股票期货突破技术分析(英文原版)-第27章

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tor　lengths。have　been　used　and　the　point　and　figure　chart　parameters　have　varied。　The　charts。demonstrate　what　an　important　point　and　figure　development　this　is。　In　most　cases；　the　traditional　periods。can　be　translated　into　columns；　although　there　is　a　fine　balance　between　the　sensitivity　of　the　point　and　figure　chart　and　the　column　length　of　the　indicator。　

Market　Breadth　Indicators　
Point　and　figure　also　has。its。own　measures。of　market　breadth。　The　most　mon　calculates。on　a　day…to…day　basis。the　percentage　of　stocks。in　an　index　for　which　the　last　signal　was。a　point　and　figure　double…top　buy　signal。　The　indicator　is。called　bullish　percent　and　has。been　in　use　for　some　fifty　years。　But　there　are　other　ways。to　calculate　point　and　figure…based　market　breadth　indicators；　for　example；　the　percentage　of　stocks。for　which　the　relative　strength　chart　against　the　index　is。on　a　buy　signal；　or　the　last　column　is。a　column　of　Xs；　or　the　last　plotted　box　is。above　a　chosen　column　moving　average。　These　indicators。are　normally　plotted　as　point　and　figure　charts。but　can　be　plotted　as。line　charts　as。well。　They　act　like　overbought/oversold　oscillators。and　put　you　in　the　right　frame　of　mind　when　assessing　whether　to　accumulate　or　distribute　stocks。in　the　index。　

Flipping　Point　and　Figure　Charts　
Technical　analysts。have　been　turning　printed　charts　upside　down　for　years。to　remove　any　subconscious。bias；　but　flipping　a　point　and　figure　chart　wasn't　as。effective　because　the　columns。of　Xs。and　Os。were　the　wrong　way　when　turned　upside　down。　puters。can；　however；　flip　the　chart　and　swap　the　Xs。for　Os。and　the　Os。for　Xs。to　provide　a　perfect　point　and　figure　chart　upside　down　and　“fool〃　the　brain　into　believing　the　chart　is。the　right　way　up。　
Most　who　analyze　a　chart　have　a　bias。　Some　are　constantly　bullish　and　can't　see　tops；　others。are　bearish　and　can't　see　bottoms。　No　matter　what　bias。you　have；　flipping　the　chart　tends。to　remove　that　bias。even　though　consciously　you　know　the　chart　is。upside　down。　It's。important　that　the　flipped　chart　look。as。natural　as　possible；　so　maintaining　the　original　price　scale—even　though　the　numbers。don't　match　the　flipped　chart—adds。to　the　deception。　The　eye　and　brain　must　be　fooled　into　thinking　that　the　chart　is。right　side　up。　
There　are　two　occasions。to　flip　a　chart：　first；　when　you　just　can't　make　your　mind　tip　about　the　state　of　the　chart；　and　second；　when　you're　so　blinded　by　extreme　confidence　in　your　analysis。that　you　can't　see　any　opposite　signs。　It’s。quite　amazing　how　well　it　works。　Even　though　you　consciously　know　it's。upside　down；　you'll　analyze　it　as。if　it's。right　side　up。　

The　chart　in　Figure　8。13　is。a　1％　x　3　chart　of　the　Dow　flipped　upside　down。　Notice　the　price　scale　is　not　flipped；　thus。aiding　the　deception；　but　the　columns。of　Xs。have　bee　Os　and　the　columns。of　Os。have　bee　Xs。　Some　analysts　may　be　looking　for　a　top　in　the　Dow；　some　may　be　talking　about　new　highs。　You　make　up　your　own　mind　by　looking　at　the　chart。　Do　you　think。it's。making　a　bottom；　or　do　you　think。it's　a　continuation　of　the　downtrend？　Whatever　you　think；　the　opposite　is；　in　fact；　your　view；　because　the　chart　is。upside　down。　
Flipping　charts。is。one　technique　you　should　not　overlook；　and　you　will　find　the　point　and　figure　version　works。better　than　the　version　for　candles。or　bar　charts。　
Like　no　other　chart；　the　point　and　figure　chart　has　evolved　to　maintain　itself　in　the　modern　world；　and　there's。no　doubt　that　it　will　continue　to　do　so。　Not　being　bounded　by　time　allows。it　to　be　adapted　in　more　ways。than　any　other　chart。　This。chapter　hasvered　a　number　of　new　and　not…so…new　point　and　figure　techniques；　from　internal　45　trend　lines　to　log　scaled　point　and　figure　charts；　from　establishing　point　and　figure　targets。to　calculating　risk…reward　ratios。from　them；　from　the　use　of　moving　averages。and　parabolic。curves。on　point　and　figure　charts。to　the　use　of　Bollinger　bands；　from　point　and　figure　charts。of　
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CHAPTER　9　

Deconstructing　the　Market：　The　Application　of　Market。Profile　to　Global。Spreads　
ROBIN　MESCH　
Deconstruction；　a　method　of　analysis。that　emphasizes。the　relational　quality　of　meaning；　involves。discovering；　recognizing；　and　understanding　the　underlying—and　unspoken　and　implicit—assumptions；　ideas；　and　frameworks。that　form　the　basis。for　thought　and　belief　
Most　spread　traders。are　accustomed　to　working　with　line　charts。that　show　the　value　of　the　spread　at　discrete　points。in　time；　connected　by　lines。　For　example；　Figure　9。1　is。a　daily。chart　of　the　10…year　U。S。　Treasury　notes　versus。the　10…vear　EuroGerman　Bund　spread　with　a　ratio　of　100：55。　

This。type　of　chart　is。not　very　conducive　to　technical　analysis。　There　is。a　lot　of　information　here；　but　it　is。not　organized　in　a　way　that　is。accessible　to　the　trader。　How　we　organize　the　data　determines。how　we　see　the　market。　Figure　9。2　shows。a　Market　Profile　chart　for　the　same　period。　（For　details。on　how　the　Market　Profile　isnstructed；　see　my。chapter　in　New　Thinking　in　Technical　Analysis　＇Bloomberg　Press；　2000＇。）　
We　start　with　the　basic。understanding　that　the　market　is。an　auction。　The　progress。of　the　auction　and　where　the　market　spent　time　（and　hence　perceived　value）　bee　much　clearer　on　this。chart。　But　the　real　strength　of　Market　Profile　analysis；　and　the　concept　on　which　this。chapter　will　locus；　es。from　reorganizing　the　profiles。to　reflect　plete　cycles。of　market　activity　and　setting　up　a　framework。to　guide　the　trader　as。the　market　progresses　through　its。auction　cycle。　
Let's。preview　our　approach　by　looking　at　a　reorganized　version　of　this。same　data　（see　Figure　9。3）；　showing　a　plete　auction　cycle　followed　by　a　new　directional　move。　
This。final　version；　created　by　bining　monthly　profiles。from　March　through　June　2006　and　monthly　profiles。from　July　through　October　2006；　provides。a　structure　and　presentation　of　the　data　that；　as。we　will　see；　gives。a　basis。for　determining　strategy　when　trading　spreads。　
The　strength　of　Market　Profile　is。itsanization　of　market　data　into　a　bell　curve；　revealing　the　underlying　auction　process。that　drives。price　fluctuations。　In　this。chapter　we　apply　Market　Profile　analysis。to　global　spreads；　as　a　tool　to　understand　the　relationship　between　two　correlated　markets。　Well　start　by　reviewing　the　basic。principles。of　Market　Profile；　and　then　apply　those　principles。to　some　monly　traded　global　spread　markets。　

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should　the　non　preferred　scenario　unfold。　But　if　the　market　was。able　to　climb　over　the　high…volume　ledge　of　930；　it　would　confirm　the　bullish　game　plan　that　I　was。favoring　at　the　time。　Let's　see　what　took。place　for　the　remainder　of　2003。　
For　the　remainder　of　the　year；　from　April　2003　to　December　2003；　the　market　traded　within　the　pocket　of　low　volume　left　by　the　February　2001…March　2003　profile。　Figure　9。6　shows。the　resulting　profile。　This。is。what　I　would　call　a　perfect　fill。　
This。analysis。exemplifies。the　strengths　of　Market　Profile；　which　gives。us。the　tools。to：　
。　
know　market　direction　

。　
establish　a　target　

。　
develop　a　timeline　for　the　unfolding　of　our　scenario　

。　
identify　the　market　activity　pattern　that　confirms　were　right；　and　know　how　to　tell　if　we're　wrong　


To　recap　our　example　in　the　light　of　these　four　elements。of　a　trading　strategy；　we　knew　ing　into　April　2003　that　the　lower　bell　curve　wasplete　and　that　the　market　was。poised　for　a　directional　move。　With　the　undeveloped　area　looming　above　the　market；　chances。were　good　that　the　auction　would　return　to　that　territory　to　fill　in　volume；　and　that　the　new　auction　extremes。would　be　from　930　to　1075。　This。would　make　a　buy　over　930　a　major　directional　play。　Market　Profile　analysis。gave　us。a　direction　and　a　target。　
We　also　knew　that　if　our　favored　scenario　was。unfolding；　the　market　should　not　develop　back。below　the　consensus。point　（most　traded　price）　at　890。　Once　we　saw　that　the　bullish　scenario　was。under　way。　we　knew　a　range　would　develop　until　the　low…volume　pocket　was。filled；　at　which　point　we　would　know　the　strategy　had　run　itsurse；　and　the　market　was。ready　for　a　new　auction　to　kick。off。　



The　Four　Stages　of　Sticker　Shock　
To　develop　a　deeper　level　of　understanding　of　the　negotiation　process；　let's。talk。about　the　underlying　psychology　that　drives。the　auction。　As。the　great　trader　Jesse　Livermore　once　said；　〃I　absolutely　believe　that　price　movement　patterns。are　repeated　and　appear　over　and　over　with　slight　variations。　This。is。because　humans　drive　the　stocks。and　human　nature　never　changes。〃　
As。it　builds。the　bell　curve；　the　auction　process。tracks。the　psychology　of　the　negotiation　process。in　four　stages。　With　a　nod　to　Elisabeth　Kübler…Ross；　I　call　it　the　four　stages。of　sticker　shock。　
1。　
In　stage　one　（shock。denial）；　a　dramatic。directional　move　beyond　the　well…accepted　value　area　is。halted　by　a　feeling　of　“sticker　shock”　on　the　part　of　participants。　The　new　price　point　stirs。feelings。of　“I　can’t　believe　it；　this。won't　last〃　

2。　
In　stage　two　（anger）；　usage　slows　down　as。people　search　for　alternatives。or　attempt　to　change　long…standing　patterns　of　behavior；　triggering　a　counter…move　that　seeks。an　opposite　end　of　value。　In　this。stage　the　extremes。of　a　trading　range　are　first　established。　Normally　the　market　retraces。a　portion　of　the　initial　dramatic。directional　range。　The　feeling　here　is。〃I　won't　buy/sell　it。　I’ll　take　my　money/product　elsewhere”。　

3。　
Stage　three　（bargaining）　ushers。in　the　beginning　of　development；　which　explores　value　and　buildsnsensus　to　determine　what　is　acceptable　and　unacceptable　within　the　range　established　in　stage　two。　During　this。phase；　participants。grow　used　to　the　price　as。

shock。and　anger　wear　off。　（This。phase　usually　creates。either　a　lowercase　b…shape　or　an　uppercase　P…shape　profile。）　“I’ll　just　use/sell　what　I　need　to　get　by。〃　

4。　
After　a　brief　or　protracted　period　of　bargaining；　stage　four　（acceptance　or　rejection）　unfolds。in　one　of　two　ways：　

。　
Acceptance。　This。represents。resignation　to　the　new　level　of　prices　and　acceptance　that　it　is。fair。　The　market　breaths　a　sigh　that　says。　〃This。is。the　new　standard。〃　At　this　point；　the　initial　imbalance　revives。and　the　cycle　begins。anew。　

。　
Rejection。　The　market　ultimately　rejects。the　new　price　and　returns　to　where　the　move　originated。　




Let’s。look。at　the　fourth　stage　and　the　transition　to　a　new　cycle　in　more　detail。　If　the　market　truly　accepts　the　new　price　level；　it　will　continue　in　the　direction　of　the　initial　dramatic　move　to　stake　out　a　further　price　territory。　Figure　9。7　shows。
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the　narrow　tail　of　the　P　or　b　shape。　This。creates。a　large　bell　tune；　ultimately　resembling　a　capital　D。　

Application　to　Spreads　
Let's。look。at　an　example　of　this。negotiation　process。as　applied　to　a　spread　market。　
Figure　9。9　is。a　chart　of　the　2…year　Euro　Schatz　versus。the　5…year　Euro　Bobl　spread　for　the　period　July　25　through　August　1；　2006；　organized　into　the　Market　Profile　formal。　ing　out　of　the　mode　（widest　area）　of　a　well…developed　bell　curve　（D　shape）；　the　new　auction　process。starts。with　an　initiating　directional　move。　Here；　it's。a　sell…off　that　opens　new　territory。to　the　downside。　

As。the　negotiation　（auction）　begins；　the　first　stage　shuts　off　the　selling；　an