c3(0);

a1 = expvalue(-1.414*3.14159 / Period); a1 = expvalue(-1.414*3.14159 / Period);

b1 = 2*a1*Cosine(1.414*180 / Period); b1 = 2*a1*Cosine(1.414*180 / Period);
c2 = b1; c2 = b1;
c3 = -a1*a1; c3 = -a1*a1;
c1 = (1 + c2 - c3) / 4; c1 = 1 - c2 - c3;

If CurrentBar >= 4 Then $HighPass = c1*(Price - 2*Price[1] + If CurrentBar >= 4 Then $SuperSmoother =
Price[2]) + c2*$HighPass[1] + c3*$HighPass[2]; c1*(Price + Price[1]) / 2 + c2*$SuperSmoother[1] +
If Currentbar < 4 Then $HighPass = 0; c3*$SuperSmoother[2];
If Currentbar < 4 Then $SuperSmoother = Price;

12 • January 2025 • Technical Analysis of Stocks & Commodities

the nominal monthly (20-bar) wavelength we assume to be The data is assumed to be ergotic and have a unity auto-
present. So, the upper bound is set to 40 to make sure we correlation factor. For this reason, the data is normalized
include the expected conditions. The lower bound is set at to swing between −1 and +1 using a fast-attack, slow-
18 to capture the shortest cycle period found in the Figure decay AGC (automatic gain control). If the band-limited
1 survey. The lower bound should be set to be greater than waveform absolute amplitude is larger than the historical
8 to ensure the effects of aliasing are effectively eliminated peak, then the historical peak is reset to the larger value.
from the calculations. The upper bound should be at least If the amplitude of the band-limited signal is less than the
an octave more than the lower bound to produce a low historical peak, then the peak is reset to 0.991 of its previ-
phase slope across the piece of spectrum we are analyz- ous value on each sample. For a 30-bar cycle component in
ing. When computing the spectrum or dominant cycle, it the spectrum, we expect to get a new maximum absolute
is good practice to use a length of data at least as long as amplitude every 15 bars. In that 15-bar time, the peak will
the upper bound to ensure we get at least one full cycle of have dropped to 0.99115 = 0.873 of the real maximum.
the data at the upper bound. If you make the length of data This is only a little more that 1 dB of distortion in the
too long, you could lose some of the shorter wavelength normalized signal, which I think is acceptable.
response due to averaging over the longer data length. If you prefer, you can unremark one line of code to
When only making the prediction, a relatively small length replace the normalized data input with a pure sine wave
of data can be used because the data autocorrelation falls having a 30-bar period as a test signal.
off rapidly as a function of lag. The next step is to convert the normalized data variable

GRIFFITHS PREDICTOR, IN EASYLANGUAGE CODE

{ If Peak <> 0 Then Signal = LP / Peak;
Griffiths Predictor Indicator
(C) 2024 John F. Ehlers //Perfect cycle test signal
from "Rapid Measurement of Digitial Instantaneous Fre- //Signal = Sine(360*currentbar / 30);
quency", IEEE Transactions ASSP-23
} For count = 1 to Length Begin
XX[count] = Signal[Length - count];
Inputs: End;
LowerBound(18),
UpperBound(40), XBar = 0;
Length(18), For count = 1 to Length Begin
BarsFwd(2); XBar = XBar + XX[Length - count]*coef[count];
End;
Vars:
Mu(0), For count = 1 to Length Begin
HP(0), coef[count] = coef[count] + Mu*(XX[Length] -
LP(0), XBar)*XX[Length - count];
HH(0), End;
LL(0),
Signal(0), //Prediction
Peak(.1), For advance = 1 to BarsFwd Begin
XBar(0), XPred = 0;
count(0), For count = 1 to Length Begin
XPred(0), XPred = XPred + XX[Length + 1 - count]*coef[count];
advance(0); End;
For count = advance to Length - advance Begin
Arrays: XX[count] = XX[count + 1];
XX[200](0), End;
coef[200](0), For count = 1 to Length - 1 Begin
Pwr[200,2](0); XX[count] = XX[count + 1];
End;
Mu = 1 / Length; XX[Length] = XPred;
End;
HP = $HighPass(Close, UpperBound);
LP = $SuperSmoother(HP, LowerBound); Plot1(Signal);
Plot2(0);
Peak = .991*Peak[1]; Plot3(XPred);
If AbsValue(LP) > Peak Then Peak = AbsValue(LP);

January 2025 • Technical Analysis of Stocks & Commodities • 13

GRIFFITHS SPECTRUM, IN EASYLANGUAGE CODE
{ Real = 0;
Griffiths Spectrum Indicator Imag = 0;
(C) 2024 John F. Ehlers For count = 1 to Length Begin
from "Rapid Measurement of Digitial Instantaneous Fre- Real = Real + coef[count]*Cosine(360*count / Pe-
quency", IEEE Transactions ASSP-23 riod);
} Imag = Imag + coef[count]*Sine(360*count / Pe-
riod);
Inputs: End;
LowerBound(10), Denom = (1 - Real)*(1 - Real) + Imag*Imag;
UpperBound(40), Pwr[Period, 1] = .1 / Denom + .9*Pwr[Period, 2];
Length(40); End;
MaxPwr = 0;
Vars: For Period = LowerBound to UpperBound Begin
Mu(0), If Pwr[Period, 1] > MaxPwr Then Begin
HP(0), MaxPwr = Pwr[Period, 1];
LP(0), End;
HH(0), End;
LL(0), For Period = LowerBound to UpperBound Begin
Signal(0), If MaxPwr <> 0 Then Pwr[Period, 1] = Pwr[Period, 1] / Max-
Peak(.1), Pwr;
XBar(0), End;
count(0),
advance(0), //Plot the Spectrum as a Heatmap
Period(0), For Period = LowerBound to UpperBound Begin
Real(0), //Convert Power to RGB Color for Display
Imag(0), If Pwr[Period, 1] >= .5 Then Begin
Denom(0), Color1 = 255;
MaxPwr(0), Color2 = 255*(2*Pwr[Period, 1] - 1);
Color1(0), End;
Color2(0); If Pwr[Period, 1] < .5 Then Begin
Color1 = 255*2*Pwr[Period, 1];
Arrays: Color2 = 0;
XX[100](0), End;
coef[100](0),
Pwr[100, 2](0); If Period = 3 Then Plot3(3, "S5", RGB(Color1, Color2, 0),0,4);
If Period = 4 Then Plot4(4, "S4", RGB(Color1, Color2, 0),0,4);
Mu = 1 / Length; If Period = 5 Then Plot5(5, "S5", RGB(Color1, Color2, 0),0,4);
If Period = 6 Then Plot6(6, "S6", RGB(Color1, Color2, 0),0,4);
HP = $HighPass(Close, UpperBound); If Period = 7 Then Plot7(7, "S7", RGB(Color1, Color2, 0),0,4);
LP = $SuperSmoother(HP, LowerBound); If Period = 8 Then Plot8(8, "S8", RGB(Color1, Color2, 0),0,4);
If Period = 9 Then Plot9(9, "S9", RGB(Color1, Color2, 0),0,4);
Peak = .991*Peak[1]; If Period = 10 Then Plot10(10, "S10", RGB(Color1, Color2, 0),0,4);
If AbsValue(LP) > Peak Then Peak = AbsValue(LP); If Period = 11 Then Plot11(11, "S11", RGB(Color1, Color2, 0),0,4);
If Peak <> 0 Then Signal = LP / Peak; If Period = 12 Then Plot12(12, "S12", RGB(Color1, Color2, 0),0,4);
If Period = 13 Then Plot13(13, "S13", RGB(Color1, Color2, 0),0,4);
For count = 1 to Length Begin If Period = 14 Then Plot14(14, "S14", RGB(Color1, Color2, 0),0,4);
XX[count] = Signal[Length - count]; If Period = 15 Then Plot15(15, "S15", RGB(Color1, Color2, 0),0,4);
End; If Period = 16 Then Plot16(16, "S16", RGB(Color1, Color2, 0),0,4);
If Period = 17 Then Plot17(17, "S17", RGB(Color1, Color2, 0),0,4);
XBar = 0; If Period = 18 Then Plot18(18, "S18", RGB(Color1, Color2, 0),0,4);
For count = 1 to Length Begin If Period = 19 Then Plot19(19, "S19", RGB(Color1, Color2, 0),0,4);
XBar = XBar + XX[Length - count]*coef[count]; If Period = 20 Then Plot20(20, "S20", RGB(Color1, Color2, 0),0,4);
End; If Period = 21 Then Plot21(21, "S21", RGB(Color1, Color2, 0),0,4);
For count = 1 to Length Begin If Period = 22 Then Plot22(22, "S22", RGB(Color1, Color2, 0),0,4);
coef[count] = coef[count] + Mu*(XX[Length] - If Period = 23 Then Plot23(23, "S23", RGB(Color1, Color2, 0),0,4);
XBar)*XX[Length - count]; If Period = 24 Then Plot24(24, "S24", RGB(Color1, Color2, 0),0,4);
End; If Period = 25 Then Plot25(25, "S25", RGB(Color1, Color2, 0),0,4);
If Period = 26 Then Plot26(26, "S26", RGB(Color1, Color2, 0),0,4);
//Instantaneous Frequency If Period = 27 Then Plot27(27, "S27", RGB(Color1, Color2, 0),0,4);
For Period = LowerBound to UpperBound Begin If Period = 28 Then Plot28(28, "S28", RGB(Color1, Color2, 0),0,4);
Pwr[Period, 2] = Pwr[Period, 1]; If Period = 29 Then Plot29(29, "S29", RGB(Color1, Color2, 0),0,4);

14 • January 2025 • Technical Analysis of Stocks & Commodities

 If Period = 30 Then Plot30(30, "S30", RGB(Color1, Color2, 0),0,4); If Period = 66 Then Plot66(66, "S66", RGB(Color1, Color2, 0),0,4);
If Period = 31 Then Plot31(31, "S31", RGB(Color1, Color2, 0),0,4); If Period = 67 Then Plot67(67, "S67", RGB(Color1, Color2, 0),0,4);
If Period = 32 Then Plot32(32, "S32", RGB(Color1, Color2, 0),0,4); If Period = 68 Then Plot68(68, "S68", RGB(Color1, Color2, 0),0,4);
If Period = 33 Then Plot33(33, "S33", RGB(Color1, Color2, 0),0,4); If Period = 69 Then Plot69(69, "S69", RGB(Color1, Color2, 0),0,4);
If Period = 34 Then Plot34(34, "S34", RGB(Color1, Color2, 0),0,4); If Period = 70 Then Plot70(70, "S70", RGB(Color1, Color2, 0),0,4);
If Period = 35 Then Plot35(35, "S35", RGB(Color1, Color2, 0),0,4); If Period = 71 Then Plot71(71, "S71", RGB(Color1, Color2, 0),0,4);
If Period = 36 Then Plot36(36, "S36", RGB(Color1, Color2, 0),0,4); If Period = 72 Then Plot72(72, "S72", RGB(Color1, Color2, 0),0,4);
If Period = 37 Then Plot37(37, "S37", RGB(Color1, Color2, 0),0,4); If Period = 73 Then Plot73(73, "S73", RGB(Color1, Color2, 0),0,4);
If Period = 38 Then Plot38(38, "S38", RGB(Color1, Color2, 0),0,4); If Period = 74 Then Plot74(74, "S74", RGB(Color1, Color2, 0),0,4);
If Period = 39 Then Plot39(39, "S39", RGB(Color1, Color2, 0),0,4); If Period = 75 Then Plot75(75, "S75", RGB(Color1, Color2, 0),0,4);
If Period = 40 Then Plot40(40, "S40", RGB(Color1, Color2, 0),0,4); If Period = 76 Then Plot76(76, "S76", RGB(Color1, Color2, 0),0,4);
If Period = 41 Then Plot41(41, "S41", RGB(Color1, Color2, 0),0,4); If Period = 77 Then Plot77(77, "S77", RGB(Color1, Color2, 0),0,4);
If Period = 42 Then Plot42(42, "S42", RGB(Color1, Color2, 0),0,4); If Period = 78 Then Plot78(78, "S78", RGB(Color1, Color2, 0),0,4);
If Period = 43 Then Plot43(43, "S43", RGB(Color1, Color2, 0),0,4); If Period = 79 Then Plot79(79, "S79", RGB(Color1, Color2, 0),0,4);
If Period = 44 Then Plot44(44, "S44", RGB(Color1, Color2, 0),0,4); If Period = 80 Then Plot80(80, "S80", RGB(Color1, Color2, 0),0,4);
If Period = 45 Then Plot45(45, "S45", RGB(Color1, Color2, 0),0,4); If Period = 81 Then Plot81(81, "S81", RGB(Color1, Color2, 0),0,4);
If Period = 46 Then Plot46(46, "S46", RGB(Color1, Color2, 0),0,4); If Period = 82 Then Plot82(82, "S82", RGB(Color1, Color2, 0),0,4);
If Period = 47 Then Plot47(47, "S47", RGB(Color1, Color2, 0),0,4); If Period = 83 Then Plot83(83, "S83", RGB(Color1, Color2, 0),0,4);
If Period = 48 Then Plot48(48, "S48", RGB(Color1, Color2, 0),0,4); If Period = 84 Then Plot84(84, "S84", RGB(Color1, Color2, 0),0,4);
If Period = 49 Then Plot49(49, "S49", RGB(Color1, Color2, 0),0,4); If Period = 85 Then Plot85(85, "S85", RGB(Color1, Color2, 0),0,4);
If Period = 50 Then Plot50(50, "S50", RGB(Color1, Color2, 0),0,4); If Period = 86 Then Plot86(86, "S86", RGB(Color1, Color2, 0),0,4);
If Period = 51 Then Plot51(51, "S51", RGB(Color1, Color2, 0),0,4); If Period = 87 Then Plot87(87, "S87", RGB(Color1, Color2, 0),0,4);
If Period = 52 Then Plot52(52, "S52", RGB(Color1, Color2, 0),0,4); If Period = 88 Then Plot88(88, "S88", RGB(Color1, Color2, 0),0,4);
If Period = 53 Then Plot53(53, "S53", RGB(Color1, Color2, 0),0,4); If Period = 89 Then Plot89(89, "S89", RGB(Color1, Color2, 0),0,4);
If Period = 54 Then Plot54(54, "S54", RGB(Color1, Color2, 0),0,4); If Period = 90 Then Plot90(90, "S90", RGB(Color1, Color2, 0),0,4);
If Period = 55 Then Plot55(55, "S55", RGB(Color1, Color2, 0),0,4); If Period = 91 Then Plot91(91, "S91", RGB(Color1, Color2, 0),0,4);
If Period = 56 Then Plot56(56, "S56", RGB(Color1, Color2, 0),0,4); If Period = 92 Then Plot92(92, "S92", RGB(Color1, Color2, 0),0,4);
If Period = 57 Then Plot57(57, "S57", RGB(Color1, Color2, 0),0,4); If Period = 93 Then Plot93(93, "S93", RGB(Color1, Color2, 0),0,4);
If Period = 58 Then Plot58(58, "S58", RGB(Color1, Color2, 0),0,4); If Period = 94 Then Plot94(94, "S94", RGB(Color1, Color2, 0),0,4);
If Period = 59 Then Plot59(59, "S59", RGB(Color1, Color2, 0),0,4); If Period = 95 Then Plot95(95, "S95", RGB(Color1, Color2, 0),0,4);
If Period = 60 Then Plot60(60, "S60", RGB(Color1, Color2, 0),0,4); If Period = 96 Then Plot96(96, "S96", RGB(Color1, Color2, 0),0,4);
If Period = 61 Then Plot61(61, "S61", RGB(Color1, Color2, 0),0,4); If Period = 97 Then Plot97(97, "S97", RGB(Color1, Color2, 0),0,4);
If Period = 62 Then Plot62(62, "S62", RGB(Color1, Color2, 0),0,4); If Period = 98 Then Plot98(98, "S98", RGB(Color1, Color2, 0),0,4);
If Period = 63 Then Plot63(63, "S63", RGB(Color1, Color2, 0),0,4); If Period = 99 Then Plot99(99, "S99", RGB(Color1, Color2, 0),0,4);
If Period = 64 Then Plot64(64, "S64", RGB(Color1, Color2, 0),0,4);
If Period = 65 Then Plot65(65, "S65", RGB(Color1, Color2, 0),0,4); End;

FIGURE 2: PREDICTIONS. Here you see swing trading predictions for approximately one year of the emini S&P. The prediction is shown in blue and the band-limited and
normalized data is shown in red for 2 BarsFwd. In general, the prediction crossing the signal line can provide excellent timing for swing trading entries and exits.
January 2025 • Technical Analysis of Stocks & Commodities • 15
to an array. I do this because the counter for a variable the signal line provide excellent timing for swing trading
goes from right to left from the current bar whereas an entries and exits.
array in technical publications goes from left to right.
In addition, the variable counter starts at zero whereas Griffiths spectrum
the array counter starts at 1. So, I convert the data to an The general expression for the transfer function of a linear
array simply to not go crazy when coding the rest of the predictive filter of order L is:
procedure.
In the next step we find the prediction value of the nor- 1
H(Z) =
malized data exactly the same way we found the prediction 1 −�Ll=1 cl Z−l
in the simple example. That is, the prediction is the sum
of the products of the coefficients and the data across the We can find the response in the frequency domain simply
array. The process is adaptive, so don’t worry about the by substituting the Fourier e(−jwl) for the Z transform Z−1.
initial values of the coefficients. Therefore, the spectrum shape is in the content of the
The coefficients are computed by minimizing the er- optimized filter coefficients. That is, when the filter is
ror between the last data point and the prediction XBar. perfectly tuned, the difference between the prediction and
The process converges with each new data sample with the last data point is zero. Therefore, the coefficients carry
the convergence factor Mu, which is just the reciprocal the spectrum information as a function of frequency. We
of the data length. can obtain the power spectrum by squaring the transfer re-
The prediction is made with exactly the same process as sponse. This ensures a real solution from complex variables.
used computing the value of the coefficients, finding XPred The power spectrum for a linear predictive filter is:
instead of XBar. The process is extended by selecting the
BarsFwd you want for the prediction. You will find that the 1
P(w) =
prediction falls apart if extended more than several bars (1 −� cl e(−jwl))2
L
l=1
into the future. With no new data input, the information
content is degraded with each prediction iteration. So, all we have to do to recover the spectrum is to run
Figure 2 shows the prediction in blue and the band- the operation with complex frequencies across the band
limited and normalized data in red for 2 BarsFwd. The of interest.
lower bound was set at 18, and the upper bound and data The EasyLanguage code to compute the Griffiths
length were set at 40. In general, the prediction crossing spectrum is given in the sidebar “Griffiths Spectrum, In

FIGURE 3: GRIFFITHS DOMINANT CYCLE. The data dominant cycle extracted from the Griffiths spectrum is displayed as an indicator. Here you see the dominant
cycle for the emini S&P over approximately the last year and cycle period range between 18 and 40 bars.
16 • January 2025 • Technical Analysis of Stocks & Commodities
GRIFFITHS DOMINANT CYCLE INDICATOR, IN EASYLANGUAGE CODE
{
Griffiths Dominant Cycle Indicator //Signal = Sine(360*currentbar / 30);
(C) 2024 John F. Ehlers
from "Rapid Measurement of Digitial Instantaneous Fre- For count = 1 to Length Begin
quency", IEEE Transactions ASSP-23 XX[count] = Signal[Length - count];
} End;

Inputs: XBar = 0;
LowerBound(18), For count = 1 to Length Begin
UpperBound(40), XBar = XBar + XX[Length - count]*coef[count];
Length(40); End;
For count = 1 to Length Begin
Vars: coef[count] = coef[count] + Mu*(XX[Length] -
Mu(0), XBar)*XX[Length - count];
HP(0), End;
LP(0),
HH(0), //Instantaneous Frequency
LL(0), For Period = LowerBound to UpperBound Begin
Signal(0), Real = 0;
Peak(.1), Imag = 0;
XBar(0), For count = 1 to Length Begin
count(0), Real = Real + coef[count]*Cosine(360*count / Pe-
advance(0), riod);
Period(0), Imag = Imag + coef[count]*Sine(360*count / Pe-
Real(0), riod);
Imag(0), End;
Denom(0), Denom = (1 - Real)*(1 - Real) + Imag*Imag;
MaxPwr(0), Pwr[Period, 1] = .1 / Denom;
Cycle(0); End;
MaxPwr = 0;
Arrays: For Period = LowerBound to UpperBound Begin
XX[200](0), If Pwr[Period, 1] > MaxPwr Then Begin
coef[200](0), MaxPwr = Pwr[Period, 1];
Pwr[200,2](0); Cycle = Period;
End;
Mu = 1 / Length; End;

HP = $HighPass(Close, UpperBound); If cycle > cycle[1] + 2 Then cycle = cycle[1] + 2;

LP = $SuperSmoother(HP, LowerBound); If cycle < cycle[1] - 2 Then cycle = cycle[1] - 2;

Peak = .991*Peak[1]; Plot1(Cycle);

If AbsValue(LP) > Peak Then Peak = AbsValue(LP);
If Peak <> 0 Then Signal = LP / Peak;

EasyLanguage Code.” Finding the coefficients is done the band, and the largest value is used to normalize the
exactly as was done for the Griffiths predictor. The arrays spectrum to have the largest value as unity.
are scaled at 100 because the indicator is constrained to The spectrum amplitudes are converted to colors. Color1
have no more than 99 indicator lines. is red and color2 is green. When the spectrum value is
The spectrum is found by scanning the periods from 1, both color1 and color2 are 255, so the combination
the lower bound to the upper bound by the complex fre- produces yellow. When the spectrum value drops to 0.5,
quencies. Cosine() are the real components and Sine() are
the imaginary components. The value of the spectrum
is found for each period. This, in essence, is mathemati-
cally the same as applying a sweep generator to a filter In this context, “In” is the
and observing the output. Each spectral component is new data point. In other
smoothed in an EMA with an alpha = 0.1 to calm down words, it is the prediction.
some of the noisiness in the output. The amplitude of the
largest spectral component is found by sweeping across
January 2025 • Technical Analysis of Stocks & Commodities • 17
color2 goes to zero so that only red is left. When the
spectrum value drops to 0, both color1 and color2 are
zero, producing black. So color represents the amplitude The dominant cycle can be
of the spectrum component at each wavelength for a given used to adaptively tune
data point, and the vertical position of that data point is
proportional to the wavelength. The display advances
indicators and strategy
horizontally across the screen for each time sample. The algorithms to changing
display can be considered as a raster scan of each wave- market conditions.
length across the screen.
Figure 1 is an example of the Griffiths spectrum for
a lower bound of 10, an upper bound of 40, and a data of a linear predictive filter. The spectrum display is
length of 54. extracted by applying a sweep generator to the filter
band and observing the filter output.
Griffiths dominant cycle • The dominant cycle period is the spectrum component
Displaying the entire spectrum is often overwhelming and having the largest amplitude.
unnecessary. In the sidebar “Griffiths Dominant Cycle • The dominant cycle can be used to tune other indi-
Indicator, In EasyLanguage Code,” the dominant cycle in cators and strategy algorithms to adapt to changing
the data is captured as the largest amplitude component. market conditions.
Then, that dominant cycle is displayed as an indicator. The
dominant cycle for the emini S&P over approximately John Ehlers is a retired electrical engineer and a retired
the last year and cycle period range between 18 and 40 technical analyst, specializing in the application of DSP
bars is shown in Figure 3. With sufficient caution regard- (digital signal processing) to trading. For more informa-
ing computational delay, the dominant cycle can be used tion, see www.mesasoftware.com.
to adaptively tune indicators and strategy algorithms to
changing market conditions. Further reading
Ehlers, John [2014]. “Predictive And Successful Indica-
Conclusions tors,” Technical Analysis of Stocks & Commodities,
Thank you for joining me into this deep dive into DSP. It Volume 32, January.
is my motto to “provide left-brained concepts for traders [2004]. Cybernetic Analysis For Stocks And Futures,
in their right mind.” I trust that I have delivered that to John Wiley & Sons.
you in this article. In summary, here are some key points [2013]. Cycle Analytics For Traders, John Wiley
I hope you remember: & Sons.
[2021]. “A Technical Description of Market Data
• A bandpass filter has more fidelity to the input data for Traders,” Technical Analysis of Stocks & Com-
than any other technical indicator. modities, Volume 39: May.
• A bandpass filter should have a bandwidth of an Lloyd J. Griffiths, “Rapid Measurement of Digital In-
octave or more to minimize phase slope across the stanteous Frequency,” IEEE Transaction ASSP-23,
band of interest. (pp 187-202).
• A bandpass filter should have a lower bound of no
less that 8 bars to nearly eliminate the effects of ‡TradeStation
aliasing. ‡See Editorial Resource Index
• AGC retains fidelity of a band-limited signal and
normalizes the amplitude to swing between −1 and The code given in this article is available in the Article
+1. Code section of our website, Traders.com.
• Linear predictive (all-pole) filters actually have a
predictive capability. The prediction improves as the See our Traders’ Tips section of the magazine beginning
bandwidth of the band-limited data is reduced. on page 46 for implementation of John Ehlers’ technique
• The Griffiths procedure computes linear predictive in various technical analysis and trading platforms.
filter coefficients by adaptively minimizing the error Code found in the Traders’ Tips section is also posted
between the last data point and the prediction. to Traders.com.
• The data spectrum is captured by the coefficients
18 • January 2025 • Technical Analysis of Stocks & Commodities
 Futures For You
INSIDE THE FUTURES WORLD
Want to find out how the futures markets really work? Carley Garner is
the senior strategist for DeCarley Trading, a division of Zaner, where she
also works as a broker. She has written five books on futures and options
trading, with the latest being Trading Commodity Options...With Creativ-
ity (July 2020), as well as A Trader’s First Book On Commodities (third
edition, October 2017) and Higher Probability Commodity Trading (July
2016). Garner also authors widely distributed e-newsletters; for a free
subscription, visit www.DeCarleyTrading.com. To submit a question, email
her at info@carleygarnertrading.com or via www.DeCarleyTrading.com.
Selected questions will appear in a future issue of S&C.
Carley Garner

TRADING FOR A LIVING losses to cover a tax bill. the plunge. He also gave himself a
How likely is it to successfully trade There is an undeniable but often timeline of two years to sink or swim,
for a living? overlooked sense of comfort in with the goal in the first year merely
I wish it weren’t true, but the odds having multiple income streams. being to scratch and the goal for
of someone being able to solely Diversification in life is just as the second to produce a sustainable
trade futures and options, or even important as it is in investment living. If this realistic approach to
stocks, forex, etc., for a living are portfolios. I’ve witnessed countless the endeavor doesn’t appeal to you,
slim. It isn’t impossible, but most of traders who managed to keep their it’s probably best you keep your day
us don’t have the mental toughness speculative activities in the green job.
to make it a reality. I would suspect while holding down a day job make I suspect it is shocking to hear about
the odds of trading for a living are the switch to full-time trading to the dismal prospects of success and
akin to the likelihood of an athlete discover they can’t get out of the the grueling process of achieving
enjoying a lengthy career in one of the red. Trading for fun or livelihood is it, particularly in an environment
major sports leagues. To put this into a mental game. It is a lot easier to fraught with crypto millionaires and
perspective, the NBA has 30 teams shrug off adverse trading when we young kids swimming in meme stock
with 15 players on a roster, or 18 if are doing it for fun than it is when money. However, I assure you there
you count the players that play for we are doing it for survival. is a big difference between making
both the NBA and G League affiliate windfall profits and keeping them.
(minor league). Of all the millions of Further, this is a historic time in
kids hooping it up throughout their Diversification in life the markets; those getting rich via
childhood, less than 500 will play at is just as important speculation are largely inexperienced
the highest level in any given year. as it is in investment traders who don’t fully appreciate the
Perhaps full-time traders might have risk they take because they haven’t
better odds, but not by much.
portfolios. been forced to acknowledge it. It has
For clarity, I’m not referring to worked for them, but eventually, the
trading successfully as a side project. A long-time friend of mine from pendulum will return to normalcy.
Although this is a challenge, it is the futures trading industry, you In the end, successful trading is a
far more attainable. The difference would probably recognize his name, mental exercise. Only those who can
is the mental anguish of knowing recently rearranged his life to give remain unfazed by outsized wins or
your bills will only be paid, and trading for a living a shot. He knew losses will succeed in the long run.
your kids will only be fed, if your that decades of closely following Very few humans have this quality
trades are profitable. In this scenario, markets and trading through the because it goes against our nature.
drawdowns become devastating financial crisis, the flash crash, the We are emotional beings who tend to
instead of just annoying. Likewise, pandemic, and the Russian invasion make emotionally driven decisions;
losing streaks can quickly become of Ukraine wasn’t enough experience until that changes, trading for a living
all-consuming, causing traders to to guarantee success. He waited until will be something only a select few
make poor decisions or, worse, his kids were grown and his finances can attain.
revenge trade in desperation to recoup were entirely in order before taking
January 20254 • Technical Analysis of Stocks & Commodities • 19
 Trend Confirmation

Combining Bollinger Bands

And RSI For Smarter
Entries & Exits
Elevate your trading strategy through enhanced signal two powerful tools to understand the market’s tug-of-
optimization using Bollinger Bands and RSI along with war:
a moving average. Here’s how.
Bollinger Bands: Picture two elastic bands that widen

I
by Azeez Mustapha and narrow based on market volatility. When the bands
are tight, it suggests a potential price breakout. (A
magine the market as a tug-of-war, with bulls breakout is a big move in either direction).
(optimistic buyers) pulling on one end and
bears (pessimistic sellers) on the other. When Relative strength index (RSI): This indicator gauges
these forces are evenly matched, prices tend whether the market is “overbought” (that is, dominated
PROSTOCKSTUDIO/JAYHERMIONY/SHUTTERSTOCK

to fluctuate within a defined range, creating by bullish sentiment) or “oversold” (that is, dominated
uncertainty for traders. But wait! What if you could predict by bearish sentiment).
when the bulls or bears gain the upper hand, allowing
you to capitalize on their power struggle? By combining these two tools, you can identify promis-
ing trading opportunities when the market is poised for
Enter the Bollinger Band & RSI trading a breakout, potentially allowing you to:
strategy
This strategy isn’t magic (sorry!), but it equips you with Ride the wave with the bulls: Enter a long trade
20 • January 2025 • Technical Analysis of Stocks & Commodities
 TRADING TECHNIQUES

(buying) when the RSI suggests the market is oversold consider selling (jumping off the seesaw before it
and the Bollinger Bands hint at a potential upward goes down).
breakout.
3 & 4. Double confirmation
Profit from the bears’ strength: Enter a short trade Scenarios 3 and 4 offer stronger confirmation of the
(selling) when the RSI indicates an overbought mar- buy/sell signals.
ket and the Bollinger Bands anticipate a downward In scenario 3, the RSI dips even further into the
breakout. oversold zone before rising, suggesting a deeper
“bargain” before potential upward momentum.
This strategy is designed to be easy to understand, even In scenario 4, the RSI climbs even higher into
for beginners, but remember, successful trading requires the overbought zone before falling, suggesting a
practice and continuous learning. So, are you ready to more intense rally before a potential downward
join the market’s tug-of-war with some powerful tools correction.
by your side? Let’s dive in!
Before you jump on the seesaw based on the Bollinger
Applying the strategy: Putting Bands and RSI signals, remember, there’s another player
Bollinger Bands and RSI to work in this game: the exponential moving average (EMA)
Imagine you’re watching a seesaw with the market price with a period of 50, or even a simple moving average
on one side and “bullish” and “bearish” forces on the (SMA). Think of it as a trendline that smooths out the
other. The Bollinger Bands act like guide rails, showing price fluctuations and shows the overall direction the
how much the price is likely to sway. The RSI helps you market is taking.
understand whether the crowd is overwhelmingly bullish Here’s how the EMA(50) acts as a filter for our buy/
(seesaw tilted up) or bearish (seesaw tilted down). This sell signals:
strategy combines them to identify potential trading
opportunities. No going against the trend. If a buy signal pops up
We will explore four distinct trading scenarios: (price at lower band, RSI rising), but the EMA(50) is
trending down, we hold off. Why? Because the overall
1. Price at lower band, RSI rising above 30 (buy trend suggests the price might still fall despite the
signal) temporary upward momentum. Remember, the seesaw
This suggests the market may be oversold (bullish might tilt up for a moment, but if the “bearish” side is
sentiment is low), but the price is showing signs of generally stronger, it’s likely to go back down.
upward momentum.
Imagine the seesaw tilted down with the “bear- Same goes for the other side. If a sell signal appears
ish” side heavy. The price touches the lower band (price at upper band, RSI falling), but the EMA(50)
(seesaw almost hits the ground). Suddenly, the is trending up, we wait. The overall uptrend suggests
“bullish” side starts pushing back, and the RSI rises the price might continue rising despite the temporary
above 30 (people are becoming more optimistic). weakness. Don’t jump off the seesaw just yet if the
This could signal a potential trend reversal, so you “bullish” side is still pushing back!
might consider buying (riding the seesaw up).
Clear direction matters. If the EMA(50) is flat,
2. Price at upper band, RSI falling below 70 (sell meaning it has no clear upward or downward trend,
signal) we ignore both the signal and the EMA(50). Why?
This indicates the market might be overbought
(bearish sentiment is high) and the price is hitting
a ceiling.
Think of the seesaw tilted up with the bullish side When these forces are evenly
dominant. The price touches the upper band (the matched, prices tend to fluctuate
seesaw almost hits the ceiling). Now, the bearish within a defined range, creating
side starts pushing back and the RSI falls below 70 uncertainty for traders.
(people are becoming more cautious). This could
be a sign of a potential downtrend, so you might
January 2025 • Technical Analysis of Stocks & Commodities • 21
 TRADINGVIEW
FIGURE 1: EXAMPLE OF LONG TRADE, SOL/USD. Despite receiving strong confirmation from both the Bollinger Bands indicator and the relative strength
index that the market was trending bullish, we exercise patience, waiting to observe even a slight deviation in the direction of the SMA before entering a long
position.

Because a flat EMA(50) doesn’t provide any additional position at the $15.00 price level, with a profit target set
direction, so it’s best to sit on the sidelines and wait at $18.00. This target was achieved within five days.
for a clearer picture. In my analysis, I incorporated the 20-day moving
average to mitigate price fluctuations. My entry into
Remember: Using a moving average to filter trades the trade coincided with the upward movement of this
helps improve the reliability of our Bollinger Bands+RSI moving average, affirming the RSI crossover from below
trading strategy by focusing on signals that align with the 30 level. Additionally, I could have preemptively set
the overall market trend. However, no strategy is perfect, a buy stop (that is a pending order) seven days prior to
so always practice good risk management and consider reaching the $15.00 price level.
other factors before making any trades. On January 9, 2023, I initiated a long position at the
$15.00 level (Figure 1). Within the following four days,
Examples the trade successfully reached the target at the $18.00
I’ll provide an example of implementing the Bollinger price level.
Bands+RSI trading strategy using the SOL/USD pair My decision to enter the long position was primarily
(see Figure 1). Solana, with ticker symbol SOL, is a based on the confirmation provided by the upward move-
cryptocurrency that runs on the Solana blockchain. ment of the 20-day moving average, aligning with the
After observing a decline to the lower Bollinger Band RSI crossover and the upward trajectory of price action,
and subsequent recovery of the relative strength index albeit with some noise.
(RSI) above the 30 mark, I noted the emergence of two Here is a snapshot of the example trade:
plus-sign dojis, indicating a potential reversal in the
market trend. Recognizing that these signals occurred Trade snapshot
at the conclusion of a downtrend, I anticipated a possible • Instrument: SOL/USD
reversal.
Upon identification of a candlestick with a significant
body closing in favor of the bulls for the day, I considered
it as further confirmation of the anticipated bullish trend. The Bollinger Bands act like
Additionally, I incorporated moving averages into my guide rails, showing how much
analysis to help filter out market noise. the price is likely to sway.
Following the clear indication of a shift in favor of
bulls indicated by the moving average, I entered a long
22 • January 2025 • Technical Analysis of Stocks & Commodities
FIGURE 2: EXAMPLE OF SHORT TRADE, BTC/USD. In the Bitcoin cash market, we identify a selling opportunity on August 16, 2021, characterized by price
being at the upper Bollinger Bands and the RSI being up in the region at or above the 70 level, suggesting an overbought market. However, we hesitate due to the
disagreement from the SMA. Eventually, on September 7, when the SMA confirmed, we execute the sell order, and the market moved downward as anticipated.

• Order: Buy • Strategy type: Trying to predict the potential trend

• Entry date: January 9, 2023 and taking advantage of it
• Entry price: 15.00 • Suitability: Good for part-time traders
• Stop-loss: 14.00 • Trading style: Position trading
• Take-profit: 18.00 • Timeframe: Daily chart and 4-hour chart
• Exit date: January 13, 2023 • Price levels: Major price levels, especially whole
numbers
In Figure 2 you see an example of a short trade in Bitcoin • Bullish setup: While price action is below the lower
using the pair BTC/USD. On the chart, price is at the level of the Bollinger Bands and the RSI line is
upper band of the Bollinger Bands in mid-August 2023 below the 30, we wait for the RSI line to cross up
and the RSI is above 70. Bearish candlesticks appear, and above the level. We also wait for either the EMA
the RSI begins to fall and crosses under the 70 level. This or the SMA to indicate a clear upward shift before
combination of indications from the Bollinger Bands, the taking a long trading position.
RSI, and bearish candlesticks suggests we begin to con- • Bearish setup: In this setup, the price action must
sider a bearish position in Bitcoin. However, the moving be around the upper Bollinger Bands area and the
average continues to trend upward at that point, so we RSI line must be above the 70 level to indicate an
take no action and wait for further developments. Several impending bearish shift. Then we wait for either
weeks later, a change is observed in the moving average the EMA or SMA to confirm the movement in the
when it starts some downward movement. This change in downward direction before shorting the position.
the moving average, which is a clue to market direction, • Position size: Using 0.01 lots for each $2,000
provides some clarification and some confirmation for a
bearish outlook. A short position is then initiated. The Continued on page 29
market continued downward as expected.

Strategy summary
Here is an overview of the Bollinger Bands+RSI+MA Picture two elastic bands that
trend strategy details: widen and narrow based on
market volatility.
• Strategy name: Prediction and confirmation of
trends using Bollinger Bands and RSI
January 2025 • Technical Analysis of Stocks & Commodities • 23
 INTERVIEW

Technical Analyst, Advisor, Author, Index Specialist

A Conversation With
Buff Pelz Dormeier
Buff Pelz Dormeier is a financial advisor with expertise in volume analysis.
He is chief technical analyst for Kingsview Partners. As a portfolio
manager for Kingsview Partners as well, he designs customized portfolio
strategies for advisors and their clientele using portfolio analytics to create
goals-based investment strategies. Dormeier is also an index specialist
with Monarch Funds. Monarch Funds are advised by Kingsview Wealth
Management LLC, an SEC-registered investment adviser.
Dormeier is a Chartered Market Technician (CMT) and member of
the CMT Association. In 2007 he won the Charles H. Dow award for
his technical research. He regularly speaks at industry conferences and
his work has appeared in a variety of media and technical journals. He
has contributed occasional articles to Technical Analysis of Stocks &
Commodities magazine for over two decades.
Dormeier is the author of two books, Investing With Volume
Analysis (2012) and his latest, The Volume Factor (2024). His website
is BuffDormeier.com.
We interviewed Buff Pelz Dormeier via email in October 2024 to I often comprehend things
discuss his current areas of research, his recent articles in S&C, his
new book, and the launch of two new ETFs in which he has a role.
from a different vantage
point than the crowd. I
tend to grasp concepts
We’ll start by asking and objective analysis, sparked from unconventional
you a little about your my interest in technical analysis angles.
background and what as a more reliable approach to
drove your interest in financial markets. That analyst
the quantitative side of financial was Chartered Market Technician You are the developer of several
analysis. What gave you an interest Jeffrey Weiss. volume-based tools. You’ve written
in technical analysis? about several of these tools in
My interest in technical analysis What brought you to the fields and articles for our magazine as well
began during my early days as a fi- areas of interest you are in today? as in your books. What does volume
nancial advisor. While most market My journey into volume analysis add to your analyses? Why is it
analysts at our brokerage firm relied stems from my unique approach to important?
on storytelling to promote stocks, learning and understanding complex As I passionately studied market
often leading to mixed results for systems. I have never been much of dynamics, I discovered that volume
investors, one analyst stood out. He a quick learner. I often comprehend often led and confirmed price move-
focused on technical aspects like things from a different vantage point ments, providing faster signals and
trends, support, resistance, patterns, than the crowd. I tend to grasp con- more accurate indications. Intrigued
and risk management, without relying cepts from unconventional angles, by this insight, I dedicated myself
on flashy narratives. His approach diving deep to understand core prin- to peeling back the layers of market
consistently yielded quick profits, and ciples rather than surface-level infor- structure and behavior, focusing on
when it didn’t, he promptly admitted mation. This trait led me to explore volume as the cause and price being
mistakes. This analyst’s method, volume in financial markets. its effect.
which prioritized capital preservation This approach aligned with my
24 • January 2025 • Technical Analysis of Stocks & Commodities
analytical strengths and my inclina- where volume analysis
tion to question established norms. and volume-weighted
By developing and rigorously test- indicators can play an My research pointed to
ing volume-based indicators and important role? improved outcomes when
strategies through scientific methods, Absolutely. I utilize cap- incorporating specific
I’ve carved out a niche in technical ital-weighted volume and
analysis that leverages my analyti- dollar volume to gauge
volume characteristics into
cal skills and unique perspective on the underlying health of trading strategies.
market dynamics. the broad market. Tradi-
tional index volume has
Was your research pointing to two significant flaws, which is why traded, capital-weighted volume
improved profits and improved I haven’t used traditional index data considers each component’s market
outcomes in trading when certain in decades. capitalization. This approach gives
volume characteristics were added First, most investors follow the more weight to larger companies, pro-
into the equation, whereas otherwise S&P 500 index, but the volume data viding a more accurate representation
they were not being considered or from most vendors is NYSE volume, of actual capital movement within the
in some cases weren’t given enough not the S&P 500 volume. This is market, harmonizing the relationship
weight, in your opinion? because stocks trade on exchanges, between price and volume. Taking
Indeed, my research pointed to and vendors simply report data this a step further, capital-weighted
improved outcomes when incorporat- directly from these exchanges. In dollar volume incorporates both vol-
ing specific volume characteristics our current “Magnificent 7” world, ume and price of trades. This metric
into trading strategies. Traditional where approximately 25% of the effectively tracks the actual money
volume analysis, while valuable, is index is controlled by just seven flowing in and out of the market,
often underutilized in the broader highly capitalized positions, these offering a more nuanced view of
investment community. However, major contributors are not factored market activity.
the most significant finding was the in because all Mag 7 stocks trade on The benefits of these capital-
discovery of previously unrecognized the NASDAQ, not the NYSE. Thus, weighted approaches are substan-
dynamic performance drivers related the biggest contributors do not have tial:
to volume. volume representation in most S&P
While traditional volume analysis 500 volume datafeeds. • Enhanced accuracy. These ap-
and concepts like volume spread The second issue is even more proaches provide a more precise
analysis offer some benefits, I found problematic. While stock indexes are picture of market activity by
that volume analysis is most potent weighted, such as capital-weighted, accounting for the size and influ-
when examining its asymmetrical volume indexes are tallied. This ence of different companies.
relationship to price, particularly in means that large mega-cap stocks • Improved trend identification.
terms of trends and momentum. This trading in the hundreds or thousands By tracking actual capital flows,
“delta” between volume and price be- per share are generally underweight- these metrics can help identify
haviors represents a largely untapped ed, while small penny stocks are emerging trends before they’re
source of market insight. usually significantly overweighted. fully reflected in price move-
My work has focused on develop- A prime example was Citigroup after ments.
ing and refining methods to exploit the 2008 financial crisis. Citigroup’s • Better risk assessment. Under-
this asymmetry, creating more robust S&P 500 capital weighting went from standing the volume of capital
indicators and strategies that capture approximately 5% in 2007 to less than moving in or out of the market
nuances in market behavior not read- 0.1% in 2009. Yet, before its reverse can help gauge the strength or
ily apparent through conventional split, Citigroup’s volume often ac- weakness of price movements.
analysis. counted for over 25% of the index’s • Insight into institutional activ-
daily volume on many datafeeds. ity. Large capital movements
You often speak of the importance Capital-weighted volume differs often indicate institutional
of tracking capital flows and being significantly from traditional index investor activity, which can be
able to see the money moving in volume. While index volume simply a leading indicator of market
and out of the stock market. Is this tallies the total number of shares direction.
January 2025 • Technical Analysis of Stocks & Commodities • 25
 2024. For over a year, diately apparent through traditional
the bond market had price analysis alone. Investors can
Traditional volume been anticipating inter- sign up for this letter for free at my
analysis, while valuable, est rate cuts, but stocks website, BuffDormeier.com.
weren’t reflecting this
is often underutilized in sentiment. However, in In your September 2024 article
the broader investment June 2024, although price in this magazine, “The Volume
community. indexes held steadily firm, Mom en t um In d i ca tor,” you
we witnessed massive, presented the VMI indicator
overwhelming downside you developed, which allows the
Volume-weighted indicators built capital-weighted volume, the likes trader to compare and contrast
on these principles may offer traders of which we hadn’t seen since the price momentum with volume-
and investors a significant edge. They weeks leading up to the infamous weighted price momentum. The
allow us to see beyond surface-level flash crash of 2010. VMI technique incorporates both
price movements and understand the traditional RSI and the MFI.
the underlying forces driving the At your website, you offer a free What can the VMI tell us about
market. This deeper insight may lead weekly market letter with a market possible volume imbalances in the
to more informed decision-making, update. Who is this for, and what do market?
improved timing of entries and exits, you cover in this weekly email? The volume momentum indicator
and ultimately, better risk-adjusted This actually ties in to what I was (VMI) is indeed a powerful tool for
returns. just commenting on. understanding market dynamics, and
In essence, by focusing on capital- In my weekly market letter, “Vol- it’s rooted in asymmetrical principles
weighted volume and dollar volume, ume Analysis Weekly,” I updated that parallel Newton’s laws of motion.
we’re able to “follow the money” the subtitle to “And Then There Just as Newton’s first law states that an
more precisely and accurately. This Were None,” referencing the rush of object in motion stays in motion un-
approach has been a cornerstone of capital out of the largest, most liquid less acted upon by an external force,
my work and has proven to be a pow- stocks in June 2024. This data clearly the VMI helps us identify when the
erful tool in navigating markets. Un- signaled that the previous discus- “force” of volume is aligning with or
derstanding the relationship between sions about interest rate cuts were diverging from price momentum.
volume and price is key to interpret- now transitioning into actual market The VMI compares the relative
ing this analysis effectively. action well before the rotation trade strength index (RSI), which measures
The drawback to this capital- was recognized. price momentum, with the money
weighting methodology is that it’s This example illustrates how flow index (MFI), which incorporates
complicated and data intensive. In volume analysis can provide early volume into its calculation. This
fact, when I first discovered capital- insights into significant market shifts. comparison is analogous to Newton’s
weighted volume, it took the fastest By focusing on capital-weighted vol- second law, which relates force to
computers available at the time over ume, we were able to identify a major mass and acceleration.
18 hours to compute. By the time I shift in investor behavior before it When the VMI shows a significant
received the results from the previ- fully manifested in price movements. divergence between RSI and MFI, it’s
ous close, the markets were already This type of analysis allows us to see indicating a potential volume imbal-
open and trading! Fortunately, with beyond surface-level price action and ance in the market. This imbalance
today’s computers, these calculations understand the underlying forces can be thought of as an “unbalanced
only take a few seconds. driving market dynamics. force” in Newtonian terms, suggest-
Such volume-weighted tools are ing that the current price momentum
Do volume-weighted tools also invaluable for investors and traders may not be sustainable.
help you to discern primary trend looking to stay ahead of primary In this way, the VMI helps us gauge
changes? trend changes. They may offer a the “reaction” in the market, akin to
Yes, volume-weighted tools are more nuanced and accurate picture Newton’s third law. When we see a
exceptionally effective in discern- of market sentiment, often providing strong action in price not supported
ing primary trend changes. A prime early warnings of shifts in market by volume, we can anticipate an equal
example of this occurred in June direction that might not be imme- and opposite reaction as the market
26 • January 2025 • Technical Analysis of Stocks & Commodities
corrects this imbalance. sive” game in the markets.
For instance, if we see a rising price Meanwhile, my “defen-
(high RSI) but declining volume- sive” game plan uses a risk Traditional index volume
weighted momentum (lower MFI), overlay incorporating the has two significant flaws,
the VMI would indicate a negative trend of capital-weighted which is why I haven’t used
divergence. This scenario suggests volume, capital-weighted
that the price movement lacks the dollar volume, and market
traditional index data in
“force” of volume behind it, poten- breadth. However, your decades.
tially signaling a weakening trend or question strikes deep at
an impending reversal. a core fallacy of most de-
Conversely, when the MFI is fensive strategies: Trend-following, the bottom on reentry. Unfortunately
significantly higher than the RSI, it almost by definition, means missing for trend followers, even those incor-
indicates that volume is flowing into
the security at a rate that exceeds
what the price movement alone would
suggest. This could be a precursor to
a breakout or an acceleration of the
current trend.
The VMI is particularly useful in
identifying situations where price
momentum and volume-weighted
momentum are out of sync. These
imbalances often precede significant
market moves, as they represent a
build-up of potential energy in the
market—much like the potential
energy in a compressed spring in
physics.

OPTUMA
In essence, the VMI allows us to
see beyond the surface-level price FIGURE 1: V-BOTTOM EXAMPLE, VOLUME PRICE CONFIRMATION INDICATOR. The volume price
movements and understand the confirmation indicator (VPCI) developed by Buff Dormeier uses volume information to help gauge market
sentiment. A V-bottom in the VPCI reflects a deeply oversold condition and, when particular measures
underlying “forces” at play in the
are met, it can signal a possible opportunity to reenter the market following a market downturn or
market. By identifying these volume downtrend.
imbalances, investors may be able
to better anticipate potential trend
changes and make more informed
decisions about market entry and
exit points.

After a bear or down market during

which you may have reduced your
positions, what types of things or
which of your tools might help
you to know when to reenter the
market? What do you look for in
this situation, or what gauges do
you follow and use to guide your
decisions? FIGURE 2: W-BOTTOM EXAMPLE, VOLUME PRICE CONFIRMATION INDICATOR. The VPCI calculates
I believe in employing prolific asymmetry between price trends and their corresponding volume, helping to identify market extremes. A
volume-based tools—volume indica- W-bottom in the VPCI reflects a shallower oversold condition than a V-bottom. After particular conditions
tors and momentum—for my “offen- are met, the second bottom would be considered a signal.
January 2025 • Technical Analysis of Stocks & Commodities • 27
 During bear market further. Does this most recent book
bottoms, SPY’s volume show your readers how using capital
Capital-weighted volume tends to skyrocket as flows can help to manage tactical
differs significantly from the market tanks. What positions as well as helping with
we are looking for is the portfolio management?
traditional index volume. SPY’s volume and price Yes, indeed. My two books serve
relationship to drive our different purposes and target distinct
VPCI two standard devia- audiences, each building upon the
porating volume, the strongest most tions below its lower Bollinger Band. foundations of volume analysis but
powerful segment of a bull market is This condition attempts to identify a with unique focuses.
its birth. To address this critical issue, VPCI washout bottom setup. Once My first book Investing With Vol-
our approach also incorporates what the setup is in place, our reentry ume Analysis was primarily aimed
we like to call our “special teams trigger awaits the VPCI to rise back at analysts and portfolio managers.
unit,” to use a football analogy. This up, crossing back over its lower Bol- It explored the technical concepts of
is a unit built for a swift transition linger Band. This trigger suggests the using volume analysis as a key tool
from defense back to offense. weak investors may have now fully in portfolio management, introducing
For transitioning from defense capitulated, clearing the way for a readers to the idea of volume as a
back to offence, we look to volume new market cycle. significant performance driver.
sentiment. Specifically, we look for So, the VPCI V-bottom is a deep My latest book, The Volume Fac-
rare moments when investors are oversold condition requiring the tor, takes this research several steps
capitulating, running scared out of the VPCI to fall both below -4 and its further. It’s designed for a broader
market. Counterintuitively, that’s of- lower Bollinger Band as a setup. The audience, including chief investment
ten the ideal time to race back in while reentry trigger occurs after these officers, financial advisors, and savvy
prices are severely depressed. conditions have been met and the individual investors. In this book, I
The cornerstone of our reentry VPCI crosses back above its lower demonstrate that volume is not just a
strategy is the volume price confir- Bollinger Band. (See Figure 1 for an leading indicator but what I consider
mation indicator (VPCI) V-bottom, example VPCI V-bottom on a chart to be the monarch of all investment
our trademark volume sentiment of SPY.) factors.
indicator. The VPCI calculates the Seeing a W-bottom appear on the The core thesis of The Volume
asymmetry between price trends and VPCI chart can also be a useful indi- Factor is that understanding and
their corresponding volume, helping cation. The VPCI W-bottom indicates leveraging capital flows can dramati-
to identify market extremes. a shallower oversold condition, also cally enhance both tactical position
Think of it this way: Do you know requiring the VPCI to fall beneath management and overall portfolio
anyone who’s always right? Prob- its lower Bollinger Band but the strategy. I illustrate how the “vol-
ably not, but you undoubtedly know indicator is only required to drop to ume factor” can be applied to create
several people who have a knack for - 0.4. However, this occurrence must successful investment outcomes in
seemingly doing the wrong thing at happen twice within 30 trading days. financial planning, providing a more
precisely the wrong time. There is The first setup and trigger is ignored comprehensive data-driven frame-
a ticker symbol tracking this type and the second setup and trigger is work to navigate not only markets but
of retail investor who often buy on taken. I recommend utilizing a time more importantly, outcomes.
greed and the fear of missing out. stop of 20 days for the most accurate This book delves deeper into how
These same people inevitably tend signals or 60 days for the most profit- volume and capital flows can be
to sell on fear when the trade goes able outcomes. (See Figure 2 for an used to:
against them, causing panic. What example VPCI W-bottom on a chart
ticker is it? It’s SPY. Yes, the SPDR of SPY.) • Identify market trends earlier
S&P 500 ETF that is widely con- and with greater accuracy
sidered representative of the stock Your first book, Investing With • Manage risk more effectively
market itself. As investors know, the Volume Analysis (2012), explores by understanding the “smart
SPY mirrors the S&P 500 index in using volume analysis for portfolio money” movements
price. Our volume sentiment analysis management. Your new book, The • Optimize entry and exit points
focuses on SPY’s volume. Volume Factor, takes this research for both tactical and strategic
28 • January 2025 • Technical Analysis of Stocks & Commodities
 positions What is your ongoing role for these Further reading
• Enhance overall portfolio con- two funds, if any? Dormeier, Buff Pelz [2024]. The
struction and management Given my portfolio expertise in the Volume Factor: Goals-Based
index strategies algorithms, my role Investment Strategies To Achieve
In essence, while my first book laid as an index specialist is to ensure that Successful Investment Outcomes,
the groundwork for understanding these ETFs track the benchmark in- BuffDormeier.com.
volume analysis, The Volume Factor dex efficiently and cost-effectively. [2012]. Investing With Volume
elevates this concept, demonstrating Analysis: Identify, Follow, And
its paramount importance in the What are some of the unique Profit From Trends, FT Press.
hierarchy of investment factors and features offered by these two ETFs [2024]. “Volume Confirmation
providing actionable strategies for a that may benefit investors? For A Trend System,” Technical
wide range of financial professionals They both utilize volume as their Analysis of Stocks & Commodi-
and sophisticated investors. primary performance drivers, em- ties, Volume 42: August.
ploying a volume factor. [2024]. “The Volume Momen-
In addition to your role as chief tum Indicator,” Technical Analysis
technical analyst at Kingsview Do the ETFs use some of your of Stocks & Commodities,
Partners, you also are an index proprietary indicators and tools? Volume 42: September.
specialist with Monarch Funds. In If so, what are the tools or what is [2011]. “Trend Thrust Indica-
2024, Monarch Funds launched the nature of these tools? tor,” Technical Analysis of Stocks
two new ETFs in which you have a Yes, briefly, concepts originating & Commodities, Volume 29:
role: the Monarch Volume Factor from my VPCI and VMI indicators August.
Global Unconstrained Index ETF are given consideration for market [2007]. “Between Price And
(symbol MVFG) and the Monarch entry. For defensive market position- Volume,” Technical Analysis of
Volume Factor Dividend Tree Index ing, the principles of capital-weighted Stocks & Commodities, Volume
ETF (symbol MVFD). How are you volume and capital-weighted dollar 25: July.
involved in these ETFs or the funds’ volume are given consideration. And [2001]. “Buff Up Your Moving
design? during times of market transitioning, Averages,” Technical Analysis of
I designed the algorithms for both indications provided by the VPCI are Stocks & Commodities, Volume
index ETFs. Their methodology and taken into consideration. 19: February.
construction incorporate volume fac-
tor concepts. Thank you, Buff.

MUSTAPHA/SMARTER ENTRIES & EXITS four methods I’ve outlined here to enhance Bollinger
Continued from page 23 Bands and generate associated trading signals is an ap-
proach you can try out for smarter entries and exits.

• Stop-loss: 100 pips Azeez Mustapha is an analyst at Instaforex Companies

• Take-profit: 300 pips Group and a blogger at Advfn.com, and as well as a
• Risk-to-reward ratio: 1:3 freelance author for various trading publications. He
• Breakeven stop: A stop at breakeven can be set after is a trading signals provider at some websites. He can
a gain of about 100 pips be reached via email at azeez.mustapha@analytics.
• Exit: Exit at the stop, breakeven of profit targets instaforex.com.

FinaL WOrdS ‡TradingView

‡See Editorial Resource Index
At times, the signals we seek don’t appear when expected.
Patience is key, waiting for the opportune moment. The
January 2025 • Technical Analysis of Stocks & Commodities • 29
 How Gold ETFs Have Fared Over The Years

Gold ETFs: Is It A Good Time

To Buy This Flashy Metal?
Gold had a stellar year. Could this asset be the place to be background on physical gold in a moment.
for the next few years? Here, we present a survey of gold- But first, I'll mention a few more notes and observa-
based ETFs and review some statistics and comparative tions about gold, its historical context, and how gold is
return data to help you decide whether an allocation sometimes perceived.
to one or some of these ETFs may be suitable for your Most investors assume that gold is an inflation hedge,
portfolio and for your diversification purposes. but when inflation increased in 2022, gold barely moved.
Interestingly, with inflation falling in 2024 to around

In
by Leslie N. Masonson, MBA 2.5% in the fourth quarter, gold and gold ETFs made
numerous new all-time highs.
2024, gold had a “brilliant” year by produc- As most investors know, gold often becomes popular
ing multiple new all-time highs throughout in times of uncertainty. This can include during times
the year. Between the start of 2024 and of rising geopolitical tensions, during times of domestic
October 31, 2024, the price of gold soared uncertainty, and so on. Uncertainty surrounding the No-
34.7%, outpacing gains in both the S&P 500 vember 2024 U.S. election increased the demand for gold
(which saw a gain of 23.2% during that period) as well as a safe haven. It will be interesting to watch gold’s price
as the Nasdaq Composite Index. In alignment with that, following the election and in the remainder of the fourth
this strong rate of return was also seen by gold ETFs, quarter 2024 to determine if its shine is dimming.
such as GLD and others. This was the largest gold Another aspect of the economy that can have an impact
ETF percent price increase since the phenomenal 2005 on gold is interest rates. The Fed finally implemented an
through late 2011 period when gold prices soared 387%. anticipated rate cut in September 2024, and, as I write
JIVACORE/SHUTTERSTOCK

From GLD’s low point in early 2018, it sprinted 156% this, another cut is expected in the fourth quarter of 2024.
through late 2024. Could we be only halfway through There is not a perfect correlation between rate cuts and
this “golden era”? the price of gold, but it is correlated nonetheless.
Before diving into gold ETFs, I’ll start with some
30 • January 2025 • Technical Analysis of Stocks & Commodities
 WHY TRADE ETFS?

Gold background future, bitcoin will replace gold as the standard store of
Gold is one of the oldest commodities (it has a 6,000-year value, but that is not on the horizon at the moment.
history). It’s been a store of value going back to ancient
times. It was used to make decorative objects as far back Gold ETF review
as around 4000 BC, based on archeological discoveries Figure 1 provides the nine gold ETFs and their ticker
in Europe. A little later it was used to make jewelry and symbols reviewed for this article. I purposely did not
idols for worship. Around 1500 BC, Egypt produced include gold miners or other ETFs that use gold as the
the first gold coin called the shekel, which weighed 11.2 basis for other strategies like bull and bear leverage
grams; it was composed of mostly gold plus a small (UGL, DGP, GLL, DZZ), buffered products (BGLD),
amount of silver. Jumping forward in time to 1787 (to option writing (USG, GLDI), or target income (IGLD). I
skip over some of the detailed history), the first U.S. gold wanted the comparison to be a 100% match of the same
coin was produced. In 1792, the Coinage Act was passed commodity with no fancy or subtle changes. That be-
by Congress. There is much more history about gold’s ing the case, this ETF review is much less complicated
journey, including the gold standard and other issues, than ETF reviews I have previously done, where I had
that is beyond the scope of this article. to evaluate portfolios of stocks and other characteristics
Gold’s scarcity makes it a precious metal. Interestingly, of comparable equity ETFs.
all the gold mined throughout history would fit into a
square box with sides of around 20 meters in length, Common characteristics
according to an unidentified source. Gold has numer- The nine gold ETFs had many common characteristics
ous notable characteristics as a metal. It is soft and is including:
the most malleable and ductile of the elemental metals.
It is an excellent conductor of heat and electricity; it re- • Gold is physically held
sists corrosion and tarnishing; and it can be spread into • Grantor legal structure
extremely thin sheets known as gold leaf. Gold has had • Global market reach
many uses over the years, including to make jewelry, • No leverage
watches, coins, teeth, Olympic medals, medallions, Os- • Passive management
car awards, art, statues, painted ceilings, and famously, • No dividends paid
toilet seats. Gold is made into bars for storage and for • NYSE Arca listing
resale units. On the industrial side, it is used in electronic • 1099 tax reporting
components, electrolytes, catalysts, space exploration, • Positive performance in all timeframes
dentistry, and medicine.
The one use of gold that applies to this article is its Observe that State Street offers two ETFs, GLD and
wealth protection and “store of value” status. It is pur- GLDM, and that Blackrock (iShares) also offers two
chased most often in times of economic and financial ETFs in this category, IAU and IAUM.
distress, inflation, and other
catastrophic events. Paper Ticker Fund Name Assets under manage-
money tends to get depreciated GLD SPDR Gold Shares ment and expenses
over time and its value shrinks IAU iShares Gold Trust
Figure 2 provides a com-
in times of high inflation. As parative evaluation of the nine
an example, in some South GLDM SPDR Gold MiniShares Trust
ETFs. Combined, their total as-
American countries, it can SGOL abrdn Physical Gold Shares ETF sets under management (AUM)
take 100,000 notes in the home IAUM iShares Gold Trust Micro ETF of Benef Interest
was $129.8 billion with an
currency to buy a loaf of bread. average expense ratio of 0.22%,
Gold continues to be viewed OUNZ VanEck Merk Gold ETF and one-year net inflows of $3.4
as a safe haven in times of AAAU Goldman Sachs Physical Gold ETF billion, as of October 29, 2024,
unrest, distress, upheaval, and according to www.ETFAction.
BAR GraniteShares Gold Shares
uncertainty about the future. com. This website was used
Gold historically has had long FGDL Franklin Responsibly Sourced Gold ETF for all the data in this article,
periods of subpar performance FIGURE 1: GOLD ETFS. Here you see the names and tickers of gold ETFs except for the charts and the
followed by above-average that hold only physical gold. Note that the SSGA (SPDR) has two ETFs in performance commentary
performance. Perhaps in the this category, and Blackrock offers two iShares-branded ETFs. related to the charts.
January 2025 • Technical Analysis of Stocks & Commodities • 31
 Brand Inception Expense Avg. Daily Flows 1 Yr. Flows 3 Yrs. Flows 5 Yrs.
Ticker AUM ($MM) Perf. 1 Yr. Perf. 3 Yrs. Perf 5 Yrs.
Name Date Ratio Volume ($MM) ($MM) ($MM)
GLD SPDR 11/18/2004 0.40% $78,270 5,802,566 36.09% 14.65% 12.48% $3,144 ($2,781) $701
IAU iShares 1/21/2005 0.25% $33,381 4,272,526 36.23% 14.80% 12.65% ($1,328) ($6,333) $1,778
GLDM SPDR 6/25/2018 0.10% $9,584 3,357,003 36.52% 14.97% 12.77% $1,197 $2,385 $5,349
SGOL abrdn 9/9/2009 0.17% $3,892 3,050,418 36.35% 14.89% 12.73% $160 $281 $1,247
IAUM iShares 6/15/2021 0.09% $1,462 2,035,893 36.41% 15.00% $157 $155 $951
OUNZ VanEck 5/16/2014 0.25% $1,217 991,173 36.23% 14.79% 12.63% $172 $290 $659
Goldman
AAAU 7/26/2018 0.18% $940 2,138,545 36.44% 14.92% 12.74% $166 $275 $481
Sachs

ETFACTION.COM
Granite-
BAR 8/31/2017 0.17% $905 772,288 36.30% 14.89% 12.71% ($317) ($347) ($178)
Shares
FGDL Franklin 6/30/2022 0.15% $97 12,565 37.17% $5 $63 $63
FIGURE 2: GOLD ETF COMPARISON. The top four ETFs have captured 95% of the category assets. GLD and its twin hold 68% if the assets. Three ETFs have less
than $1 billion in AUM making their longevity questionable.

GLD, offered by State Street Global Advisors (SSGA), Blackrock’s iShares ETF, IAU, came into existence
rules the roost with the earliest inception date of November about a year after GLD, capturing a significant $33.4
18, 2004, and its massive AUM of $78.3 billion. That billion in AUM with only a 0.25% expense ratio, beat-
represents 60% of the category’s total. However, its 0.40% ing GLD by 15 basis points, thus drawing away assets
expense ratio was the highest of all. That is one reason from GLD. It was a no-brainer for investors to prefer
why its performance figures were about 15 to 35 basis IAU to capture the extra dollars provided by the 15 ba-
points lower in all the periods shown than its competitors sis point advantage of a lower fee. Had SSGA brought
with lower ratios, which will be covered shortly. out GLDM earlier instead of waiting 14 years after its
Notice that GLDM is also sponsored by SSGA. It came launch of GLD, it could have probably captured 90% of
in third place in AUM at $9.6 billion with a June 25, 2018 all the assets earlier on, but that was not the case, to the
launch date. These ETF twins offer the same product, ex- advantage of Blackrock.
cept the latter sports an expense ratio of only 0.10%, which Blackrock also used the same strategy by launching
is much lower than the 0.40% rate for GLD. Moreover, IAUM on June 15, 2021, with this twin at a 0.09% expense
it was the second lowest of the group, but was the lowest ratio, the lowest of all those here. IAUM has brought in
until IAUM came to market in 2021 at 0.09%. $1.5 billion AUM. So the two big players in the gold ETF
In order to capture more market share, SSGA was arena are SSGA and Blackrock with combined assets of
strategic and brought out GLDM for conservative long- $87.9 billion and $34.8 billion, respectively. Together,
term buy-and-hold investors to provide the best bang for they dominate the category with 94.6% of the AUM, a
the buck in this category, as GLDM consistently outper- staggering controlling interest.
formed all these ETFs in most timeframes, or came in Because of their overwhelming category dominance,
second in a few cases. Comparing its performance in the I will not be spending much time reviewing the other
timeframes in Figure 2, GLDM beat GLD by 43 basis five ETFs. In general, those have lower AUM, expense
points in the one-year performance, 32 basis points in ratios between 0.15% and 0.25%, much lower daily vol-
the three-year performance, and 0.29 in the five-year ume (except for AAAU), and somewhat lower inflows,
performance. That differential mounts over time and that but they have almost comparable performance to the
is why certain investors flock to that offering. lowest-cost ETFs showing the most competitive gains.
FGDL had the best one-year performance at 37.2% but
it is only 2.5 years old with only $97 million in AUM
and a weak 12,565 daily share volume. You may want
Gold continues to be viewed to put this ETF on your watchlist and check it out in a
few years to see if it still has the best performance in
as a safe haven in times of this category.
unrest, distress, upheaval, and
uncertainty about the future. Trading volume and cash inflows and
outflows
As expected, GLD provides the largest daily volume at
32 • January 2025 • Technical Analysis of Stocks & Commodities
5.8 million shares. But IAU
is not far behind at 4.3 mil-
lion shares. Also, GLDM and
IAUM top 3.3 million and 2.0
million shares, respectively.
Even AAAU has over 2 mil-
lion shares a day. Traders can
use any of the top five ETFs
and AAAU to obtain a decent
bid-to-ask spread and accept-
able liquidity.
The cash flows present
a mixed picture. Over the
past one year, GLD has
captured $3.1 billion and its
twin GLDM has grabbed
$1.2 billion. On the other
hand, Blackrock’s IAU has

STOCKCHARTS.COM
disgorged $1.2 billion, after
losing a massive 6.3 billion
over the past three years.
GLD has lost $2.8 billion over FIGURE 3: GLD, LATE 2004 THROUGH OCTOBER 29, 2024. Gold had a terrific run from early 2005 through November
three years. It is not surpris- 2011, then a downswing into 2016, then a long basing period followed by a big run up from 2019 through October
ing that GLDM captured $2.4 2024. The buy arrows shown on the chart are based on RSI and MACD signals.
billion in three years with its
lower expense ratio. IAUM,
on the other hand, captured
only around $156 million in
the last one and three years.
GLDM gained the most AUM
over five years at $5.3 billion,
with SGOL in second place
at $1.2 billion.

GLD performance
chart review
In the upcoming chart ex-
amples, I will use GLD to
represent the typical gold
ETF.
Figure 3 shows a GLD
weekly candlestick chart
beginning in late 2004 with
a price of around $40 per FIGURE 4: 20-YEAR COMPARISON OF GLD TO MAJOR INDEXES. The Nasdaq (red line) was the clear winner, but
share near its inception date GLD (purple line) came in second. Most investors would not have predicted this over a 20-year period.
of November 18, 2004. As
you can see, it had a great run, reaching around $195 a is acceptable to most investors. I have placed key buy
share by October 2011, a runup of 387%. Then it cratered, points using arrows on the chart based on the reversal
basing around $100 from 2013 through mid-2019, when of the RSI going below 30 and then rising above it, and
it began its next leap to around $195 again. So basically, the MACD with an upward cross occurring below the
it was dead money for eight years, not something that zero line. Both of those indicators confirmed the same
January 2025 • Technical Analysis of Stocks & Commodities • 33
 entry point. Moreover, anyone
using either the 50-day mov-
ing average (DMA) or the
200-DMA could have easily
seen the GLD price rise above
those levels to get the buy sig-
nals, and vice versa. The best
buy points occurred when the
RSI and MACD turned up
after hitting lows and coincid-
ing with the GLD price being
above the 50- or 200-DMA.
The most conservative and FIGURE 5: GOLD UNDERPERFORMS OVER 10-YEAR PERIOD. During this bullish period, except for the quick COVID
safest entry is when the price crash, GLD (purple line) was the laggard. That is usually the case for gold in long bull runs.
is above the 200-DMA.

GLD performance
compared to Dow
Jones Industrials,
SPY, and Nasdaq Com-
posite
20-year chart shows outper-
formance
Figure 4 provides a com-
parison of GLD to three
major U.S. stock indexes
for the period November 18,
2004–October 29, 2024. The FIGURE 6: MOST RECENT THREE-YEAR PERIOD FOR GLD AND MARKET INDEXES. GLD was the leader because
performance statistics are as the 2022 bear market crushed the equity markets while GLD held its own and even outpaced market indexes in
of October 29, 2024 as pro- calendar year 2024.
vided by StockCharts.com.
The starting date of November 18, 2004 was selected for indexes, as follows:
this chart, since that is when gold began to accelerate in
price. Over this 20-year period, GLD performed better • COMP 351.7%
than the DJIA and S&P 500 ETFs with a gain of 477%. • DJIA 156.9%
Only the Nasdaq Composite with a gain of 789.3% was • SPY 218.39%
a much better performer, but it experienced roller-coaster • GLD 117.0%
volatility.
Clearly, the Nasdaq Composite crushed the competition,
• COMP 789.3% but also had a 37% decline in 2022 before recovering.
• DJIA 299.5% Gold experienced a long flat period from mid-2020
• SPY 392.8% through early 2024 before starting its ascent. It was stable
• GLD 477.0% during the COVID pandemic, but did not participate in
the subsequent two-year rally.
10-year chart shows underperformance
Figure 5 provides a comparison of GLD to three major 3-year chart shows outperformance
U.S. stock indexes for the period January 2, 2014–October Figure 6 provides a comparison of GLD to three major U.S.
29, 2024. The performance statistics are as of October stock indexes for the period December 29, 2021–October
29, 2024 as provided by StockCharts.com. The starting 29, 2024. The performance statistics are as of October
date of January 2, 2014 was selected here because it 29, 2024 as provided by StockCharts.com. The chart
was a period where GLD underperformed all the major shows an approximately three-year period. Remember
34 • January 2025 • Technical Analysis of Stocks & Commodities
 Decade Gold S&P 500 Ticker Fund Name Perf. YTD Perf. 1 Yr. Perf. 3 Yrs. Perf. 5 Yrs. Perf. 10 Yrs.
1970s 31% 6% SPY SPDR S&P 500 ETF Trust 23.18% 41.46% 9.69% 15.56% 13.26%
RITHOLTZ WEALTH MANAGEMENT

1980s −2% 17% GLD SPDR Gold Shares 34.70% 39.11% 15.59% 12.79% 8.38%
1990s −3% 18% UGL ProShares Ultra Gold 67.42% 75.50% 23.12% 17.29% 10.40%
2000s 14% −1% DB Gold Double Long
DGP 71.20% 79.05% 25.61% 20.07% 11.90%
ETNs
2010s 3% 13%
GLL ProShares UltraShort Gold −40.96% −43.89% −22.60% −22.16% −16.93%

ETFACTION.COM
2020s 13% 15%
Deutsche Bank Ag London
FIGURE 7: GOLD VS S&P 500 PER- DZZ Gold Double Short −36.22% −33.07% −16.71% −17.92% −14.08%
FORMANCE OVER DECADES. Gold Exchange Traded (Nts)
excelled in the 1970s and 2000s during FIGURE 8: GLD AND LEVERAGED GOLD ETF PERFORMANCE COMPARISON. The 2× bullish ETF UGL and bullish ETN
times of distress, while the S&P 500 pow- DGP, although outperforming GLD, did not actually double its return due to the daily reset and negative compounding
ered ahead in the 1980s and 1990s. during flat or falling periods.

that 2022 was a bear market year for the major indexes.
GLD declined as well, about 25% from peak to through,
but was able to power forward from October 2022
through October 2024. Thus, for this three-year period,
GLD more than doubled the performance of the major
averages because of its better performance in 2022 and
its ability to keep marching ahead. Here are the perfor-
mance figures for the three-year period:

• COMP 18.7%
• DJIA 15.7%

WWW.DAILYSHOT.COM
• SPY 21.7%
• GLD 51.9%

Gold over multiple time periods FIGURE 9: GOLD’S ANNUAL PERFORMANCE SINCE 2005. 2024 may be the
There is no clear correlation between the price of gold best or second best-performing year since 1995. The variability of the price
and stock price performance. Diversification into gold is returns is evident with no consistency in its annual returns.
a strategy used by many investors, as a counter to their
equity positions. On some occasions they move in sync of GLD to the SPY and four double-leveraged ETFs, two
and in some they diverge. One period over its history bullish and two bearish, for the benefit of aggressive gold
when they both moved together with high double digits, ETF traders. GLD had a better performance in 2024
as they have in 2024, was during the 12 months ending year-to-date, as well as the three-year timeframe. The
November 1980 when the S&P 500 advanced about 39% SPY had a 2 to 6 percentage point annualized advantage
and gold jumped nearly 49%. in all the other time periods shown. Remember that 2022
Figure 7 provides a comparison of the price of gold was a bear market year for the stock market, which is
and the S&P 500 index over six decades. Gold excelled included in these three-year returns. That’s why gold held
during the 1970s and 2000s when there were economic up better, as it often does in times of turmoil.
issues and big bear markets. The S&P 500 had exception- The bull double-leveraged gold ETF and ETN both had
ally strong performance in the back-to-back 1980s and superior performance year-to-date as well as over one
1990s with an average 17.5% annualized return. Also, year and over three years, but their performance was not
it beat gold by 10 percentage points in the 2010s and by so great over five years and longer. The measurement is
only 2 percentage points in the 2020s. to see if these leveraged ETFs can capture a 2× return
of GLD. In most cases, it was less than that, due to the
Gold compared to SPY and leveraged daily reset of the ETF price and negative compounding
ETFs in flat or declining periods. The bear leveraged ETFs
Aggressive traders may be interested in how the lever- were losers in all time periods, so investors and traders
aged gold ETFs performed compared to GLD and SPY. should stay away from them.
Figure 8 provides a comparison of the price performance
January 2025 • Technical Analysis of Stocks & Commodities • 35
 Gold compared on annual basis
Figure 9 provides a visual of gold’s 2024 performance
(through early October) compared to all years since 2005.
If gold continues its ascent into year-end 2024, then it
will be the first or second-best year performance-wise.
The wide variation in annual returns is quite evident by
looking at this diagram.

Gold seasonality
Seasonality is a very common approach to uncovering
profitable short-term trades in commodities, stocks, and
futures. Figure 10 from Stockcharts.com provides a look
at the percent of months that GLD closed higher since
2005 through October 29, 2024, a 20-year timeframe. FIGURE 10: GLD SEASONALITY OVER 20 YEARS. Only four months had
In this example, the worst-performing months with only a 60% or higher percentage of winning performance, and 60% is not that
40% of the months closing higher were March, May, June, significant for GLD traders. Higher percentages such as 75% or more would
and September. The three best months were January, offer better odds of making money.
July, and December with a 65% number.
Figure 11 shows the more recent 10-year period. Decem-
ber and January offer the best back-to-back performance
with over 70% of those months being positive. Also, July
comes in at the same number. Those results also match
the previous 20-year best months. So short-term traders
interested in taking advantages of potentially profitable
trades should concentrate their efforts during those
months, but realize that there is a 30% to 35% prob-
ability that the results will not be profitable, so defensive
maneuvers are needed to avoid large losses.
Note that September has deteriorated over the most
recent 10 years to a 20% positive month versus 40% over
20 years. Coincidentally, that is the same month that is
FIGURE 11: GLD SEASONALITY OVER 10 YEARS. This more recent period
the weakest for the SPY. That means that investing in
produced improved winning month percentages, with January, July, and
a gold ETF to counter the expected price decline in the especially December all above 70%. That provides GLD traders with a higher
S&P 500 in September is not a high-probability trade. probability of making money when going long GLD.

Conclusions executive of The Vanguard Group, said on numerous

GLDM had the best performance in all time periods occasions, which I paraphrase here: Buy an index fund
because of its low expense ratio. That is the only variable with the lowest expense ratio in its category and hold it
for the most part that distinguishes each of these ETFs, forever. That philosophy works well in the case of gold
because they all hold the exact same commodity with and silver, as they tend to move together.
no variation. Moreover, with a large asset base and trad- Although not previously mentioned here, other pre-
ing volume in the millions, GLDM is a clear choice for cious metals like silver, palladium, and platinum are
any investor. As John Bogle, the late founder and chief also available as ETFs. For your benefit, I’ve checked
out their performance against GLD for 1 year, 3 years
annualized, and 5 years annualized through October 31,
2024. Palladium (PALL) was the worst performer in all
Gold historically has had long periods periods, gaining 1.8% in one year and losing 17% annu-
of subpar performance followed by alized in three years and 9% annualized over five years.
above-average performance. Platinum (PPLT) was the next worst performer with a
gain of 7.7% in one year, a loss of 0.69% over three years,
and a gain of 1.3% over five years. Silver (SLV) was the
36 • January 2025 • Technical Analysis of Stocks & Commodities
best one-year performer with a 44.4% gain, 11.7% over
three years, and 12.98% over five years.
GLD’s comparative numbers over the same periods Most investors assume that gold
were 39.1% over one year, 15.5% over three years, and is an inflation hedge, but when
12.8% over five years. And GLDM’s numbers are even inflation increased in 2022, gold
better, as previously shown. SLV beat gold only over the barely moved.
past year and was basically tied over five years annual-
ized. Therefore, GLD and GLDM’s overall performance
is the best of all the precious metal ETFs. active NASDAQ futures day trader, and the author of
In view of this record, long-term buy-and-hold inves- six books including Buy—Don’t Hold: Investing With
tors might wish to go with GLDM with its low 0.10% ETFs Using Relative Strength To Increase Returns With
expense ratio, which was one-quarter the size of GLD’s Less Risk, and All About Market Timing (two editions),
expense ratio. Since there is no difference in the holdings as well as Day Trading On The Edge. Contact him at
of each ETF, investors could earn a higher return with lesmasonson@yahoo.com or 845 323-7276.
GLDM considering the expense ratio. For traders, GLD
is usually the go-to vehicle for its larger trading volume Further reading & resources
and higher liquidity. Other gold ETFs could also be used Arora, Bani [2016]. “Revival Of The Gold Myth,” Tech-
for trading as long as the volume is high enough—say, nical Analysis of Stocks & Commodities, Volume
over 500,000 shares a day—and the bid-to-ask spread is 34: August.
no more than a few pennies. am.gs.com • www.abrdn.com • franklintempleton.com
• www.granitesharers.com • www.ishares.com
S&C contributing writer and ETF columnist Leslie N. • www.ssga.com • www.vaneck.com
Masonson is president of Cash Management Resources,
a firm focusing on ETF trading strategies. He is an

Algo Q&A
DAVEY drawdowns greater than $5K?
Continued from page 41 Even with a $50K account, that There is almost zero
is a nearly 35% max drawdown, chance this strategy
which most cannot handle.
strategy development is having a 9. There are other secondary con-
will perform well going
repeatable process that you trust siderations too. Did you apply forward.
to produce profitable real time the right amount of slippage for
strategies. This strategy looks coffee, which is a fairly high- backtest looks good, but right below
like the process used was “test slippage, low-liquidity market? the surface there are so many red
various ideas until something Not a deal killer with only 11 flags, any of which could be a deal
works, like a blind squirrel even- trades, but something to look killer. There is almost zero chance
tually finding a nut” approach. at. Not including slippage and this strategy will perform well going
7. 100% winning trades, which commission costs, or underesti- forward and if it somehow does,
your backtest shows, always mating them, is a frequent mis- it is likely due to good luck and
scare me. If you look at the de- take of inexperienced strategy randomness.
tailed equity curve (Figure 2), developers. Sorry to be the bearer of bad news,
the strategy certainly looks a lot but this strategy belongs in the trash
more risky. Adding up all the concerns and bin. The process you used to create
8. If you were to trade this live, questions I have, it is pretty clear that the strategy belongs there, too.
could you actually handle a you’ve likely wasted two months on
$17K drawdown and multiple this strategy. Sure, the closed trade
January 2025 • Technical Analysis of Stocks & Commodities • 37
 Explore Your Options
GOT A QUESTION ABOUT OPTIONS?
Jay Kaeppel has over three decades of experience in the options markets. He
was a head trader for a CTA firm, an options trading software developer,
and was a portfolio manager for an investment management firm. He is
presently Senior Research Analyst for Sentimentrader.com. He is the author
of several books, including The Four Biggest Mistakes In Option Trading;
The Option Trader’s Guide To Probability, Volatility, And Timing; and
Seasonal Stock Market Trends. Send your questions or topic suggestions
to Jay Kaeppel at jay@sentimentrader.com. Selected questions will appear
in a future issue of S&C.
Jay Kaeppel

THE BEST STRIKE PRICE WHEN of AMZN stocks. The particulars for • The cost to enter this position is
BUYING A CALL OPTION? this long trade appear in Figure 1, and $18,882
I am bullish on a high-priced stock the risk curves appear in Figure 2. • The breakeven price at expiration
over the next two months but can’t The biggest obstacle to taking is $188.82
commit the capital to buy 100 shares. this position is the initial cost. With • “Delta” measures the “stock
I am looking at call options but am AMZN shares trading at $188.82 a equivalent position” for an option
unsure which strike price to buy. Are share, the 100-share position will cost trade. Not surprisingly, a long
there any guidelines? $18,882 to enter. From there, the “risk 100-share position in AMZN
Guidelines, yes. Hard and fast rules, curves” in this case are straight lines stock has a delta of 100
no. The key to choosing which strike because, for each $1 gain or loss in • If AMZN rallies to $255, this posi-
price call to buy if you are bullish the price of AMZN shares, the stock tion will show a gain of roughly
is to gauge your own expectations. position will gain or lose $100. $6,618 (or 35% of the entry cost)
The rules of thumb to keep in mind • If AMZN declines to $140, this
are these:

• The deeper in-the-money the

strike price, the higher the cost

WWW.OPTIONSANALYSIS.COM
to enter, the lower the percentage
profit potential (less leverage),
but the higher the probability of
a profit
• The further out-of-the-money the FIGURE 1: TRADE PARTICULARS, LONG STOCK POSITION. In this example scenario, the trader buys 100
strike price, the lower the cost to shares of AMZN stock outright. The cost to enter the position is $18,882 (100 shares x $188.82 per share).
enter, the greater the percentage
profit potential (more profit poten-
tial), but the lower the probability
of a profit

The best way to illustrate this is with

some examples. We will use Amazon
(AMZN) for the examples.

Buying 100 shares of stock

Let’s assume that on October 11,
2024, a trader decides that they ex-
pect AMZN shares to rally prior to
the December option expiration on FIGURE 2: RISK CURVES, LONG STOCK POSITION. This demonstrates the risk curves for the example
December 20. The most straightfor- long position from Figure 1. The “risk curves” in this case are straight lines, since for each $1 gain or loss in
ward approach is to buy 100 shares the stock’s price, the long position (100 shares) will gain or lose $100.
38 • January 2025 • Technical Analysis of Stocks & Commodities
 Options
position can lose up to $4,882 (or
26% of the entry cost)

Buying an in-the-money FIGURE 3: TRADE PARTICULARS, IN-THE-MONEY CALL OPTION. In this example scenario, the trader
buys an in-the-money call option on AMZN stock. The cost to enter this position (and the maximum risk) is
call option
$2,390 (or just 12.6% of the cost of buying 100 shares of stock as in Figure 1).
Instead of buying 100 shares of
AMZN and paying almost $19K,
let’s consider buying an in-the-money
call option instead. For this example,
we will buy one December 2024 170
strike price call option at $23.90. The
particulars for this position appear
in Figure 3, and the risk curves in
Figure 4.

• The cost to enter this position

(and the maximum risk) is $2,390
(or 12.6% as much as buying 100
shares of stock)
• The breakeven price at expiration FIGURE 4: RISK CURVES, IN-THE-MONEY CALL OPTION. This demonstrates the risk curves for the
is $193.90 example in-the-money call option position from Figure 3. The risk curves show the expected dollar gain or
• The position has a delta of 79.70 loss based on the price of the underlying stock as of four dates leading up to option expiration. The option
(which means that buying one call expiration date is shown here as a black line.
is roughly equivalent to buying 80
shares of AMZN)
• If AMZN rallies to $255, this
position will show a gain of
roughly $6,110 (or 156% of the
entry cost)
• If AMZN declines to $140, this
position can lose up to $2,390 FIGURE 5: TRADE PARTICULARS, AT-THE-MONEY CALL OPTION. In this example scenario, the trader
buys an at-the-money call option on AMZN stock. The cost to enter this position (and the maximum risk)
Buying an at-the-money is $1,080 (or 5.7% of the cost of buying 100 shares of stock outright). Thus, this trade has a lower cost of
call option entry than the scenarios represented in either Figures 1 or 3 but a greater probability of losing the premium
Instead of buying 100 shares of paid, by comparison.
AMZN or a more expensive in-the-
money call, let’s consider a less costly
at-the-money strike price. For this
example, we will buy one December
2024 190 strike price call option at
$10.80. The particulars for this posi-
tion appear in Figure 5, and the risk
curves in Figure 6.

• The cost to enter this position

(and the maximum risk) is $1,080
(or 5.7% as much as buying 100
shares of stock)
• The breakeven price at expiration FIGURE 6: RISK CURVES, AT-THE-MONEY CALL OPTION. This demonstrates the risk curves for the example
is $200.80 at-the-money call option position from Figure 5. The breakeven price at expiration is $200.80, so this trade
• The position has a delta of 53.45 would have a higher breakeven price than the trade depicted in Figure 4 (an in-the-money call option).
January 2025 • Technical Analysis of Stocks & Commodities • 39
 Explore Your Options
(which means that buying one call
is roughly equivalent to buying 53
shares of AMZN)
• If AMZN rallies to $255, this
position will show a gain of
roughly $5,420 (or 392% of the
entry cost)
• If AMZN declines to $140, this FIGURE 7: TRADE PARTICULARS, OUT-OF-THE-MONEY CALL OPTION. In this example scenario, the
trader buys an out-of-the-money call option on AMZN stock. The cost to enter this position (and the maximum
position can lose up to $1,080
risk) is just $260 (or 1.4% as much as buying 100 shares of stock). Thus, this trade has a lower cost of entry
than the scenarios represented in Figures 1, 3, or 5 but a higher probability of losing the entire premium.
The favorable tradeoffs are a lower
cost of entry and a greater percentage
profit potential if AMZN shares rally
significantly.
The unfavorable tradeoffs are a
higher breakeven price and a greater
probability of losing the entire
premium paid.

Buying an out-of-the-
money call option
Instead of buying 100 shares of
AMZN or a more expensive in-the-
money call or at-the-money call,
FIGURE 8: RISK CURVES, OUT-OF-THE-MONEY CALL OPTION. This demonstrates the risk curves for the
let’s consider a more speculative bet
example out-of-the-money call option position from Figure 7. The breakeven price at expiration is $217.60,
that AMZN shares will rise sharply. so this trade has a higher breakeven price than the trades depicted in all the earlier example scenarios.
For this example, we will buy one
December 2024 215 strike price call potential for a far greater percentage
option at $2.60. The particulars for profit potential if AMZN shares rally The key to choosing
this position appear in Figure 7, and significantly. which strike price is
the risk curves in Figure 8. The unfavorable tradeoff is that
if AMZN shares do anything but
to gauge your own
• The cost to enter this position (and rally by at least roughly 29 points, expectations.
the maximum risk) is just $260 the probability of losing the entire
(or 1.4% as much as buying 100 premium is very high. profitability if the underlying secu-
shares of stock) rity makes a significant move, then a
• The breakeven price at expiration Considering the tradeoffs farther out-of-the-money strike can
is $217.60 In choosing a strike price, the real make the most sense.
• The position has a delta of 19.59 question is not “Which is the best Bottom line: If you are looking for
(which means that buying one call strike price?” The real questions are a position that will track most closely
is roughly equivalent to buying 20 “What do I expect the stock to do?” with the stock, select a lower strike
shares of AMZN) and “What tradeoff am I willing to price. Suppose you want maximum
• If AMZN rallies to $255, this accept?” The deepest in-the-money leverage and maximum gain (and you
position will show a gain of strike has the highest probability are okay with losing the premium
roughly $3,240 (or 1,146% of the of showing any profit (since it has paid), choose a higher strike price.
entry cost) a closer breakeven price and will If your expectations or feelings are
• If AMZN declines to $140, this begin to move point-for-point with mixed, consider a closer to at-the-
position can lose up to $260 the stock price sooner than a farther money strike.
out-of-the-money strike). On the ‡Optionsanalysis.com
The favorable tradeoffs are the other hand, if a trader determines that ‡See Editorial Resource Index
extremely low cost of entry, and the they specifically want to maximize
40 • January 2025 • Technical Analysis of Stocks & Commodities
 Algo Q&A
ALGORITHMIC TRADING
Have a question about system or algo trading? Kevin J. Davey has over 30
years of system trading experience. Davey is a full-time trader, and also
teaches and consults via his Strategy Factory online workshop (https://
kjtradingsystems.com), which was the winner of the 2024 Readers’ Choice
Award in this magazine for the category of “Trading Schools.” Davey is also
the author of five books on trading. Send your questions or topic suggestions
to Kevin Davey at kdavey@kjtradingsystems.com. Selected questions will
appear in a future issue of S&C.
Kevin J. Davey

A CRITICAL LOOK AT A STRATEGY 3. Are these in-sample results or perience, the only way strategy
I’ve spent the last two months devel- out-of-sample results? I assume development for a single strategy
oping a coffee strategy (see Figure they are in-sample, which basi- takes that long is if you overfit
1). I wanted to know what you think cally makes them useless. Think and basically test thousands of
of it? of it this way—if the results were variations until you find a good
Thanks for the question. Where do poor, you would not be asking one. Huge red flag there.
I start? I have a ton of concerns and about the strategy performance. 5. How many versions of this strat-
questions about this strategy, so I’ll This was the top strategy that egy (with rule changes, etc.) did
just list some of the most important survived your two months of you test on this two-year history?
ones, and why you should be very development and if the results In this case, anything more than
cautious with this strategy. are from optimization, they just one version is probably one too
cannot be trusted. If this was many. You’ve fooled yourself
1. Why only a backtest of less than real-time performance, after you thinking you have a good back-
two years? This is typically much test, but good backtests fall
too short of a backtest. Test it back apart in real time more often
to 2010 or earlier. Does it hold Good backtests fall than not.
up over those years too? apart in real time more 6. How many other strategies have
2. How many optimized inputs often than not. you created with the same devel-
did you have? You only have opment approach, and how have
11 trades, which is a very small they done in live trading? (I’m
number of trades, even if you developed the strategy, I’d feel a guessing zero, and that is okay, it
have only one optimized input. lot better about it. just brings even more uncertainty
Curve-fitting is a huge concern 4. Speaking of spending two into the equation). Part of solid
here. months on a strategy, in my ex-
Continued on page 37

FIGURE 1: COFFEE STRATEGY BACKTEST, 1/3/2023–11/5/2024 FIGURE 2: COFFEE STRATEGY, DETAILED EQUITY CURVE
January 2025 • Technical Analysis of Stocks & Commodities • 41
 The Savvy Technician
CHARTING THE MARKETS
Stella Osoba, CMT, Esq., is an attorney, trader, and financial writer in New York,
NY, and is also the Senior Editor, Trading and Investing, for Investopedia.com. Her
work in financial litigation involving regulatory bodies and large multinational
corporations led to an interest in the financial markets, then technical analysis
and the psychological aspects of market behavior. She earned a CMT charter
in 2013 and was a director-at-large on the board of the CMT Association for
four years. This column will focus on recognizing and applying technical chart
patterns to trading with flexibility and astuteness for better decision-making in
trading. She can be reached at stellaosoba@gmail.com. Stella Osoba

IS THE PRESIDENTIAL CYCLE STILL ment their economic policies and 3rd year in office
RELEVANT TODAY FOR STOCK MARKET wants to get their campaign prom- The hypothesis posits that the third
ANALYSIS? ises fulfilled. The effects of these year of a president’s term in office of-
Cycle analysis attempts to impose policies may not be wildly popular ten results in a bump in stock market
some order on stock market behavior. and therefore may negatively impact returns, partly as a result of activity
The presidential cycle is one of the market sentiment and stock prices, and policies the administration may
more popularly studied cycles. The the hypothesis goes. implement that the stock market sees
presidential cycle was first described as more popular and that are designed
in Stock Trader’s Almanac by Yale 2nd year in office to juice the economy ahead the presi-
Hirsch. According to the hypothesis, the dential election in the 4th year.
The hypothesis describes the stock president continues to implement
market behavior during each of the their policy proposals and the impact 4th year in office
four years of a U.S. president’s time of this may continue to affect stock While not necessarily the strongest
in office. The second half of the presi- market returns. But as the year pro- year in terms of stock market returns,
dential term supposedly sees better gresses and the mid-terms approach, the election year is also likely to be
stock market performance than the the president may begin to introduce stronger than either of the two years
first half. There are rational reasons more popular policies, leading to a in the first half of the presidential
for why this might be so, which we’ll mild recovery of the stock market. cycle, according to the hypothesis,
look at in a moment. I’ll also as the incumbent presiden-
show some charts of the last tial party ramps up for the
20 years of stock market coming election and with
behavior, split into four-year market-pleasing policies
cycles of presidents who by focusing on growing the
were in office then, to ana- economy.
lyze whether these historical
charts provide us with any Two decades of
useful information that can stock market price
inform our trading decisions history
moving forward. Now that we have sum-
marized the broad ideas
1st year in office underlying the presidential
STOCKCHARTS.COM

The hypothesis posits that cycle, we have 20 years of

the first year of the presi- price history to analyze.
dential term usually sees Each of the five charts shown
FIGURE 1: BUSH 2ND TERM (2005–2008). Green vertical lines separate
the weakest stock market each year of the four-year presidential term. During the first year of this four- here has been annotated with
performance of the four-year year cycle, the market was in a sideways trend. In the second year, it entered green vertical lines separat-
cycle. This is because, the an uptrend. In the third year, 2007, the highs were tested and then that third ing the individual years of
hypothesis states, the new year ended with the DJIA retreating to its 50-day MA. The fourth year saw the the four-year term. There are
president wants to imple- 2008 financial crisis, resulting in a severe stock market crash. further annotations broadly
42 • January 2025 • Technical Analysis of Stocks & Commodities
 The Savvy Technician
describing the stock market 2008 financial crisis led to a
performance in each of the stock market crash, and even
four years. The Dow Jones though there was a price dip
Industrial Average (DJIA) is later that year, the dip halted
used here as a proxy for the at the 200-day MA, finding
broader market. Also, it is support, and rose again. In
important to remember that 2012, which was the fourth
we are using price charts and year of the presidential cycle
not any statistical analysis, during Obama’s first term,
which could provide differ- the stock market moved
ent results. sideways to up. This was
Additional note: Just for overall the best year of the
simplicity, the years listed in four-year cycle as the DJIA
the captions in the charts in zigzagged higher, with de-
Figures 1–5 for each presi- clines finding support at the
dential term are rounded FIGURE 2: OBAMA 1ST TERM (2009–2012). The first year in office had a 50-day MA.
to the year and thus don’t continuation of the bear market following the 2008 stock market crash that
occurred during Bush’s last term in office. In the second year, 2009, the DJIA
include the partial month in Barack Obama’s 2nd term
began a V-shaped recovery. In the third year, the DJIA continued to move higher.
January that leads up to in- In the fourth year, 2012, the stock market moved sideways to up.
See Figure 3. The incum-
auguration day on or around bent president went on to
January 20. win another term and was
inaugurated on January 20,
George W. Bush’s 2nd term 2013. That year, 2013, also
See Figure 1. George W. saw the DJIA making new
Bush was inaugurated into all-time highs. In fact, just by
office on January 20, 2005 glancing at the charts we can
for his second term in of- see that the first and second
fice. The market was in a years of the term saw an al-
sideways trend during the most uninterrupted uptrend.
first year of that term. It The DJIA moved higher with
entered an uptrend in the ease. The third year of the
second year. The uptrend ac- cycle saw volatility return
celerated into the third year; to the market with the DJIA
there was a test of the highs crashing to form the first of a
and the year ended with the double bottom. It found sup-
DJIA retreating to its 50-day FIGURE 3: OBAMA 2ND TERM (2013–2016). In the first year of the second port at the 200-day moving
moving average. The fourth term, 2013, the DJIA made new all-time highs. In the second year, an almost average (MA). The second
year was the worst year of uninterrupted uptrend continued. In the third year, volatility returned to the bottom of the double bottom
that four-year cycle as the market and the market crashed, seeing the first low of a double bottom. In occurred in the following
the fourth year, 2016, the DJIA recovered to make new all-time highs, almost
2008 financial crisis resulted year, which was 2016. That
breaking through 20,000 for the first time.
in a stock market crash. low also found support at the
200-day moving average, as
Barack Obama’s 1st term and began a V-shaped recovery. In
See Figure 2. Barack Obama was in- the second year of the presidential The hypothesis
augurated on January 20, 2009. In that cycle (2010), the market saw further
first year, 2009, the market initially recoveries and moved sideways to up.
describes the stock
saw the worst of the bear market that The third year (2011) saw even more market behavior during
had begun during Bush’s term after stock price recovery as the DJIA each of the four years of
the market crashed in 2008. Still in continued to move higher. The 50-day a U.S. president’s time
that first year of the four-year cycle, moving average crossed above the in office.
2009, the DJIA reached its crash lows 200-day for the first time since the
January 2025 • Technical Analysis of Stocks & Commodities • 43
 The Savvy Technician
did the first low of the double presidential cycles of each
bottom in 2015. Arguably, president then in office, tell
2016 could be described as us? As I mentioned earlier,
the best year of that four-year this analysis of stock mar-
presidential cycle in terms of ket behavior is not meant
stock market returns. The to be conclusive, nor is it a
DJIA recovered to make statistical analysis. This is
new all-time highs that year, only a casual look at charts
almost breaking through of the DJIA for each year
20,000 for the first time. over the last 20 years. From
this brief look, I don’t think
Donald Trump’s 1st term it is possible to come to
See Figure 4. Donald Trump any rigid rules in line with
was inaugurated on January the hypothesis about stock
20, 2017. The strong uptrend market behavior during each
from Obama’s last year in FIGURE 4: TRUMP 1ST TERM, (2017–2020). In the first year, the strong of the presidential years. We
office was still in effect. The uptrend from Obama’s final year in office was still in effect. The second year cannot even confidently say
second year saw the market saw the market trending sideways followed by a sharp decline at the end of the that the market is likely to
year. By his third year in office, the market recovered and entered an uptrend.
trending sideways followed The fourth year coincided with the Covid pandemic and the market fell sharply perform worse in the first
by a sharp decline at the end before reversing in a V-shaped recovery. half of the presidential cycle
of the year. In 2019, which than in the second half. We
was Trump’s third year in have charts that show that
office, the market recovered not to be the case.
and entered an uptrend for So, what to take away
the rest of that year. The from this? Any hypothesis
fourth year coincided with of market behavior will be
the Covid pandemic and was right some of the time and
the worst year in terms of wrong some of the time. The
stock market performance, important thing to remember
and the market fell sharply, is to watch market behavior
crashing to new multi-year through price action sown on
lows before reversing in a the charts. If we train our-
V-shaped recovery, going on selves to watch market action
to make new highs. and leave out the noise, the
charts will give us clues. It is
Joe Biden’s term often difficult to see, except
See Figure 5. The uptrend FIGURE 5: BIDEN TERM (2021–2024). In the first year of this four-year in hindsight, the signals that
in Trump’s fourth year con- term, the uptrend from Trump’s fourth year continued. The second year saw the market may be sending,
tinued into Biden’s first year a market crash. The third year saw a double bottom recovery, then sideways but that does not mean they
in office, 2021. The second price action. The last year of that four-year cycle, 2024, was very strong, with are not there. As we get better
the DJIA moving up to make new all-time highs.
year, 2022, saw a market at our craft, we will be able
crash. The double bottom to see more clearly what is
recovery in that year evolved into The last year of that four-year cycle, already there. We must remember to
sideways price action in the third year. 2024, may be the best out of the four caution ourselves that when we miss
years, with the DJIA moving up to the signals, that is not proof that they
make new all-time highs. are not there.
The presidential cycle Trading has never been easy. It
was first described in What does it tell us? takes discipline, hard work, and
Stock Trader’s Almanac So, what does this brief analysis of the time. Less useful are easily recited
by Yale Hirsch. past 20 years of stock market price propositions.
history, told through the four-year
44 • January 2025 • Technical Analysis of Stocks & Commodities
 Strategy Corner
GOT A QUESTION ABOUT USING TRADING STRATEGIES?
Dave Mabe has 25 years of experience in trading strategy development. With a
background as a computer engineer and chief technology officer for Trade-Ideas,
he is interested in the design of innovative algorithms for rules-based trading
systems as well as the intersection of artificial intelligence and finance. He
launched DaveMabe.com to help other traders learn how they can improve their
trading performance and consistency in results. Through his website he offers
a road map for trading strategy development and offers one-on-one coaching.
Send your questions or topic suggestions to Dave Mabe at dave@davemabe.com.
Selected questions will appear in a future issue of S&C. Dave Mabe

THE SMART WAY TO SCALE UP A to achieve with the smaller sizing. If enal on paper. When you follow that
STRATEGY you size up before enough of your up with some real trades that have
Garrett, a trader with a proprietary profits have accumulated or if you worked well so far, you’re primed to
trading firm, asks (used with per- increase your size too much, then fall for the overconfidence trap.
mission): it’s very easy to end up in a situation I got some excellent advice from a
“How do you determine when to where your solidly profitable strategy senior software developer early in my
increase the risk per trade on your is losing money! career: “Be paranoid.” When building
model?” This is psychologically dem- large-scale software systems, things
Great question because so many oralizing even though there’s nothing can go wrong in production that are
traders do the wrong thing and shoot wrong with your system and things hard to imagine when you’re building
themselves in the foot. With a little are operating completely normally. the system.
planning ahead, you can avoid the This is the situation you want to The same is true for traders. Over
most common mistakes and increase avoid. the long run, it pays to be cautious
your size like a pro. Luckily, it’s easy to prevent this and skeptical of your trading systems.
from happening if you just use a In the back of your mind, you should
Don’t scale up too quickly little patience. always be a little worried that you’ve
By far the most common mistake is overlooked an important aspect
to scale up your size in a strategy too Instead of all at once, of your system. This skepticism is
quickly. Don’t do this! scale up over a period of healthy and can push you to uncover
The reason this mistake is so costly time issues before they cost you money.
is that when you increase your size It’s easy to get overconfident—espe- Resist the urge to raise your size
too much, a normal losing trade using cially when you’ve done the work to quickly. Instead of raising your size
the new sizing can quickly wipe out create a backtest for a strategy with
your recent gains you fought so hard an equity curve that looks phenom- Continued on page 51
DAVEMABE.COM

FIGURE 1: THIS SHOWS THE EQUITY CURVE FOR A STRATEGY WITHOUT FIGURE 2: THE SAME STRATEGY EXCEPT THE TRADER INCREASED SIZE
ANY CHANGES TO POSITION SIZING STARTING AT THE BLUE ARROW. The “normal” drawdown that occurred is
magnified with the new larger sizing which pushes the curve into negative
territory.
January 2025 • Technical Analysis of Stocks & Commodities • 45
 The focus of Traders’ Tips • Traders.com → S&C Magazine → Traders’ Tips
this month is John Ehlers’
article in this issue, “Lin- At Traders.com you can also right-click on any chart
ear Predictive Filters And to open it in a new tab or window and view the chart
Instantaneous Frequen- at a much larger size.
cy.” Here, we present the
January 2025 Traders’ The Traders’ Tips section is provided to help readers im-
Tips code with possible plement a selected technique from an article in this issue
implementations in vari- or another recent issue. The entries here are contributed
ous software. by software developers or programmers for software
that is capable of customization.
The code for the following Traders’ Tips selections is
posted here:

F T RADESTATION: JANUARY 2025 TRAD-

ERS’ TIPS CODE
In “Linear Predictive Filters And Instanta-
neous Frequency,” John Ehlers explores the
use of linear predictive filters, applying the
Griffiths approach and key digital signal
processing principles to tackle the challenge
of adaptively tuning indicators for evolving
market conditions. He discusses how this
approach can identify and adjust to the
dominant cycle within market data.
Code in EasyLanguage for the Ehlers’
approach can be found in Ehlers article in
this issue.
A sample chart is shown in Figure 1.
This article is for informational pur- FIGURE 1: TRADESTATION. This shows a daily chart of the continuous emini S&P 500 showing a
poses. No type of trading or investment portion of 2024 with all three indicators applied.
recommendation, advice, or strategy is
being made, given, or in any manner provided by TradeSta- “white hot” dominant cycle (DC) indicator snapping to
tion Securities or its affiliates. the frequency with the most energy. Note however that it’s
—John Robinson constrained to change only by two cycles per bar to prevent
TradeStation Securities, Inc. “bouncing.” The heat map is primarily eye candy (useful to
www.TradeStation.com impress your spouse and friends), but the Griffith DC indi-
cator is the key to “adaptively tune indicators and strategy
algorithms,” as Ehlers states in his article. The GriffithsDC
and GriffithsPredictor indicators can now be found in our
WealthLab.TASC indicator library.
F WEALTH-LAB: JANUARY 2025 TRADERS’ TIPS CODE
using System;
Leave it John Ehlers to remind former electrical engineers
using WealthLab.Backtest;
how much we’ve forgotten! In “Linear Predictive Filters And using WealthLab.Core;
Instantaneous Frequency” in this issue, Ehlers uses the Grif- using WealthLab.TASC;
fiths approach with elements of digital signal processing to
offer coding for some indicators to help solve the challenge namespace WealthScript
{
of adaptively tuning indicators and strategy algorithms to the
public class GriffithSpectrum : UserStrategyBase
dominant cycle of the data. The article includes several code {
listings to calculate and plot the indicators on a chart. Just to Parameter _ub, _lb, _length;
translate all the code presented in the article took the better
part of a day, but the result is worth it. public GriffithSpectrum()
{
Atop the Griffiths spectrum in Figure 2, you’ll see the
46 • January 2025 • Technical Analysis of Stocks & Commodities
 _lb = AddParameter("Lowerbound",
ParameterType.Int32, 18, 5, 40, 5);
_ub = AddParameter("Upperbound",
ParameterType.Int32, 40, 20, 125, 5);
_length = AddParameter("Length",
ParameterType.Int32, 54, 30, 60, 1);
}

public override void

Initialize(BarHistory bars)
{
TimeSeries ds = bars.Close;
int ubound = _ub.AsInt;
if (ubound > ds.Count) ubound =
ds.Count;

//initialize raster series

SetPaneDrawingOptions("GrSp", 20);
int nser = ubound - _lb.AsInt + 1;
TimeSeries[] Raster = new
TimeSeries[nser]; FIGURE 2: WEALTH-LAB. This example daily chart of the emini S&P 500 futures (ES) displays the
for (int n = 0; n < nser; n++) Griffiths spectrum with the dominant cycle indicator. The GriffithsDC and GriffithsPredictor indicators
{ can now be found in the WealthLab.TASC indicator library.
Raster[n] = new TimeSeries(bars.
DateTimes, n + _lb.AsInt);
double imag = 0;
PlotTimeSeriesLine(Raster[n], "", "GrSp", WLColor.
Black, 8, suppressLabels:true);
for (int count = 0; count < _length.AsInt; count++)
}
{
real += coef[count] * Math.Cos(2 * Math.PI *
double[] XX = new double[_length.AsInt];
count / period);
double[] coef = new double[_length.AsInt];
imag += coef[count] * Math.Sin(2 * Math.PI *
double[,] Pwr = new double[nser, 2];
count / period);
int L1 = _length.AsInt - 1;
}
double denom = (1 - real) * (1 - real) + imag *
double Mu = 1.0 / _length.AsInt;
imag;
TimeSeries HP = new HighPass(ds, ubound);
Pwr[pidx, 0] = 0.1 / denom + 0.9 * Pwr[pidx, 1];
TimeSeries LP = new SuperSmoother(HP, _lb.AsInt);
}
TimeSeries Peak = new TimeSeries(ds.DateTimes, 0.1);
TimeSeries Signal = new TimeSeries(ds.DateTimes, 0);
double maxPwr = 0;
for (int pidx = 0; pidx < nser; pidx++)
for (int bar = Math.Max(ubound, _length.AsInt); bar <
if (Pwr[pidx, 0] > maxPwr)
ds.Count; bar++)
maxPwr = Pwr[pidx, 0];
{
Peak[bar] = 0.991 * Peak[bar - 1];
for (int pidx = 0; pidx < nser; pidx++)
if (Math.Abs(LP[bar]) > Peak[bar])
if (maxPwr != 0) Pwr[pidx, 0] = Pwr[pidx, 0] / max-
Peak[bar] = Math.Abs(LP[bar]);
Pwr;
Signal[bar] = Peak[bar] != 0 ? LP[bar] / Peak[bar] :
//convert power to RGB color
Signal[bar - 1];
for (int pidx = 0; pidx < nser; pidx++)
{
for (int count = 0; count < _length.AsInt; count++)
double clr1 = Pwr[pidx, 0] >= 0.5 ? 255 : 255 * 2 *
XX[count] = Signal[bar - (L1 - count)];
Pwr[pidx, 0];
double clr2 = Pwr[pidx, 0] >= 0.5 ? 255 * (2 *
double XBar = 0;
Pwr[pidx, 0] - 1) : 0;
for (int count = 0; count < _length.AsInt; count++)
SetSeriesBarColor(Raster[pidx], bar, WLColor.
XBar += XX[L1 - count] * coef[count];
FromRgb((byte)clr1, (byte)clr2, 0));
}
for (int count = 0; count < _length.AsInt; count++)
}
coef[count] += Mu * (XX[L1] - XBar) * XX[L1 -
count];
//Plot the Dominant Cycle
GriffithsDC gdc = GriffithsDC.Series(ds, _lb.AsInt,
//instantaneous frequency
_ub.AsInt, _length.AsInt);
for (int pidx = 0; pidx < nser; pidx++)
PlotTimeSeriesLine(gdc, gdc.Description, "GrSp", WL-
{
Color.WhiteSmoke, 4);
double period = pidx + _lb.AsInt;
}
Pwr[pidx, 1] = Pwr[pidx, 0];
double real = 0;

January 2025 • Technical Analysis of Stocks & Commodities • 47

 public override void Execute(BarHistory
bars, int idx)
{ }
}
}

—Robert Sucher
Wealth-Lab team
www.wealth-lab.com

F NEUROSHELL TRADER:
JANUARY 2025 TRADERS’
TIPS CODE
The highpass, SuperSmoother, 2-pole pre-
dictor and Griffiths indicators presented in
John Ehlers’ article in this issue, In “Lin-
ear Predictive Filters And Instantaneous
Frequency,” can be easily implemented FIGURE 3: NEUROSHELL TRADER. This NeuroShell Trader chart shows the highpass, SuperSmooth-
in NeuroShell Trader using NeuroShell er, 2-pole predictor, Griffiths predictor, and Griffiths dominant cyle on a chart of the S&P Emini futures
Trader’s ability to call external dynamic (ES).
linked libraries (DLLs). Dynamic linked
libraries can be written in C, C++ and // Provided By: PineCoders, for tradingview.com
Power Basic.
//@version=5
After moving the code given in the article to your pre- title ='TASC 2025.01 Linear Predictive Filters'
ferred compiler and creating a DLL, you can insert the re- stitle = 'LPF'
sulting indicator as follows: indicator(title, stitle, false)

1. Select “new indicator” from the insert menu. //#region Inputs and Constants:
2. Choose the External Program & Library Calls // @variable Overload for plot 'display.all'.
category. DSPA = display.all
3. Select the appropriate External DLL Call indicator. // @variable Overload for plot 'display.none'.
4. Set up the parameters to match your DLL. DSPN = display.none
5. Select the finished button. // @variable Overload for plot style 'plot.style_columns'.
PSH = plot.style_columns
// @variable Full Angle Rotation '360'.
Users of NeuroShell Trader can go to the Stocks & Com- float FROT = 2.0 * math.pi
modities section of the NeuroShell Trader free technical // @variable Square Root of 2 '1.414'.
support website to download a copy of this or any previous float SQRT2 = math.sqrt(2.0)
Traders’ Tips. // @variable Perfect Cycle Test signal.
—Ward Systems Group, Inc. // 'Signal = math.sin(360.0 * bar_index / 30.0)'.
float TS = math.sin(FROT * bar_index / 30.0)
sales@wardsystems.com
www.neuroshell.com // @enum Indicator Display Choice Enumerator.
enum eID
SMP = 'Simple 2-Pole Predictor'
GP = 'Griffiths Predictor'
GS = 'Griffiths Spectrum'
GD = 'Griffiths Dominant Cycle'
F TRADINGVIEW: JANUARY 2025 TRADERS’ TIPS CODE GSD = 'Griffiths Spectrum and Dominant Cycle'
The TradingView Pine Script code presented here implements
the Griffiths predictor, Griffiths dominant cycle indicator, // @variable Indicator Display Choice.
and Griffiths spectrum, as discussed in John Ehlers’ article eID iChoice = input.enum(eID.SMP, 'Select Indicator:')
in this issue, “Linear Predictive Filters And Instantaneous // @variable Use Test Signal.
bool iTest = input.bool(false, 'Use Test Signal:')
Frequency.”
// Parameters:
// TASC Issue: January 2025 float Src = input.source(close, 'Source:')
// Article: Linear Predictive Filters And int LBound = input.int(18, 'Lower Bound:')
// Instantaneous Frequency int UBound = input.int(40, 'Upper Bound:')
// Article By: John F. Ehlers int Length = input.int(40, 'Length:')
// Language: TradingView's Pine Script™ v5

48 • January 2025 • Technical Analysis of Stocks & Commodities

float Q = input.float(0.35, 'Simple Predictor
Q:')
int BarsF = input.int(2,'Griffiths Predictor
Bars Forward:')
//#endregion
//#region Filter functions

// @function High Pass Filter.

HP (float Source, int Period) =>
float a0 = math.pi * math.sqrt(2.0) /
Period
float a1 = math.exp(-a0)
float c2 = 2.0 * a1 * math.cos(a0)
float c3 = -a1 * a1
float c1 = (1.0 + c2 - c3) * 0.25
float hp = 0.0
if bar_index >= 4
hp := c1 * (Source - 2.0 * Source[1] +
Source[2]) +
c2 * nz(hp[1]) + c3 * nz(hp[2])
hp FIGURE 4: TRADINGVIEW. Here is an example of the indicator and heatmap on a daily chart of the
emini S&P 500 futures (ES).
// @function Super Smoother
SS (float Source, int Period) =>
float a0 = math.pi * math.sqrt(2.0) / Period //#endregion
float a1 = math.exp(-a0) //#region Griffiths Predictor
float c2 = 2.0 * a1 * math.cos(a0)
float c3 = -a1 * a1 GP (float source=close, int lowerB=18, int upperB=40,
float c1 = 1.0 - c2 - c3 int length=18, int barsF=2, bool Test=false) =>
float ss = Source float MU = 1.0 / length
if bar_index >= 4 float Signal = CF(source, lowerB, upperB, Test)
ss := c1 * ((Source + Source[1]) / 2.0) + float[] XX = array.new<float>(length+1, 0.0)
c2 * nz(ss[1]) + c3 * nz(ss[2]) var float[] Coef = array.new<float>(length+1, 0.0)
ss float XBar = 0.0
XX.set(length, Signal)
// @function Common function. for count = 1 to length - 1
CF (float Source=close, int LowerB=18, int UpperB=40, XX.set(count, nz(Signal[length - count]))
bool Test=false ) => for count = 1 to length
float HP = HP(Source, UpperB) XBar += XX.get(length-count) * Coef.get(count)
float LP = SS(HP, LowerB) for count = 1 to length
float Peak = 0.1 Coef.set(count, Coef.get(count) +
Peak := .991 * nz(Peak[1]) MU * (XX.get(length) - XBar) *
if math.abs(LP) > Peak XX.get(length-count))
Peak := math.abs(LP) // Prediction
if Test float XPred = 0.0
TS for advance = 1 to barsF
else XPred := 0.0
float Signal = 0.0 for count = 1 to length
if Peak != 0.0 XPred += XX.get(length+1-count)*Coef.get(count)
Signal := LP / Peak for count = advance to length - advance
Signal XX.set(count, XX.get(count + 1))
for count = 1 to length - 1
//#endregion XX.set(count, XX.get(count + 1))
//#region Simple 2 Pole Predictor XX.set(length, XPred)
[Signal, XPred]
SP (float Source=close, int lengthHP=15, int lengthLP=30,
float Q=0.35, bool Test=false) => //#endregion
float HP = HP(Source, lengthHP) //#region Griffiths Spectrum
float LP = SS(HP, lengthLP)
float Signal = Test ? TS : LP GS (float source=close, int lowerB=10, int upperB=40,
float c0 = 1.0 , float c1 = 1.8 * Q , float c2 = -Q * Q int length=40, bool Test=false) =>
float sum = 1.0 - c1 - c2 int LP1 = length + 1 , float MU = 1.0 / length
c0 := (c0 / sum) * Signal float Signal = CF(source, lowerB, upperB, Test)
c1 := (c1 / sum) * Signal[1] float[] XX = array.new<float>(LP1, 0.0)
c2 := (c2 / sum) * Signal[2] var float[] Coef = array.new<float>(LP1, 0.0)
float Predict = c0 - c1 - c2 var matrix<float> Pwr = matrix.new<float>(LP1, 2, 0.0)
[Signal, Predict] float XBar = 0.0

January 2025 • Technical Analysis of Stocks & Commodities • 49

 XX.set(length, Signal) cycle >= cycle[1] + 2.0 => cycle[1] + 2.0
for count = 1 to length - 1 cycle <= cycle[1] - 2.0 => cycle[1] - 2.0
XX.set(count, nz(Signal[length - count])) => cycle
for count = 1 to length cycle
XBar += XX.get(length-count) * Coef.get(count)
for count = 1 to length //#endregion
Coef.set(count, Coef.get(count) + //#region Plots:
MU * (XX.get(length) - XBar) *
XX.get(length-count)) // Indicator IO Conditionals:
// Instantaneous Frequency D0 = iChoice == eID.SMP ? DSPA : DSPN
for period = lowerB to upperB D1 = iChoice == eID.GP ? DSPA : DSPN
Pwr.set(period, 1, Pwr.get(period, 0)) D2 = iChoice == eID.GS or iChoice == eID.GSD ? DSPA : DSPN
float re = 0.0 , float im = 0.0 D3 = iChoice == eID.GD or iChoice == eID.GSD ? DSPA : DSPN
for count = 1 to length // Simple 2-Pole Predictor
float a0 = FROT * count / period [s1, p1] = SP(Src, LBound, UBound, 0.35, iTest)
re += Coef.get(count) * math.cos(a0) plot(s1, 'Signal', color.blue, display=D0)
im += Coef.get(count) * math.sin(a0) hline(0, display=D0)
denom = math.pow(1.0 - re, 2.0) + math.pow(im, 2.0) plot(p1, 'Predict', color.red, display=D0)
Pwr.set(period, 0, 0.1 / denom) // Griffiths Predictor
float MaxPwr = Pwr.col(0).max() [s2, p2] = GP(Src, LBound, UBound, Length, 2, iTest)
if MaxPwr != 0 plot(s2, 'Signal', color.blue, display=D1)
for period = lowerB to upperB hline(0, display=D1)
Pwr.set(period, 0, Pwr.get(period, 0) / MaxPwr) plot(p2, 'Predict', color.red, display=D1)
// Plot the Spectrum Colors // Griffiths Spectrum
color[] Spectrum = array.new<color>(100, #000000) SP = GS(Src, LBound, UBound, Length, iTest)
for period = lowerB to upperB plot(19, '', SP.get(18), 1, PSH, false, 18, display=D2)
// Convert Power to RGB Color for display plot(20, '', SP.get(19), 1, PSH, false, 19, display=D2)
float p0 = Pwr.get(period, 0) plot(21, '', SP.get(20), 1, PSH, false, 20, display=D2)
float r = p0 >= 0.5 ? 255.0 : 255.0 * 2.0 * p0 plot(22, '', SP.get(21), 1, PSH, false, 21, display=D2)
float g = p0 >= 0.5 ? 255.0 * (2.0 * p0 - 1.0) : 0.0 plot(23, '', SP.get(22), 1, PSH, false, 22, display=D2)
Spectrum.set(period, color.rgb(r, g, 0.0)) plot(24, '', SP.get(23), 1, PSH, false, 23, display=D2)
Spectrum plot(25, '', SP.get(24), 1, PSH, false, 24, display=D2)
plot(26, '', SP.get(25), 1, PSH, false, 25, display=D2)
//#endregion plot(27, '', SP.get(26), 1, PSH, false, 26, display=D2)
//#region Griffiths Dominant Cycle plot(28, '', SP.get(27), 1, PSH, false, 27, display=D2)
plot(29, '', SP.get(28), 1, PSH, false, 28, display=D2)
GD (float source=close, int lowerB=18, int upperB=40, plot(30, '', SP.get(29), 1, PSH, false, 29, display=D2)
int length=40, bool Test=false) => plot(31, '', SP.get(30), 1, PSH, false, 30, display=D2)
int LP1 = length + 1 , float MU = 1.0 / length plot(32, '', SP.get(31), 1, PSH, false, 31, display=D2)
float Signal = CF(source, lowerB, upperB, Test) plot(33, '', SP.get(32), 1, PSH, false, 32, display=D2)
float[] XX = array.new<float>(LP1, 0.0) plot(34, '', SP.get(33), 1, PSH, false, 33, display=D2)
var float[] Coef = array.new<float>(LP1, 0.0) plot(35, '', SP.get(34), 1, PSH, false, 34, display=D2)
var matrix<float> Pwr = matrix.new<float>(LP1, 2, 0.0) plot(36, '', SP.get(35), 1, PSH, false, 35, display=D2)
float XBar = 0.0 plot(37, '', SP.get(36), 1, PSH, false, 36, display=D2)
XX.set(length, Signal) plot(38, '', SP.get(37), 1, PSH, false, 37, display=D2)
for count = 1 to length - 1 plot(39, '', SP.get(38), 1, PSH, false, 38, display=D2)
XX.set(count, nz(Signal[length - count])) plot(40, '', SP.get(39), 1, PSH, false, 39, display=D2)
for count = 1 to length // Griffiths Dominant Cycle
XBar += XX.get(length-count) * Coef.get(count) cycle = GD(Src, LBound, UBound, Length, iTest)
for count = 1 to length plot(cycle, 'Dominant Cycle', color.blue, 3, display=D3)
Coef.set(count, Coef.get(count) + //#endregion
MU * (XX.get(length) - XBar) *
XX.get(length-count)) The indicator is available on TradingView from the Pine-
// Instantaneous Frequency CodersTASC account: https://www.tradingview.com/u/
for period = lowerB to upperB
Pwr.set(period, 1, Pwr.get(period, 0)) PineCodersTASC/#published-scripts
float re = 0.0 , float im = 0.0 An example chart is shown in Figure 4.
for count = 1 to length —PineCoders, for TradingView
float a0 = FROT * count / period https://TradingView.com
re += Coef.get(count) * math.cos(a0)
im += Coef.get(count) * math.sin(a0)
denom = math.pow(1.0 - re, 2.0) + math.pow(im, 2.0)
// float _p1 = Pwr.get(period, 1)
Pwr.set(period, 0, 0.1 / denom)// + 0.9 * _p1)
float MaxPwr = Pwr.col(0).max()
F NINJATRADER: JANUARY 2025 TRADERS’ TIPS CODE
float cycle = Pwr.col(0).indexof(MaxPwr) In the article “Linear Predictive Filters And Instantaneous
cycle := switch Frequency” in this issue, John Ehlers discusses some digital
50 • January 2025 • Technical Analysis of Stocks & Commodities
signal processing techniques and an approach using Grif- You can review the source code in Ninja­Trader 8 by se-
fiths spectrum. Several of the indicators discussed in the lecting the menu New → NinjaScript Editor → Indicators
article are available for download at the following link for folder from within the control center window and selecting
NinjaTrader 8: the file.
NinjaScript uses compiled DLLs that run native, not in-
www.ninjatrader.com/SC/January2025SCNT8.zip terpreted, to provide you with the highest performance pos-
sible.
Once the file is downloaded, you can import it into Ninja- —Chelsea Bell
Trader 8 from within the control center by selecting Tools → NinjaTrader, LLC
Import → NinjaScript Add-On and then selecting the down- www.ninjatrader.com
loaded file for NinjaTrader 8.

Strategy Corner
MABE trades. The good news is there are
Continued from page 45 metrics you can use to measure By far the most
your performance independent of common mistake is to
all at once, make a plan to increase any sizing decision you’ve made.
your size gradually over the course Depending on the type of trading
scale up your size in a
of several days or weeks. There system, you could use percent gain strategy too quickly.
is no hurry to size up—if you’ve instead of dollars, but if you’re using Don’t do this!
designed your strategy well from variable sizing that might not be
the beginning, you should have a suitable. October 2024 issue), sizing up a
durable trading edge that will last a The best way to do this is using trading strategy is a similarly an
long time. R-multiples. There are a variety emotion-prone decision.
of reasons to use R-multiples and To make the decision easier, it’s
NORMALIZE YOUR PERFOR- expectancy for your performance always a good idea to plan ahead
MANCE ACROSS SIZING metrics, but one of the best is that and create milestones for yourself
Imagine your strategy’s equity curve they normalize performance across ahead of time. For example, you could
just before sizing up and then some position sizing. That way, you can pre-plan to only size up a prescribed
time after. Since you’re using large compare the health of your trading amount after you achieve a certain
position sizing, an equity curve based system whether you risked a tiny size level of profit over a minimum amount
on dollars will be overwhelmingly when you first started trading it or of time.
skewed towards the trades with the many times your original sizing. Think about what circumstances
larger sizing (see Figures 1 and 2). It’s best to get in the habit of using would have to occur before you
But a dollar’s worth of profit isn’t R-multiples for your performance would be comfortable sizing up and
the same—that’s the whole point of measure right from the beginning, what level would make sense to meet
increasing your size in the first place. before you are faced with a decision your long-term goals. That way, you
Any measure of your performance to size up. have a blueprint that you can follow
based purely on P&L alone is going rather than winging it and increasing
to make the earlier trades with the DEVELOP A LONG-TERM PLAN your size 10× after you have a great
smaller size barely a blip on your FOR SIZING UP trading day.
radar—which is not what you want. Just as it’s natural to let emotions Follow these sizing tips, and you’ll
You want to use a performance get the best of you when making be trading like the pros.
measure that isn’t subject to this trades (see my column titled “How
excessive weighting of the bigger To Prevent Trading With Emotion,”
January 2025 • Technical Analysis of Stocks & Commodities • 51
 Free Information From Advertisers
Advertiser Page Advertiser Page How to reach us
For questions, address changes, or
Advisory Services Software ordering information for Technical
Kingsview Wealth Management 11 AbleSys 7 Analysis of Stocks & Commodities
MonarchFunds.com www.ablesys.com/SCM magazine and its online publications:

MetaStock 56 Toll-free 800 832-4642

Brokerages (800-Technical) or:
MetaStock.com/P424
Interactive Brokers 5 206 938-0570.
ibkr.com/around-clock Ninjatrader 3 Email us at:
ninjatrader.com circ@traders.com.
Ninjatrader 3
ninjatrader.com Or write to us at:
Websites
4757 California Ave. SW,
Publications Stocks & Commodities 2, 55 Seattle, WA 98116-4499.
Store.Traders.com, Traders.com
Stocks & Commodities 2, 55 Do your magazines arrive tattered
Store.Traders.com, Traders.com and torn? Polybagging of magazines
(domestic delivery) is available for
$6/year.
Editorial Resource Index Single back issues from the current
TradeStation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Wealth-Lab.com.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 year (subject to availability) are $8
prepaid. Subscribers have access to
EasyLanguage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 NeuroShell Trader (Ward Systems Group) .. . . . 48 our digital archive of all past articles.
TradingView.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 NinjaTrader.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Individual articles can be purchased
from the Online Store at our website,
Optuma.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Traders.com.
ETFAction.com.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Editorial feedback
StockCharts.com. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 We always want to know more about
the needs of our readers: What kinds of
Ritholtz Wealth Management.. . . . . . . . . . . 35 articles would you like to see more of?
www.dailyshot.com. . . . . . . . . . . . . . . . . . . . . . . . 35 What do you find useful? Address your
written questions and comments to edi-
www.OptionsAnalysis.com.. . . . . . . . . . . . . . . 38 tor@traders.com or to: Editor, Stocks
KJTradingSystems.com.. . . . . . . . . . . . . . . . . . . . 41 & Commodities, 4757 California Ave
SW, Seattle, WA 98116-4499. Sorry, we
DaveMabe.com.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 cannot perform research on individual
financial questions not related to this
For more information about our advertisers, go to Traders.com/reader where magazine and we cannot respond to
you will find the alphabetized list of this month’s advertisers. For reference, the all mail. Letters or emails containing
list is also printed above along with the corresponding page number for each ad. questions or information that other
Just follow the simple directions below and the advertisers will get your requests readers may enjoy or that relate to
the same day! our articles or technical analysis top-
ics may be published in our Letters to
Step 1: Go to Traders.com/reader and S&C column.
scroll through the list of our current month’s Join us on Facebook at
advertisers.Click the box for each adver- www.facebook.com/
tiser you’d like to hear from. At the bottom STOCKSandCOMMODITIES
of the list, click Continue when finished.
Follow us on Twitter
Step 2: Fill out your contact information @STOCKSandCOMM
and click Send Request. Your request will
To receive information on the products and services listed in the Editorial
then be sent to the advertisers you selected. and Advertisers’ Indexes, go to: Traders.com/reader. These indexes are
And that’s it! published solely as a convenience. While every effort is made to maintain
accuracy, last-minute changes may result in omissions or errors.

52 • January 2025 • Technical Analysis of Stocks & Commodities

 FUTURES LIQUIDITY

T
rading liquidity is often over- very high volumes. The greatest number three-year period. Thus, all numbers in
looked as a key technical of dots indicates the greatest activity; this column have an equal dollar value.
measurement in the analysis futures with one or no dots show little Columns indicating percent margin
and selection of commodity activity and are therefore less desirable and effective percent margin provide
futures. The following explains how to for speculators. a helpful comparison for traders who
read the futures liquidity chart pub- Courtesy of CBOT wish to place their margin money ef-
lished by Technical Analysis of Stocks ficiently. The effective percent margin
& Commodities every month. is determined by dividing the margin
value ($) by the three-year price range of
Commodity futures contract dollar value, and then multiply-
The futures liquidity chart shown be- ing by one hundred.
low is intended to rank publicly traded
futures contracts in order of liquidity. Stocks
Relative contract liquidity is indicated Trading liquidity has a significant ef-
by the number of dots on the right-hand fect on the change in price of a secu-
side of the chart. rity. Theoretically, trading activity can
This liquidity ranking is produced by serve as a proxy for trading liquidity
multiplying contract point value times All futures listed are weighted equally and equals the total volume for a given
the maximum conceivable price motion under “contracts to trade for equal dol- period expressed as a percentage of the
(based on the past three years’ historical lar profit.” This is done by multiplying total number of shares outstanding. This
data) times the contract’s open interest contract value times the maximum pos- value can be thought of as the turnover
times a factor (usually 1 to 4) for low or sible change in price observed in the last rate of a firm’s shares outstanding.

Trading Liquidity: Futures

Contracts to
Effective
Commodity Futures Symbol Exchange % Margin Trade for Equal Relative Contract Liquidity
% Margin Dollar Profit
S&P 500 E-Mini (Dec ’24) ESZ24 CME 5.4 13 3 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • >>>>
Ultra T-Bond (Dec ’24) UDZ24 CBOT 5 7.3 5 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •>
10-Year T-Note (Dec ’24) ZNZ24 CBOT 2 9.7 18 ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••>
5-Year T-Note (Dec ’24) ZFZ24 CBOT 1.3 9 26 •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••>
30-Year T-Bond (Dec ’24) ZBZ24 CBOT 3.5 8.2 8 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •>
Ultra 10-Year T-Note (Dec ’24) TNZ24 CBOT 2.7 8.6 12 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •>
2-Year T-Note (Dec ’24) ZTZ24 CBOT 0.6 9 29 •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Nasdaq 100 E-Mini (Dec ’24) NQZ24 CME 5.9 11.8 2 •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Russell 2000 E-Mini (Dec ’24) QRZ24 CME 3.5 11.4 6 ••••••••••••••••••••••••••••••••
Soybean (Jan ’25) ZSF25 CBOT 2.3 2.7 5 ••••••••••••••••••••••••
Crude Oil WTI (Jan ’25) CLF25 NYMEX 9.5 11 7 ••••••••••••••••••••••
Natural Gas (Jan ’25) NGF25 NYMEX 8.7 4.6 6 ••••••••••••••••••••••
3-Month SOFR (Dec ’24) SQZ24 CME 0.1 2.2 38 ••••••••••••••••••
Gold (Dec ’24) GCZ24 COMEX 4.7 11.9 4 ••••••••••••••••••
Soybean Meal (Jan ’25) ZMF25 CBOT 1.3 1.6 3 •••••••••••••••••
Corn (Mar ’25) ZCH25 CBOT 5.3 5.9 21 ••••••••••••
Gasoline RBOB (Jan ’25) RBF25 NYMEX 8.5 7.3 4 ••••••••••
ULSD NY Harbor (Jan ’25) HOF25 NYMEX 8 6.2 3 •••••••••
Euro FX (Dec ’24) E6Z24 CME 1.9 20.2 33 ••••••••
30-Day Fed Funds (Jan ’25) ZQF25 CBOT 0.1 1.4 23 ••••••
Wheat (Mar ’25) ZWH25 CBOT 6.8 4.5 10 ••••••
Dow Futures Mini (Dec ’24) YMZ24 CBOT 5.2 14.9 5 •••••
Bitcoin Futures (Nov ’24) BTX24 CME 23.5 27.7 1 ••••
Nasdaq 100 Micro (Dec ’24) NMZ24 CME 5.9 11.8 20 ••••
S&P 500 Micro (Dec ’24) ETZ24 CME 5.4 13 34 ••••
Coffee (Mar ’25) KCH25 ICE/US 6.6 12.7 7 •••
Cotton #2 (Mar ’25) CTH25 ICE/US 5.9 4.7 10 •••
Hard Red Wheat (Mar ’25) KEH25 KCBT 7.4 5.1 10 •••
S&P 500 VIX (Dec ’24) VIZ24 CFE 39.7 32.7 21 •••
Silver (Dec ’24) SIZ24 COMEX 8.2 18.6 6 •••
British Pound (Dec ’24) B6Z24 CME 2.4 14 30 ••
Canadian Dollar (Dec ’24) D6Z24 CME 1.5 12.3 47 •• CBOT Chicago Board of Trade, Division of CME
Cocoa (Mar ’25) CCH25 ICE/US 12.9 17.3 7 •• CFE CBOE Futures Exchange
High Grade Copper (Mar ’25) HGH25 COMEX 6.3 25.5 16 •• CME Chicago Mercantile Exchange
Live Cattle (Feb ’25) LEG25 CME 3.2 10.6 18 •• COMEX Commodity Exchange, Inc. CME Group
S&P Midcap E-Mini (Dec ’24) EWZ24 CME 6.1 18.2 4 •• ICE-EU Intercontinental Exchange-Futures—Europe
Sugar #11 (Mar ’25) SBH25 ICE/US 7.1 22.6 55 •• ICE-US Intercontinental Exchange-Futures—US
Australian Dollar (Dec ’24) A6Z24 CME 2.3 13 37 • KCBT Kansas City Board of Trade
Canola (Jan ’25) RSF25 ICE/CA 6 5.7 33 • MGEX Minneapolis Grain Exchange
Crude Oil Brent (F) (Jan ’25) QAF25 NYMEX 8.2 9.7 7 • NYMEX New York Mercantile Exchange
Feeder Cattle (Jan ’25) GFF25 CME 3.6 8.8 8 •
Lean Hogs (Feb ’25) HEG25 CME 4.9 10.9 28 • 2501
Trading Liquidity: Futures is a reference chart for speculators. It compares markets “Relative Contract Liquidity” places commodities in descending order according to
according to their per-contract potential for profit and how easily contracts can be bought how easily all of their contracts can be traded. Commodities at the top of the list are easi-
or sold (i.e., trading liquidity). Each is a proportional measure and is meaningful only est to buy and sell; commodities at the bottom of the list are the most difficult. “Relative
when compared to others in the same column. Contract Liquidity” is the number of contracts to trade times total open interest times a
The number in the “Contracts to Trade for Equal Dollar Profit” column shows how volume factor, which is the greater of:
many contracts of one commodity must be traded to obtain the same potential return In volume
as another commodity. Contracts to Trade = (Tick $ value) x (3-year Maximum Price 1 or exp –2
In 5000
Excursion).

January 2025 • Technical Analysis of Stocks & Commodities • 53

 ADVISORY SERVICES SOFTWARE SOFTWARE

Yes, You Can Cash In On Chaos! Certified

Chaos Traders Courses teach you how.
Learn to earn at http://moneytide.com?r=s
EMini MoonTide Hotline up 273 months in a row
http://daytradingforecasts.com?r=s

TO ADVERTISE CONTACT: ESchramm@traders.com • (206) 660 8577

TRADERS'
RESOURCE

TOP 10 VIEWED trading systems LINKS

Trading systems can help take
the subjective interpretation out Product Company
of trading decisions by providing
automated buy and sell signals 1. AbleTrend AbleSys Corporation
based on pre-programmed rules. Sure-Fire Trading Systems (VectorVest,
Trading systems are usually com- 2. VectorVest, Inc.
Inc.)
puter programs but can also be a
real-time service issuing signals 3. Individual XGO Charts MicroMedia
or a set of published rules to follow. They can rely
on one or more trading disciplines, such as artificial 4. MX2 Trading System TradeForYourLiving.com
intelligence, Gann analysis, astrology, indicator sets,
or custom rules. 5. R-MESA MESA Software
The product information you’ll find at our website
for trading systems will help answer questions such 6. Trade-Ideas Automated Trading Bot Trade Ideas LLC
as: What indicators does the system utilize? What
markets are followed by the trading system? Are 7. Profitunity Trading Group Profitunity Trading Group
additional applications required to use the trading
system? What types of customer support are of- 8. COT Trend Trader Method TimingCharts.com
fered? What are the primary features of the trading
system? While we are unable to present track records 9. TSL Platform Trading System Lab
or rankings in the listing, we hope this resource will
be a starting place for finding out more about some 10. MTPredictor MTPredictor Ltd.
of the available systems and finding the right trading
system for your trading. These are the 10 Trading Systems listings clicked on most often on the Traders’ Re-
source website, in order of clicks received. This is not an editorial rating or ranking. For
TRADERS’ RESOURCE AT TRADERS.COM more information on specific products and services, try checking store.Traders.com for
In addition to the trading systems listing at archived S&C product reviews.
Traders.com, you’ll also find listings of other trad-
ing-related products and services such as brokerages, data hope this will help you learn about products to help in your
services, courses and seminars, software, and more. We trading endeavors.

The information in Traders’ Resource is the most accurate at the time of posting and is subject to change. Because the vendors posting to Traders’ Resource are responsible for their own listing, Technical Analysis, Inc. declines any and all
liability for any representations made by the businesses and individuals listed. Nor can Technical Analysis, Inc. endorse any business or individual listed on Traders’ Resource. Technical Analysis, Inc. makes no warranties, express or implied,
as to the accuracy and reliability of claims herein. You agree to release Technical Analysis, Inc., together with its respective employees, agents, officers, directors and shareholders, from any and all liability and obligations whatsoever in
connection with or arising from your use of Traders’ Resource. If at any time you are not happy with the information posted to Traders’ Resource or object to any material within Traders’ Resource, your sole remedy is to cease using it. This
list is updated frequently. If you are aware of a business that should be listed, please email us at Editor@Traders.com.

54 • January 2025 • Technical Analysis of Stocks & Commodities

S&C Digital Edition
Did you know that every subscriber to Technical Analysis of Stocks & Commodities magazine
has full access to the magazine in digital format? No waiting for the mail to be delivered, no need to carry
around back issues — just log on to Traders.com on any internet-capable device to read any issue or article
we’ve ever published, either in your browser, or downloaded to your device as a pdf for reading anytime,
anywhere. Every subscription includes:

Digital Edition — the complete magazine as PDF, Complete Digital Archive — from 1982 through
available to read in your browser or download to to the present. More than 17,000 pages of articles,
your device for offline viewing. You will still receive product reviews, charts, spreadsheets, and code.
the printed magazine unless you opt for a digital-
only subscription. Working Money — insight on how to minimize
your losses and maximize your profits while invest-
ing for maximum growth.

Traders.com Advantage — whether you need to

learn how an indicator works or just want to know
what a trader is looking at now, this is your source
of real-time information.

Article Code — download or copy & paste code

presented in past issues of Stocks & Commodities
— including Traders’ Tips code.

Optimized Trading — starting points when trying

to decide what values to input into your charting
software. Search for a certain symbol or company
or build your own portfolio.

Visit www.Traders.com to find out more!

Email: Circ@Traders.com • Phone: 206-938-0570 facebook.com/STOCKSandCOMMODITIES @STOCKSandCOMM
 “Whoa. This is amazing.”
-pretty much anyone who has tried MetaStock 19

Watch a demo and get an extended trial of the All-New MetaStock 19

featuring Improved Workflows and Next-Gen Flexible Layouts
MetaStock.com/P424
This is neither a solicitation to buy or sell any type of financial instruments, nor intended as investment recommendations. All investment trading involves multiple substantial risks of monetary loss. Don’t
trade with money you can’t afford to lose. Trading is not suitable for everyone. Past performance, whether indicated by actual or hypothetical results or testimonials are no guarantee of future performance
or success. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES
BETWEEN HYPOTHETICAL PERFORMANCE RESULTS OR TESTIMONIALS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. Furthermore, all internal and external
computer and software systems are not fail-safe. Have contingency plans in place for such occasions. MetaStock assumes no responsibility for errors, inaccuracies, or omissions in these materials, nor shall
it be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenue, or lost profits, that may result from reliance upon the information presented.