No. of Recommendations: 5
Hello. I've read some of your posts in the past and have been impressed w/your knowledge of some of these "old-timers". They have much to teach. I agree, of course these concepts must be adapted to the present-day markets, times have indeed changed. But much of the concepts are founded in rudimentry market dynamics, like Wyckoff, that will remain constant as long as there are markets. Supply and Demand in an auction market of the 20's is still Supply and Demand 80 years later. Candlestick charting, after all, which has gained popularity in the just the last couple of years or so, is several hundred years old. Yet the technique works beautifully even in RT intraday trading.

What Kerr does that is unique is twofold: 1) He quantifies in 36 formulas every possible market action, and 2) He incorporates News, or lack thereof, into each equation. I'm interested in, and have begun utilizing, the entire concept of the book - the technique, the system, whatever you want to call it - and incorporating it into my daily chart analysis. It's just a quantifiable, forumulaic method for interpreting the markets based on price movement and location and volume - traditional charting - but in relation to News, in order to determine supply and demand, accumulation/distribution. Who is doing the buying or selling - the public or the "insiders", the weak or the strong? Kerr breaks market dynamics into "technical", short-term over-bought/over-sold situations, and "internal", longer-term accumulation/distribution.

For instance, a market that breaks out of a trading range on good news, as we did yesterday w/Microsoft, is not as strong *internally* as one that breaks out on *no* news or unfavorable news, which would imply insiders buying/accumulating - because the public buys on good news, this is not *necessarily* "strong" buying. This implies more of a false or brief bo than the other situations. Naturally, there are many, many factors, including of course the overall ST, IT, & LT strength or weakness of the present market. Obviously I can't explain the whole book here. (And yes, one can argue that the bo Thurs ocurred before the MSFT announcement, but after the volatility had worn off, the market held the early gains. Would it have done so w/o the MSFT news? We don't know.)

If you look at the intraday Naz on Wed, there was a parabolic selloff at the Fed announcement - a classic case of the public selling on (perceived) "bad news". Now, because we're near the bottom of this 10-week range, and still in a Bear market, one would suspect the almost immediate reaction up that followed to be much due to short-covering. But because price held well the rest of the day and that recovery came on "bad" news, it was also probably "smart" money accumulating/buying. Even before Wednesday, the previous 4 days the news had been mostly unfavorable or gloomy, yet 3 of 4 closes were at the top of this little range and the lows held, which shows "internal" strength (accumulation by the insiders).

In the following Formulas, "Z" represents News, which can be anything from a major profit warning that effects the indices, to the indices & sectors effecting an individual issue. Much of this is common-TA-sense:

1) MU-ZU-VL (Market Up - News Unfavorable - Volume Large), as opposed to 2) MU-ZU-VS (Market Up - News Unfavorable - Volume Small) as opposed to 3) MU-ZF-VL (Market Up - News Favorable - Volume Large) as opposed to 4) MU-Z-VL (Market Up - No News - Volume Large). Of these, strictly quantified, 1 is strongest internally, then 4, then 3, then 2. Notice how these interpretations fit perfectly w/traditional pv analysis.

Again, let me stress that I've put this very simplistically. The book is much more complex.

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