Indicators | JAN 2009
Identifying And Timing With The Special K, Part 2 by Martin J. Pring
Stocks & Commodities V. 27:01 (28-35): Identifying And Timing With The Special K, Part 2 by Martin J. Pring In part 1, you were introduced to the Special K indicator and its application on the weekly and daily charts. In part 2, we will show you how Special K can be used to identify major trend reversals and for timing pro trend short-term moves. I mentioned in part 1, my favorite method of displaying the Special K uses a calculation (see sidebar) based on daily data and exclusively incorporating simple moving averages like that displayed in Figure 1. As you can see from this chart, the movements in the daily Kst and the Special K are similar. The daily Kst shows overbought and oversold conditions, which are not apparent from the summed cyclicality of the Special K. Let’s see how the Special K can be used to identify major trend reversals and to time pro trend short-term moves. IDENTIFYING MAJOR TREND REVERSALS EARLY The following techniques will help better time primary trend reversals: 1.Observing trendline breaks, such as that in late 2006 in Figure 1. 2.Identifying a reversal in a series of rising or falling peaks and troughs. For example, the end of the bull market in November 2007 was signaled this way. 3.Observing the crossovers of the Special K’s smoothing. In this case, I typically use a 100-day smoothing of a 100-day simple moving average, as shown in Figure 1. The series of declining peaks and troughs was still in force in mid-September 2008 as this article was written. Note that the 100/100 smoothing is not offered as the perfect solution but more as a smoothing that appears to work fairly consistently. In Figure 1, the green and red arrows show two such crossovers.
by Martin J. Pring
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.