Bradley Model, Pesavento Methodology, Relativity DYO

November 29 , 2006

13:37 Ensign Howard: Good afternoon, and welcome to today's training class

13:31 Ensign Howard: I had an enjoyable trip to Las Vegas (and St. George Utah) last week and enjoyed my visit with my brother and with Larry Pesavento. Years ago I helped Larry with a Bradley Stock Market file which he uses in conjunction with the INDU daily chart. I have posted examples of the Bradley model at various times in my Trading Trips newsletter over the years. Larry gave me permission to make the Bradley data file available to my Ensign users, and I appreciate that. So the first part of this class will be some training on how to download the Bradley file and put it on the INDU chart as an overlay.

13:35 Ensign Howard: When we are done with this training segment, you will be able to do the above chart yourself from now on. The Bradley file has been posted to my web site, and can be downloaded using the Internet Services form, Download tab.

13:35 Ensign Howard: So follow these instructions of clicking menu File | Open | Internet Services. Select the Download tab and wait for the form to fill in its dates, and then use the History drop down box to select the Bradley.d entry.

16:38 Ensign Howard: Then click the Download button.... this will put the Bradley.d file in the C:\Ensign\Day folder. Next step would be to open a chart for the $INDU.D daily file. Refresh the chart if it is not current.... those on other data feeds might have a slightly different symbol.

16:40 Ensign Howard: With the INDU chart showing, click on the Study button for the study drop down list and select Overlay Chart

16:41 Ensign Howard: Type Bradley as the Symbol, and select Line Chart as the Chart Type and Hidden as the Chart Scale. The particular example I showed also has the Invert Pattern checked. Then close the study property form. When the overlay is on the chart, you can press the letter I key to invert the pattern. Press I again to uninvert it.

16:43 Ensign Howard: You can double click on the price scale, which will change the selection from the INDU scale to the Bradley scale. Then you can drag vertically on the Bradley scale to resize the overlay, and you can drag vertically on the chart to shift the overlay up or down relative to the INDU host.

16:45 Ensign Howard: You can adjust the overlay size and position to obtain a pleasing relationship with the host chart. Any questions? Double click the price scale again to return to the INDU scale and then you can drag the host chart leftward to you have more right side margin showing and thus be able to see the Bradley pattern in the 2007 future.

16:45 Light1: Yes, I thought the model was date specific, If so, would we want to change the x-axis relationship between the two charts?

16:47 Ensign Howard: light, the pattern is date specific, and you should have the overlay property of Lock Shift L/R checked so the two cannot be moved separately. You can shift the x-axis when they are locked and they both move together to stay date aligned.

16:48 Light1: sounds good -- thanks again

16:48 Ensign Howard: You can also drag horizontally on the time stamps and this will tighten or widen the bar spacing so you see more or less bars in the view.

16:49 Light1: Is the y-axis relationship between the two also fixed?

16:49 Ensign Howard: y-axis is not fixed. The two items plot on totally different scale ranges. So I have shown you how to resize the overlay and reposition the overlay so you have a pleasing association. Ok, enjoy having the Bradley overlay as an enhancement to the Ensign Windows program.

http://www.ensignsoftware.com/tips/newsletter.htm

16:53 cyndc: The following Trading Tips Newsletters also refer to the Bradley Model -- November 2002 (# 35); May 2004 (# 53); December 2005 (# 72 ); May 2006 (# 77)

17:08 Ensign Howard: Read earlier articles in Trading Tips on the Bradley.... see the Newsletter page and the categories at the bottom in the section for Time and Astronomy. I have 3 other Bradley articles you can read and the links are shown there.

16:52 Ensign Howard: Next topic is the Expo show in Las Vegas..... I attended the Pesavento seminar at the show on Saturday and a summary of his lecture has been posted in the November 2006 Trading Tips newsletter, and the newsletter was just published a few minutes before class.

http://www.ensignsoftware.com/tips/tradingtips83.htm

16:53 Ensign Howard: For this class, lets all scan down through the article about the Pesavento seminar.

16:54 Ensign Howard: If you have not met Larry, you are missing out on knowing a very fine gentleman. He is a quality individual, and very knowledgeable about the markets. I quite enjoy his company. Larry was the guest at my brother's home in St. George Sunday and Monday following the show. We had a great time at the Sunday evening dinner table telling stories about John and I growing up in Idaho. On the wall of John's home is a lion skin, complete with the lion head.

16:58 Ensign Howard: So Larry wanted his picture taken with the lion, and the lion led to a couple hours of story telling about our experiences raising exotic animals or our animal farm(ranch). My father has loved animals all of his life, and starting in about 1960 until about 1993 he had a large private collection of exotic animals, which included buffalo, elk, deer of may varieties, llama, camels, a dozen or more varieties of antelope from Africa, zebra, giraffe, lions, tigers, leopards, jaguars, baboon, chimpanzee, monkeys, and some 'junk' animals like raccoon, donkeys, etc.

John told the story about when our white rhino pair that got out one Sunday morning and visited the garden of the neighbors about a mile away. The frantic neighbors called the sheriff, etc, and John and another employee used their pickups to herd the rhinos back to the ranch. One rhino took a dislike to John using his pickup to hedge up the way he wanted to go, so the rhino charged the pickup, smashed in the door, and then turned to go the intended right way back to the farm.

17:04 Ensign Howard: I told the story of helping dad pick up a female leopard from the Hoggle zoo in Salt Lake city, only to find the leopard loose in the back of our animal van when we got back to Idaho, instead of in the small cage it was put in. So dad, put me and one other employee in the back of the van with a catch cage, and told me to knock on the door when we had the leopard back in the cage. The van was enclosed with a covered roof, so the leopard could not escape.

17:05 Ensign Howard: Well we can laugh at it now, and Larry laughed really hard, but it was a bit scary at the time to be in an enclosed space with a loose leopard. Anyway, us Arrington brothers have lots of interesting stories from our childhood experiences building the facilities, and handling the animals.

17:06 Ensign Howard: Now back to Larry's methodology. He showed lots of examples of the Pesavento Patterns on 2-minute charts, and the Patterns help identify the AB=CD relationships, and the Fibonacci retracement levels. Larry also showed the use of his Neural Net study to give him a time indicator, which was used to know WHEN to make the trade. This is all shown in the examples and discussion of the seminar material in the Trading Tips newsletter.

17:11 Ensign Howard: So, in summary, Larry's method involves basically 4 tools: The AB=CD tool found in the Formations button in Ensign, the Pesavento Patterns, Fibonacci Levels, and the Neural Net for time.

17:12 Ensign Howard: I know Larry also uses the Gartley/Butterfly tool but this was not demonstrated at the seminar I attended. The Butterfly is a convenient way to illustrate with colored triangles some of the patterns also seen with the Pesavento Patterns tool.

17:13 Ensign Howard: I see we have Shelli here, who is very familiar with Larry's methods, because she is one of the mentors in the Trading Tutor chat room #3. Welcome Shelli...... If you would like to make a comment about Larry's trading methods, or put in information for the Trading Tutor chat room, you are welcome to do so now.

17:32 vegasallen: Howard I just spoke to Shelli and she not at her computer right now. She is asking anyone with questions to contact her: shelli@tradingtutor.com

17:15 Ensign Howard: Any questions about the newsletter article ?

17:15 Quiet: Is the Neural Net indicator a custom indicator?

17:16 Ensign Howard: NN is a private indicator that Larry has developed. The NN is a mathematical calculation that is run each day after the markets are closed by Larry and the output of the Neural Net calculation is a data file in Ensign format that he then overlays on the host chart in the exact same manner that the Bradley file was overlaid. So he is using the Overlay Chart study to show his NN curve for the coming day. The NN curve can be resized, and repositioned vertically, and inverted, all like unto the example of the Bradley overlay just demonstrated.

17:17 Quiet: So you're saying the indicator is built outside of Ensign, converted to Ensign format but Ensign doesn't actually calculate the values

17:18 Ensign Howard: Correct, Quiet, Ensign is not calculating the values, they are calculated outside of Ensign by a Neural Net software program.

17:19 Ensign Howard: Now, NN images are frequently posted as part of the Trading Tutor chat room. A similar predictive curve IS in Ensign as our Pesavento Map study, but the mathematics of that calculation are different than Larry's NN, which requires external processing through a Neural Net. Everything shown in the article about Larry's method can be emulated using the Pesavento Map study instead.

17:26 Quiet: Bradley, I presume, dblue

17:27 dblue: pesavento map on 4k bars

17:43 FuturesTrader: Since we are waiting for Howard to return .... My question is how does one make a "Relativity" DYO where a (Closing Price / 200-day SMA) study line is plotted in the primary price graph window with a separate y-axis scale? A ratio greater than 1 means current price is above 200-day SMA and less than 1 below.

17:45 Ensign Howard: On the DYO, have the location be the Chart, and have the Scale selection be Data Set.

17:47 Ensign Howard: Is that the essence of the question? or did you also want to see the formula implementation?

17:48 FuturesTrader: That is good, but if you could show the formula too it would be much appreciated...

17:50 Ensign Howard: 95 has 2 lines

17:50 Ensign Howard: Your formula is the red line curve and it auto scales from top to bottom of the display area. The line should be an oscillator referenced to a zero origin, not the 200-day SMA

17:53 FuturesTrader: Line data point = Daily Closing Price / 200-day SMA

17:53 Ensign Howard: You need to explain your formula better then. You have shown a ratio of two positive numbers, so ZERO is impossible. Close price is positive, and the SMA is also positive. So the ratio must be a number greater than zero

17:55 FuturesTrader: You are correct -- maybe a very small number could be used to avoid a divide by zero condition in that unique case.

17:55 Ensign Howard: Here is a plot with a fixed range of 2 for a High and 0 for a Low

17:56 Ensign Howard: The bottom dotted grid is 0.5, middle is 1.0, upper is 1.5 Is that what you want to see?

17:57 Ensign Howard: Here is the property for the last post. you can play with it now.

17:57 FuturesTrader: OK, great! From what you showed I will think about it more and figure out the right formula. I see your point in the formula I provided. Thank you very much Howard.

17:57 Ensign Howard: Welcome.

18:03 Ensign Howard: Thanks for attending class.... I have another phone call that is going to be a lengthy conversation. So bye for today.

18:04 makesownweather: Thank you Ensign Howard :>

18:04 deano: ty Howard

18:04 CIA: Thanks Howard - appreciated the stories :)

18:04 FuturesTrader: Bye Howard.

18:05 dblue: Thanks Howard