A big moment for a Hurstonian is when price touches one of Hurst’s cyclic tools.
(I am stealing William’s term Hurstonian, which sounds so much better than Hurstite, or Hurstie and is so much more fun than Hurst Analyst)
As you are no doubt aware Hurst defined two cyclic tools, the FLD (Future Line of Demarcation) and VTL (Valid Trend Line). They are both lines on a chart, and when price touches one or other of them it has some cyclic significance.
That cyclic significance is basically information about what the cycles are doing in the market. Such as confirmation that a trough of a particular cycle has occurred (and therefore the market is moving up now towards the cycle’s peak).
One of the tricky things about the cycle tools is that they are not static price levels – they both move up or down each bar. I have had enthusiastic newcomers to Hurst Cycles watch a video that I recorded on a Monday, then send me emails because “Monday’s FLD level” was broken by price on the Thursday, but the market didn’t behave as expected. The problem is that the FLD is at a different level each bar.
Sentient Trader users have been able enjoy these “cycle moments” by having the software send them alerts when they occur.
Those cycle moments have always felt a little lonely though. A quiet moment between you, Sentient Trader and your smart phone, but this week I am pleased to announce that they will be lonely moments no longer!
I have been testing a system that broadcasts Hurst Cycle Alerts via Twitter (and Facebook will be following soon), and it is all now up and running. Here is a tweet sent this morning:
How can you share in the Hurst moments?
Simply follow Sentient Trader on Twitter by clicking on the Follow button here (http://twitter.com/#!/sentienttrader). You will need a Twitter account of course … something that I never previously saw the point in to be honest, but I do now!
Not only can you “share the cycle moment”, you can also pass it on to others who are interested in your thoughts (your Twitter followers). Simply “retweet” the tweet:
You can also “favorite” the tweet (which I guess tells others that you really enjoyed the cycle moment):
You can also reply … although I’m not sure what the point of that would be really. Perhaps we could have a conversation about the cycle moment?
So now that you’re all set to share in these cycle moments, what do they mean?
At this point the editor in me has stepped forward … I wrote an additional extremely interesting 2,000 words about the significance of each possible alert, but I am going to make that a document that you can download if you really want to. It will be available early next week, and the link in the tweet will lead you to it … (I have to remind myself sometimes that not everyone wants to spend their entire weekend reading about Hurst!)
In the tweet shown above we were told that price touched the 40-day VTL from above. What can we do with that information?
The first thing you would need to do with any alert is understand the context of the analysis. I discussed the DAX in Monday’s Hurst Trading Room podcast (and even mentioned the 40-day VTL), and so understanding the analysis situation would not be difficult at all, even it meant going back to that video (scroll to 30 minutes and 25 seconds).
Here is a snapshot of the DAX today:
As you can see the current bar has touched the 40-day VTL (which is that blue dashed line). What does this mean?
In analysis terms we know that the 80-day cycle peak is confirmed. And that indicates that we should go short for the move into the 80-day cycle trough. We can calculate a target of approximately 9362 from a separate alert (not shown here). Bear in mind that the target is not expected to be reached because of the bullish underlying trend of the 80-day cycle. I won’t go into all of that here, but the bottom line is that we don’t expect price to go as low as 9362. A more reasonable target would be in the 9400-9500 range.
That still implies a move down, and so in trading terms one could use this alert to enter a short trade in the DAX, after first being certain that you agree with the analysis, and waiting for the price to actually cross the VTL. Remember that VTL’s can provide levels of support just as any trend line does.
Please note that I am producing these Hurst Cycle Alerts myself. They are not a part of the Sentient Trader or Hurst Signals service. I am doing it because I love sharing Hurst Cycles with anyone who will listen! But it is necessary for me to make some disclaimers:
- I am not offering trading advice. These are Hurst Cycle events, not trading instructions.
- The alerts will be for markets that I trade, but if you would like to see some particular markets in there then let me know. I will do my best to provide alerts which are useful.
- The alerts are generated by one (or more) of my own computers. I make no guarantee that all alerts in any given market will be broadcast. When I am taking a holiday my computers will be off! I might need to use the computer for something else, and so it is possible that alerts won’t be tweeted at all. Please don’t rely on them.
- The analysis that produces the FLD’s and VTL’s is my best effort at understanding what is happening in a market. It might not be correct!
- The analysis might differ from yours, and it might differ from the analysis you see in Hurst Signals (if you are an HS subscriber).
How useful will Hurst Cycle Alerts be?
The idea of broadcasting these alerts came about because of the great feedback I have received about the Hurst Trading Room videos. I often say things like: “when price crosses this VTL” … and until now the only way that a reader or viewer would know if that VTL was crossed was if they owned Sentient Trader software and matched my analysis perfectly. Now you can know when the VTL is crossed by following Sentient Trader on Twitter.
And so the first thing to be said about using Hurst Cycle Alerts is that you can only make any sense of the alert if you understand the context of the analysis that produces the alert. Most of the time that is not difficult – I publish a great deal of analysis, and I don’t think that it is difficult to know what my opinion is about most markets! But I am working on an idea that will send a snapshot of the chart at the time of the tweet, which will obviate this problem altogether.
In the meantime I hope that the alerts will prove to be useful. A mere six years ago, before Sentient Trader existed, I would exchange thoughts about Hurst analysis with friends and fellow Hurstonians by email. When I received an email mentioning price crossing the 40-week FLD in the S&P 500 I didn’t need to see the chart to understand what that implied.
I am hoping that in the same way these alerts will prove useful – please let me know how I can increase their usefulness.
I look forward getting your feedback about the Hurst Cycle alerts, and please get busy favoriting and retweeting to help spread the word about Hurst Cycles!