Riesgos para la salud ante el frío y consejos de protección

Acceleration/Deceleration (AC) is the third dimension of our market analysis. Remember that the price is the last item to change. Before the price changes, the momentum changes: and before the momentum changes direction, there must be a deceleration of momentum until momentum comes to zero. Then it starts accelerating in the opposite direction, before the price can change direction. That is what the AC measures, the Acceleration and Deceleration of the current Momentum. The AC will change direction before the Momentum and Momentum will change direction before price. Understanding the AC as an early warrling signal gives ycu an obvicus advantage over other traders. Figure 6-1 is a condensation of the rules for trading the AC. Basically, the zero line is the place where the momentum is balanced with the acceleration. If the AC is above zero, it will usually be easier for the acceleration to continue to move upward (and vice versa

Figure 6-1 RuLes for the AC signaLs.

below zero). Unlike the AO, crossing the zero line is not a signal. Il your equipment allows you to color the histogram bars, then you only need to look for a change in color to know that you need to monitor the market and possibly take action. To eliminate spurious thinking, just remember: With the AC, you cannot have a buy if the bar is red, and you cannot have a sell if the bar is green. Whenever the momentum and acceleration are both in the same direction, the

momentum is not only moving in that direction but is also gaining speed and accelerating in that direction. This, of course, is the best of all worlds: the market is going your way and picking up speed at the same time. Because this is a very sensitive signal, we want to give it a bit more room than we gave the AO. Check out Figure 6—1 and you will see, at the bottom right corner, how we do that. If the momentum is with us (it is above zero and we are buying, or below zero and we are selling), we want to enter aggressively and we need only two green bars for a buy (two red bars for a sell). If the momentum is against us (it is below zero and we are buying, or above zero and we are selling), we want confirmation so we require one extra bar. In this case, we would require three red bars to sell above the zero line and three green bars to buy below the zero line. Let's examine these signals more closely.

AC Buy above the Zero Line

All AC signals come from a change in the direction of the AC histogram. The AC histogram is a 5-bar simple moving average of the difference between the 5/34 momentum histogram and a 5-bar simple moving average of that difference. If the current difference between the 5/34 AO oscillator and the 5-bar moving average is greater than the average difference for the last 5 bars, the momentum is accelerating. If it is less, the momentum in that direction is slowing. Here are the key points you should remember:

1. A buy signal is created when there are two consecutive histogram bars with higher highs than the most recent lowest low (a down peak). (See Figure 6—2.)

2. A buy stop is placed one tick above the high of the price bar, which corresponds (in the same time frame) to the second higher high.

Figure 6-z A~ ouy slgnaL aDov~ ~IIC Le~lU Illlt:.

3. A second buy signal cannot be created until the histogram moves at least one bar lower, creating a red bar. A new buy signal can then be created after two higher (green) bars.

4. In the software, this is easy to spot because it requires at least one red bar followed by two green bars on the AC histogram.

Figure 6-3 is an example of buying when the AC is above the zero line. The bar labeled "Down Peak" is the lowest bar on the current AC histogram. That is followed by a change in acceleration (noted at point 1), and the next bar (point 2) continues the upward acceleration. Because the Accelerator is above the zero line, we need only two higher highs (two green bars) to establish a buy signal. The buy is placed one tick above the high of the price bar that is in the same time frame as point 2. Notice that it was filed on the opening gap of the next bar (day). Figure 6-4 shows the same signal on Philip Morris stock. In the next section, we will look at the requirements to place a buy stop when the Accelerator is below the zero line.

AC Buy below the Zero Line

How does the buy change if the Accelerator is below the zero line?

Figure 6-5 illustrates an Accelerator buy when the Accelerator is below the zero line. This means that the momentum is accelerating up (which is the same as the downward momentum slowing down as it falls) against the current momentum. This is similar to when you are approaching a traffic light and put on the brakes. Your momentum is still forward but it is slowing down. From a physics standpoint, you are really accelerating in the opposite direction. Here are the AC rules for buying when the histogram is "below" the zero line

1. A buy signal is created when the histogram forms three bars that have higher highs than the most recent lowest low (a down peak). All three must be green bars.

2. A buy stop is placed one tick above the high of the price bar which corresponds (in the same time segment) to the third higher high.

3. In our software, this is easy to spot because it requires at least one red bar followed by three green bars on the AC histogram.

Figure 6-6 shows the buy signal when the AC is below the zero line. Here, it takes three green bars because the momentum is against us, as determined by the AC's being below the zero line. Our buy stop would be one tick above the high of the price bar that corresponds to the same time period as the third higher high on the AC. Both the coffee and the Intel Corporation charts (Figures 6-6 and 6-?) sho~v a buy whell the AC is below the zero lin~. Remember that it takes a base (B in Figure 6-7), which must be the most recent histogram low plus three higher lows. The easiest way to see this is to program your charting software so that an up move in the histogram is colored green and a down move is colored red. Then you

Figure 6-7 AC buy signa~ when the AC is be~ow the zero ~ine—InteL Corporation.

only have to count three green bars below the zero line and you have a signal. This brings up two questions:

1. Is crossing the zero line on the AC a signal, as it is on the AO? Answer: No. 2. What effect does crossing the zero line have on the buy and sell signals?

These are the AC rules for buying when the histogram is "crossing" the zero line from below to above (negative to positive):

1. A buy signal is created if the AC histogram down peak is below the zero line and crosses the line on the second or third bar after the down peak. When that happens and the current "indicator" bar in the histogram is above the zero line, you need only two higher highs. (See Figure 6-8.)

Figure 6-8 Buying when the histogram is "crossing" the zero Line.

2. IT IS IMPORTANT TO UNDERSTAND THAT CROSSING THE ZERO LINE IS NOT A SIGNAL ON THE AC HISTOGRAM. (Crossing the zero line is a signal only on the AO chart.)

3. Crossing the zero line on the histogram chart only changes the number of green bars (higher highs) that you need for a buy signal. The reason behind reducing the number of histogram bars after crossing the zero line is that the momentum is now in your favor and you want to get in or add to your position as quickly as possible.

Figure 6-9 illustrates what happens when the AC crosses the zero line and how it affects the number of bars necessary to create a buy or sell signal. Crossing the zero line is not a signal. However, crossing the zero line may change the number of histogram bars needed to create a signal. Figure 6-9, we only need two higher highs because the second higher high is above the zero line. It does not matter where the other parts of the signal construction might be; what matters is where the current bar is in relation to the momentum. Because bar 2 is above the zero line, the momentum is now in our favor for a buy.

Figure 6-10 shows a similar setup in a Coca-Cola stock chart. Remember that all of these signals work equally well on both stocks and commodities.