V.10:9 (365-369): Summed Rate Of Change (KST) by Martin J. Pring

V.10:9 (365-369): Summed Rate Of Change (KST) by Martin J. Pring
Item# \V10\C09\SUMMED.PDF
Availability: In Stock

Product Description

Summed Rate Of Change (KST) by Martin J. Pring

In the August Stocks & Commodities, noted technician Martin Pring presented smoothed rate of change indicators as a method to identify both the trend and reversals of trend in the markets. He pointed out that different rate of change measurements could lag important market turns due to the presence of different time cycles. Here, Pring presents his method of combining various rate of change indicators for enhanced trend and reversal of trend identification.

Previously, I pointed out that price trends in financial markets are influenced by the interaction of many different time cycles. Figure 1 shows several smoothed rates of change (ROC), each reflecting a different cycle. Major market turning points usually occur when all three indicators reverse direction simultaneously. Similarly, trading range markets have a habit of occurring when they are in conflict. These three indicators do not reflect every cycle, but they do give a more revealing picture than simply using one indicator on its own.

Movements of the nine-month moving average of the 24-month rate of change in the bottom panel of Figure 1 closely monitor the primary bull and bear swings of the market itself. Signals of trend reversals are often given well after the fact, however, because it is slow to reverse direction. One way around this is to combine four smoothed rates of change into one indicator, weighting each one in rough proportion to its time span. (See sidebar, "The KST.") This enables the longer-term smoothed momentum to turn faster but keeps whipsaw signals to a minimum. Because such an indicator also includes several rates of change covering different time spans, it also reflects the interaction of several time cycles.

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order