EbbChart Primer (Public Thread)

[ebbnflow]

A pattern consists of signals from the C, S and I-fund. And there are eight possible patterns to track each market day's result.

The S&P 500 has a winning percentage of 53% over the last 40 years, so a pattern is considered to be in an uptrend if it's ebbtally percentage goes over 53% (2012 CSI).

This is the up-to-date 5 yr. ebbtally compiled since 2007. Notice how patterns with 2 or more red signals (bearish sentiment) -- 5 (59%), 8 (58%), 3 (57%) and 6 (52%) -- have a higher win-loss percentage than patterns with 2 or more green signals (bullish sentiment) -- 1 (51%), 7 (51%), 4 (53%) 2 (54%). That's the contrarian trading strategy at work -- markets tend to go up when sentiment is bearish and down when sentiment is bullish. I didn't think the ebbtally total would result in 8 of 8 patterns hitting it right on target because the odds are against it. The chances of that happening are 1 in 256 (0.5 ^ 8), so it all boils down to having the right data collected (by the ebbtracker database) daily. Note: When following the long-term indicators (triple patterns), one should look at triple patterns 5 and 8 for entry and triple patterns 1 and 7 for exit. Triple-pattern signals show up once or twice a year, so two patterns with the highest or lowest win-loss percentage can be used successfully as entry or exit signals. Triple-pattern appearances: bearish pattern 1-1-1 (Apr. 16, 2007); bearish pattern 7-7-7 (Feb. 22, 2008 and Nov. 07, 2008); bullish pattern 5-5-5 (Apr. 20, 2009 and Jun. 29, 2010); bullish pattern 8-8-8 (Oct. 27, 2011). Triple patterns should be looked at as aberrations or anomalies that mark turning points in the market.

-- ebb

 

[RealMoneyIssues]

I can't see photobucket pictures at work, so I look forward to reading this at home.

Thanks for allowing us mortals have a taste of your secret recipe

 

[ebbnflow]

January is almost over, so I'll just use this month's ebbchart as a sample.

 

[RealMoneyIssues]

January is almost over, so I'll just use this month's ebbchart as a sample.

You tease...

 

[ebbnflow]

When developing a system of your own, one thing to strive for is to make it as mechanical as possible. Do that and you take away the destructive emotions that sabotage your trading. I believe I have accomplished this with the new mechanical calling system started back in May of 2011. To test it, I began following the exchange-traded fund, TNA with the system's buy and short signals. From May thru December, the system produced a gain of +154.64%. During the same period, TNA went from 94.73 to 44.84, a loss of -52.67%. Here's the latest update of TNA:

Let me point out what's inherent to the ebbchart -- quantifying chart patterns. We have eight patterns that track each day's market result. To date, each pattern has appeared on the ebbchart 155 times (on average). By the way, you'll have a hard time quantifying regular chart patterns because it's subjective when it comes to interpretation.

"Statisticians say you need a minimum of 30 cases before you can say anything valid about the probability of history repeating itself. Scientists who do really serious science, like missiles and moon shots, demand a minimum of 200 cases." -- Technical Analysis for Dummies.

-- ebb

 

[RealMoneyIssues]

Seems like a lot of trades in between TNA and TZA(I can't short). Do you think that would identify me as a PDT?

 

[berline]

That's some great numbers ebb. I may have to jump on board just for my non-TSP account. Do I understand correctly that you give you buy/short rec in 1-2 week blocks? if something changes, do you send out an update to modify the upcoming days?

 

[RealMoneyIssues]

ebb,

I'm not sure about others, but I am going to need someone to explain all them numbers so I know what to do. Do you have a FAQ or primer so us dummies can figure it out?

Hmmm, 'ebbChart for dummies'

 

[MrJohnRoss]

This is an incredible amount of work you've done here Ebb. Very impressive! I must admit, I'm just not sure I can comprehend how all this works. For a simpleton like me, what are your bottom line results compared to the S&P over the last few years? How many buy/sell signals does your system produce each month? Do those signals work well within the constraints of the current TSP trading limitations? Or would your system work best in our personal accounts?

Thanks for your hard work and for sharing your insights with us! I look forward to learning more from you. I'm always amazed at the amount of intelligence here on this board...

John

 

[ebbnflow]

Seems like a lot of trades in between TNA and TZA(I can't short). Do you think that would identify me as a PDT?

Pacific-Daylight-Time trader (west coast)?

ebb,

I'm not sure about others, but I am going to need someone to explain all them numbers so I know what to do. Do you have a FAQ or primer so us dummies can figure it out?

Hmmm, 'ebbChart for dummies'

On the first chart, we have last year's ebbtally (2011 CSI) and the current year's ebbtally (CSI 2012). The chart gives us a running tally of the patterns' performance (winning percentage with gain/loss percentage). It allso shows the pattern's current trend for the year.

The second chart is the ebbchart patterns' 5 yr. ebbtally (2007-2012 CSI). This is where we get the system's mechanical calls -- buy/short signals. I don't like having a lot of "if" conditions, but I can live with a couple. The simpler the system, the better!

The third chart is the main ebbchart. The TA needed to generate the red and green signals for each pattern stays in the background, so we can concentrate on the patterns. You can also see the system's buy (C/S/I) and short (G/F) signals here.

-- ebb

 

[ebbnflow]

That's some great numbers ebb. I may have to jump on board just for my non-TSP account. Do I understand correctly that you give you buy/short rec in 1-2 week blocks? if something changes, do you send out an update to modify the upcoming days?

That's correct, berline. The buy and short signals are given 1-2 weeks ahead of time. Revisions don't happen often, but the charts are updated if warranted.

-- ebb

 

[ebbnflow]

This is an incredible amount of work you've done here Ebb. Very impressive! I must admit, I'm just not sure I can comprehend how all this works. For a simpleton like me, what are your bottom line results compared to the S&P over the last few years? How many buy/sell signals does your system produce each month? Do those signals work well within the constraints of the current TSP trading limitations? Or would your system work best in our personal accounts?

Thanks for your hard work and for sharing your insights with us! I look forward to learning more from you. I'm always amazed at the amount of intelligence here on this board...

John

Thanks a heap for the kind words, John. It's a process that continues to evolve. The new mechanical calling system was started back in May of 2011 and would have probably changed a lot of the previous buy and short signals. I don't want to go into backtesting and come up with enhanced numbers. The results I had with TNA last year was done in real time using the ebbchart signals. From May thru December, the S&P 500 lost -7.77% (TNA - 52.67%), but timing it with the ebbchart signals produced a gain of +41.27% for the S&P 500 (TNA +154.64%). The system had gains for all the months except December. The loss for S&P 500 in December was -3.79% (less volatility) while the loss for TNA came in at -26.05%. On average, we can expect a total of 10 buy/short signals from the system per month.

The most powerful tool in the ebbchart (discovered about a year ago) is the triple patterns (long-term indicators). If you check its timeline (see text above second chart), you will see what I mean. Bearish triple patterns 1-1-1 and 7-7-7 "saw" the impending crash of 2008. And bullish pattern 5-5-5 showed up a month after the bear market bottom (March 09, 2009). Here's a chart using the triple patterns:

This could be refined to also include the minor/fringe patterns (green patterns 2 and 4; red patterns 3 and 6). After a bull run of epic proportions, and no other triple patterns in sight for about a year, bearish triple pattern 2-2-2 turned up on the ebbchart (June 10, 2011). The S&P 500 went down from 1289 to 1129.56 (Sep. 22, 2011), a loss of -12.37%. Then, a timely bullish quadruple pattern 3-3-3-3 (Sep. 23, 2011) showed up to save the year -- the S&P 500 has gained +16.53% (Jan. 27, 2012) since then. :nuts:

-- ebb

 

[ebbnflow]

Genus: EbbChartus

Introduction: We have quantifiable chart patterns in the ebbchart; that much is known. The signals coming from the C, S and I-fund give the chart patterns three different perspectives with which to track the market. It's like having a chart with an xyz-axis instead of just xy (flat). Dang, where's the 3D glasses when you need one? :blink:

-- ebb

 

[ebbnflow]

I'm also going to try to keep this thread alive for those who can't access the premium pages.

 

[ebbnflow]

TNA (2011): MAY (W 11, L 10, +1.32%); JUN (W 12, L 10, +3.07%); JUL (W 13, L 7, +28.02%); AUG (W 10, L 13, +27.66%); SEP (W 12, L 9, +14.66%); OCT (W 10, L 11, +32.42%); NOV (W 10, L 11, +32.89%); DEC (W 10, L 11, -26.05%). TNA (2012): JAN (W 14, L 6, +17.05%).

EbbChart TNA signals (MAY-DEC): 88/170 52% (buy signals -- 52/102 51%; short signals -- 36/68 53%). Gain (compounded): +154.64%. Positive on all months except for December. A total win-percentage of 52% doesn't look much, that is, until we see the losses on the flip side of the trade. In the same period, TNA only had a 49% win-percentage (loss of -52.67%). What a difference an edge as small as 3% can do! :nuts:

-- ebb

 

[ebbnflow]

Here’s a timeline of the ebbchart's powerful triple patterns after the market crash bottom of March 2009:

S&P 500 (Apr. 17, 2009): 869.60

1st wave) Bullish Pattern 5-5-5 (Apr. 20, 2009 – Jun. 28, 2010): 832.39 – 1074.57 (gain +29.09%).
2nd wave) Bullish Pattern 5-5-5 (Jun. 29, 2010 – Jun. 09, 2011): 1041.24 – 1289 (gain +19.95%).
3rd wave) Bearish Pattern 2-2-2 (Jun. 10, 2011 – Sep. 22, 2011): 1270.98 – 1129.56 (loss -12.37%).
4th wave) Bullish Pattern 3-3-3-3 (Sep. 23, 2011 – Oct. 26, 2011): 1136.43 – 1242 (gain +9.95%).
5th wave) Bullish Pattern 8-8-8 (Oct. 27, 2011 – xxxxxxxxxxxxxx): 1284.59 – xxxx (gain xxxx).
6th wave) xxxx (info available only to current members)

The 1st and 2nd wave cycle from bullish pattern 5-5-5 brought in tremendous gains (+54.86% compounded) and had gone on for more than two years.

Then, a less potent 3rd wave from bearish pattern 2-2-2 emerged and resulted in a loss of -12.37% for the S&P 500. If an opposing wave shows up within 3 months of the previous wave, then it does not get a chance to get established. It is usually crushed or negated, but pattern 2-2-2 came in almost a year after the waning pattern 5-5-5 wave cycle. So in hindsight, pattern 2-2-2 should have been given due respect. Could have kept the system positive last year had I recognized it.

The 4th wave coming from bullish pattern 3-3-3-3 reestablished the bull market.

The 5th wave from bullish pattern 8-8-8 only strengthened the wave cycle for the bulls.

The 6th wave coming from xxxx (info available only to current members).

If you consider the Elliott wave theory (and wave counts) too esoteric or complicated, then check out the simple ebbchart patterns. And, just watch out for the triple patterns to appear. These long-term indicators should be looked at as aberrations or anomalies that mark turning points in the market. Following the triple patterns since 2007 thru 2012 would have resulted in a gain of over 100% (50% S, 50% I). I discovered the triple patterns inside the ebbcharts about a year ago.

-- ebb

 

[ebbnflow]

There are eight possible patterns that can turn up on the ebbchart each day. A pattern appearing in three consecutive trading days is called a triple pattern. It doesn't occur often, but I've learned to pay attention to it when it does (see post above).

-- ebb

 

[tsptalk]

TNA (2011): MAY (W 11, L 10, +1.32%); JUN (W 12, L 10, +3.07%); JUL (W 13, L 7, +28.02%); AUG (W 10, L 13, +27.66%); SEP (W 12, L 9, +14.66%); OCT (W 10, L 11, +32.42%); NOV (W 10, L 11, +32.89%); DEC (W 10, L 11, -26.05%). TNA (2012): JAN (W 14, L 6, +17.05%).

EbbChart TNA signals (MAY-DEC): 88/170 52% (buy signals -- 52/102 51%; short signals -- 36/68 53%). Gain (compounded): +154.64%. Positive on all months except for December. A total win-percentage of 52% doesn't look much, that is, until we see the losses on the flip side of the trade. In the same period, TNA only had a 49% win-percentage (loss of -52.67%). What a difference an edge as small as 3% can do! :nuts:

-- ebb

Great numbers, Ebb. Just so people know, TNA is very volatile and considering the transaction fees for each trade, may be your best choice. But I wanted to point out that someone might consider using something like VXF, SSO, or SPY as less volatile alternatives. Your drawdowns will be smaller, but so will any gains.

 

[ebbnflow]

Someone asked me how the ebbchart’s triple patterns did before the market crash of 2008. I work with cycles all the time, so I knew there’s something in the ebbcharts that’s just waiting to be discovered. If you’re searching for a signal that accurately marks 90-day tops or bottoms, then read on. By the way, I found an error in my previous post (% gain for pattern 5-5-5), so I’ll just do the complete timeline in here:

S&P 500 (Apr. 13, 2007): 1452.85

1st wave) Bearish green pattern 1-1-1 (Apr. 16-18, 2007 – Aug. 02, 2007): 1468.33 – 1472.20 (gain +1.33%).
Only triple pattern that didn’t work out (short term), but the missed gain is negligible.

2nd wave) Bullish red pattern 6-6-6 (Aug. 03-07, 2007 – Dec. 06, 2007): 1433.06 – 1507.34 (gain +2.39%).
This opposing wave had a chance to get established by appearing well after the 90-day cycle of pattern 1-1-1 (1st wave). Waves are strongest during its 90-day cycle.

3rd wave) Bearish green pattern 4-4-4 (Dec. 07-12, 2007 – Jan. 31, 2008): 1504.66 – 1378.55 (loss -8.54%).
Appearing a month after the 90-day cycle of pattern 6-6-6 (2nd wave) made this opposing wave a valid one.

4th wave) Bearish green pattern 4-4-4 (Feb. 01-05, 2008 – Feb. 21, 2008): 1395.42 – 1342.53 (loss -2.61%).
Same bearish wave to carry the torch further down the abyss.

5th wave) Bearish green pattern 7-7-7 (Feb. 22-26, 2008 – Mar. 07, 2008): 1353.11 – 1293.37 (loss -3.66%).
Another bearish wave cycle to strengthen the downward spiral.

6th wave) Bearish green pattern 2-2-2 (Mar. 10-12, 2008 – Nov. 06, 2008): 1273.37 – 904.88 (loss -30.04%).
There’s blood in the streets.

null wave) Bullish red pattern 6-6-6 (May 12-14, 2008).
Opposing wave showed up inside the 90-day cycle of pattern 2-2-2 (6th wave). Crushed and negated.

7th wave) Bearish green pattern 7-7-7 (Nov. 07-11, 2008 – Apr. 17, 2009): 930.99 – 869.60 (loss -3.90%).
The bearish cycle was about over, but the bears hang on.

null wave) Bullish red pattern 6-6-6 (Nov. 17-19, 2008).
Opposing wave showed up inside the 90-day cycle of pattern 7-7-7 (7th wave). It's crushed and negated.

null wave) Bullish red pattern 3-3-3-3 (Jan. 20-23, 2009).
Opposing wave showed up inside the 90-day cycle of pattern 7-7-7 (7th wave). Consider it null and void.

8th wave) Bullish red pattern 5-5-5 (Apr. 20-22, 2009 – Jun. 28, 2010): 832.39 – 1074.57 (gain +23.57%).
First appearance on the ebbchart. Market crash bottom (March 2009) soon to fade.

9th wave) Bullish red pattern 5-5-5 (Jun. 29--Jul. 01, 2010 – Jun. 09, 2011): 1041.24 – 1289 (gain +19.95%).
Back-to-back bullish waves brought in tremendous gains (+48.23%).

10th wave) Bearish green pattern 2-2-2 (Jun. 10-14, 2011 – Sep. 22, 2011): 1270.98 – 1129.56 (loss -12.37%).
Appearing almost a year after the last bullish pattern 5-5-5, a much needed correction served by this opposing wave.

11th wave) Bullish red pattern 3-3-3-3 (Sep. 23-28, 2011 – Oct. 26, 2011): 1136.43 – 1242 (gain +9.95%).
The bull rush resumed with this timely opposing wave.

12th wave) Bullish red pattern 8-8-8 (Oct. 27-31, 2011 – xxxxxxxxxxxx): 1284.59 – xxxx (gain +xxxx).
First appearance.

13th wave) xxxx (info available only to current members).

-- ebb

 

[ebbnflow]

Wow, TNA chart (using ebbchart signals) didn't look good a while back at -14.38%, but with today's gain of +2.64%, it has climbed all the way back Up to positive territory.