www.HarborLightsInvestment.com
Harbor Lights Investment Management
Commercial Consulting for: Cotton, Corn, and Soybean Meal
Capital Management, Money Management, and Trade Management
Back-Tested Trading Models for: Cotton, Corn, and Soybean Meal
The Models use Universal Laws of Mathematical and Statistics
Trading Model Results are available upon requestCopyright
Phone: 1-541-726-4234
For a 2-Week Free Trial Newsletter Subscription
Email: HarborLightsInvestment@[EMAIL PROTECTED]
Starkey was formerly the leading Long-Term Technical Analyst for
Shearson Lehman American Express out of NYC. The former Chief Technical
Analyst for Stotler and Company, and other FCM’s.
He has been a consultant to Banks, Mortgage Companies, Crude Oil
Merchants,
and is currently a consultant to Cotton Mills, Cotton Merchants,
Commercial
Grain Users, and others. He also publishes a daily re****t on Gold, Silver,
Energy’s, Currencies, and other commodities.
© 2006 Harbor Lights
DAILY TECHNICAL ANALYSIS RE****T:
Primary Objective, Format, Mathematical Indicators, Forecasting Tools, and
Definition of Terms:
First of all, I want to thank you for your inquiry about the Daily
Product and other services. However, I must admit, I did not
anticipate this much response from the First Radio Broadcast.
The primary objective of this analysis is to locate low-risk trades
with 1:3 ratio or better. As a consequence of this objective there
will be fewer trades. If you need shorter term trades then I can be
reached by E-Mail or by phone. I have always found it difficult (20
years full time) to combine the long-term perspective and short-term
perspective. In my opinion short-term trades should occur within the
long-term perspective; but without the long-term perspective being in
place, it is easy to get it lost.
Therefore, I have decided to continue doing the long-term re****ts
which
I believe will fulfill the primary objective. The last “Long-Term
Outlook for 2005”; was published on January 13th of this year. The
next publication is now scheduled for June 20th of 2005.
In addition, unless you are familiar with my methodology and its'
definitions I believe it would be difficult to follow the previous
material. Therefore, I will define the indicators I use and the
reasons behind using these indicators which are all directed to the
primary objective.
Mathematical Indicators:
The Main Trend: This is defined by the optimum Moving Average or the
Exponential Moving Average. (Refer to Forecasting Tools) The probability
is
higher when you trade in the direction of the Main Trend.
Breakouts: 20, 30, and 50-Day:
These breakout numbers are used in relation with the Main Trend. In
addition:
1] The probability is higher to trade with the trend when all trend
filters
are in one direction and variance from the mean takes place.
2] Most computer systems elect buy stops and sell stops near or at these
numbers; especially the 30-Day High or Low.
3] The closer these numbers come together it is an indication that the
buying and selling pressure is becoming equalized and a price movement out
of this range will accelerate.
The Daily Momentum: The Daily Momentum is measured through the use of the
Standard Deviation and the Bell Curve. When the variance equals “X”
distance
from the mean the market it is oversold if the trend is up or overbought
if
the trend is down. The further the price is from the mean within the
direction of the trend, the higher the probability of reverting to the
mean,
and the better the risk/reward ratio.
The Weekly Momentum: The Weekly Momentum is measured using the Standard
Deviation and the Futures Weekly. When the variance is “X” distance from
the mean the market is oversold or overbought. Larger price moves usually
come from this indication especially if this is in the same direction as
the
Main Trend.
The Daily Long-Term Momentum: This is measured using the Standard
Deviation. When the Standard Deviation is equal to or greater than 2.00
it
is in 5% end of the Bell Curve and indicates a market extreme or high
probability of a top or bottom.
The Weekly Long-Term Momentum: This is measured using the Standard
Deviation. When the Standard Deviation, basis the Futures Weekly or Cash
Weekly; is equal to or greater than 2.00 it is in the 5% end of the Bell
Curve and indicates a market extreme or high probability of a top or
bottom.
The combination of the Daily and Weekly Momentum in the 5% end of the Bell
Curve within the same time frame gives a very high probability of
capturing
the beginning of a new Bull Phase or the beginning of a new Bear Phase,
which offers a 1:3 ratio or higher.
Consolidation: Consolidation is measured through combinations of
mathematical ratios. These have been subdivided into Short-Term
Consolidation, Intermediate Consolidation, and Long-Term Consolidation.
The
first 2 sets are to be used with the trend. The final set can be used
with
the trend or against the trend.
These ratios measure the equalization of the buying and selling pressure
and
****tend a sharp breakout above or below the last day's high or low. Most
im****tantly, these ratios, when confirmed offer lower risk trades with a
higher probability of achieving the primary objective.
Divergence: Divergence is measured using the RSI and ****tends that a
bottom
or top reversal will take place.
There is positive divergence and negative divergence.
In positive divergence the RSI is declining while the market is making
higher bottoms or the RSI is rising while the market is making lower tops.
In negative divergence the RSI is rising while the market is making lower
lows, or the RSI is declining while the market is making higher highs.
These indications are stronger when they coincide with Main Trend or when
combined with the Long-Term Momentum using the Daily and Weekly Standard
Deviation.
FORECASTING TOOLS:
Forecasting can be defined as “What could be or what might be”; this
is
opposed to “What is”. The Mathematical indicators are intended to
tell
us “What is”.
Forecasting is subdivided into two categories: Price and Time
Price Forecasting measures market pressure through:
1] The Position of the market is measured by the price retracements
between
tops
and bottoms. Markets that congest in the upper half of the range are
in
bullish
position, and markets that congest in the lower half of the range are
in bearish
position.
2] Balance is based on Newton's Law that every action has an opposite and
equal
reaction. As a corollary, reactions against the Trend tend toward
equality in price
and time and are natural levels to confirm buying and selling
conclusions and the
time frame when a change in price direction should take place.
3] Price Projection…Measured by mathematical sets. Price projection is
intended to help
stay with the trend and achieve the primary objective.
Time Forecasting predicts in time when the market will begin a new price
direction.
1] Long-Term Cycles are from back-tested Sine Waves
2] Projected Low Timing and Projected High Timing are measured from
sets of ratio relation****ps between bottoms and tops. This projects
in
time when
Major bottom or Top should take place.
3] Reversal Timing is measured through Time Series Sets.
This indicates that the market should reverse price direction when the
market advances
or declines into this time frame.
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