The following represent terms that are oftentimes used in the MMA Cycles Reports, MMA’s daily and weekly commentaries.
1. Cycle: A measurable phenomenon which occurs consistently at regular intervals of time. In markets, cycles are measured from trough (low) to low.
2. Trough: a low in price.
3. Crest: a high in price.
4. Isolated Low: a price which is lower than the low of the day before and the low of the day after. Every cycle trough is an isolated low. Exception can be if two days have the same low, but both are lower than previous day or following day.
5. Isolated High: a price which is higher than the high of the day before and the high of the day after. Every cycle crest is an isolated crest. Exception can be if two consecutive days have the exact same high, but both days are higher than the previous day or following day.
6. Bull Market: Consecutively higher crests and higher troughs of the same cycle type; “right translation” patterns of primary cycles.
7. Bear Market: Consecutively lower troughs and lower crests of the same cycle type; “left translations patterns of primary cycles.
8. Trend: Bull or bear (as above). Trend depends upon the cycle you are studying. The trend is usually determined by the next longest time frame cycle than the one you are studying. For example, the trend of the primary cycle may depend upon the phasing of the 50-week cycle; the trend of the 50-week cycle may depend upon the phasing of the 4-year cycle.
9. Phase: Relates to what sub-cycle of the larger cycle you are in. For instance, there are three major cycles (sub-cycles) within a primary cycle. These major cycles can also be referred to as the three “phases” of the primary cycle. Once the first major cycle is completed, the primary cycle begins its second “phase”, or second major cycle within the primary cycle. The “phase” of a cycle is important.
10. Support: An area below the current market price where we expect prices to hold on declines. A “floor” for prices.
11. Resistance: An area above the current market price where we expect prices to hold on rallies. A “ceiling” for prices.
12. “Close that is bearish:” Occurs when prices close below daily or weekly support.
13. “Close that is bullish:” Occurs when prices close above daily or weekly resistance.
14. Bullish Trigger: Occurs when prices trade below daily or weekly support, but then close back up above it.
15. Bearish Trigger: Occurs when prices trade above daily or weekly resistance, then close back below it.
16. Trend run up: Occurs when a market has three consecutive closes above a proprietary moving average line. Concept developed by Charles Drummond.
17. Trend run down: Occurs when a market has three consecutive closes below a proprietary moving average line. Concept developed by Charles Drummond
18. Bullish Crossover Zone: Occurs when current days (or weeks) support zone is near to, or above, the previous days (or week’s) resistance zone. The market is bullish until prices close back below this crossover zone.
19. Bearish Crossover Zone: Occurs when current days (or weeks) resistance zone is near to, or below, the previous days (or week’s) support zone. The market is bearish until prices close back above this crossover zone.
20. Lorusso 5-Point Reversal Pattern – Bearish: Named after Smith Barney Chief Technician Rick Lorusso. Occurs when a market exhibits consecutively higher isolated highs, with consecutively lower isolated lows between them. The first point is an isolated high (point 1), which is followed shortly afterwards by an isolated low (point 2). This is followed by a higher isolated high than point 1 (point 3), which is followed by a lower isolated low than point 2 (point 4). This then is followed by an even higher isolated high than point 3 (point 5). After this, a prolonged decline tends to unfold.
21. Lorusso 5-Point Reversal Pattern – Bullish: Occurs when a market exhibits consecutively lower isolated lows, with consecutively higher isolated highs between them. The first point is an isolated low (point 1), which is followed shortly afterwards by an isolated high (point 2). This is followed by a lower isolated low than point 1 (point 3), which is followed by a higher isolated high than point 2 (point 4). This then is followed by an even lower isolated low than point 3 (point 5). After this, a prolonged rally tends to unfold.
22. “Pat’s Combo Down:” Named after technical market analyst Patrick Shaughnessy, student of Charles Drummond. Occurs when the high and low of the day (or week) are both higher than the high and low of the previous day (or week), and 1) prices closer near the low of that day or week, and 2) prices also close below a proprietary moving average. This setup presages a sharp price decline.
23. “Pat’s Combo Up:” Occurs when the high and low of the day (or week) are both lower than the high and low of the previous day (or week), and 1) prices closer near the high of that day or week, and 2) prices also close above a proprietary moving average. This setup presages a sharp rally.
24. “Double Loop Stochastic:” Occurs when the K and D lines of the stochastic oscillator fall below 20%. The K line then starts to rise above the D line (“crosses over”), then falls back below it again (“loops” below it), and then both start to rise above 25% (K crosses above D again too). This is a strong bullish signal (“bullish double loop”). The opposite can occur above 80%, in which case it can be a strong bearish signal (“bearish double loop”). Concept introduced by Technical Analyst Robert Perry.
25. Bullish Intermarket Divergence: Occurs when a market makes a new cycle low, but is not confirmed by a new cycle low in another closely related market. Examples would be Dow Jones Industrials and S&P futures, or Gold and Silver, or Corn and Soybeans, or Swiss Franc and Euro. If one makes a new low and the other does not, during a cyclic time band for a low, it is a good “buy” signal.
26. Bearish Intermarket Divergence: Occurs when a market makes a new cycle high, but is not confirmed by a new cycle high in another closely related market.
27. Neutral: Pertains to a trading range that is between daily/weekly support and resistance. In terms of trend indicator, it pertains to a situation in which the market ends a streak of consecutive closes above or below the daily or weekly trend indicator point (proprietary moving average). When it has three consecutive closes above or below this point, it changes form neutral to either up or down trend. Concept developed by Charles Drummond.
Abbreviations Used For Cycle Types:
- PC = Primary Cycles
- PB = Primary Cycle bottom (usually 13-21 weeks, lowest price in PC)
- PT = Primary Cycle top (highest price between 2 Primary Cycle bottoms, highest price in PC)
- 1/2-PB = 1/2-Primary Cycle bottom (happens midway in a PC, about 65% of time)
- 1/2-PT = 1/2-Primary Cycle top (highest price in the half cycle)
- MB = Major Cycle bottom (the low when cycle divides by 3; about 4-7 weeks intervals; happens about 80% of time)
- MT = Major Cycle top (highest price between 2 MB’s)
- DB = Double Bottom, usually to a primary cycle bottom, or trough.
- DT = Double Top, usually to a primary cycle top, or crest
- TB = Trading Cycle bottom, usually about 2-4 week interval; not used much in our analysis
- TT = Trading Cycle top, highest price between two TBs; not used often in our analysis.
Many of these cycle periodicities were first introduced by Walter Bressert – particularly the primary and half-primary cycle types.