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<DIV><FONT size=2>An update on the "</FONT><FONT size=2>Automatic Support
& Resistance - Mel Widner" formulas.</FONT></DIV>
<DIV><FONT size=2>The original Article and the older Traders'
Tips-formula are also printed, for</FONT></DIV>
<DIV><FONT size=2>additional/reference/info, </FONT><FONT size=2>further down
below.</FONT></DIV>
<DIV><BR><FONT size=2>Regards,<BR>Ton Maas<BR><A
href="mailto:ms-irb@xxxxxxxxxxxxx";>ms-irb@xxxxxxxxxxxxx</A><BR>Dismiss the
".nospam" bit (including the dot) when replying.</FONT></DIV>
<DIV><FONT size=2>===========================================</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>METASTOCK</FONT></DIV>
<DIV><BR><FONT size=2>In the May 1998 issue of STOCKS & COMMODITIES (May
1998, Vol.16 - No.5),</FONT></DIV>
<DIV><FONT size=2>a Traders' Tip provided </FONT><FONT
size=2>the MetaStock formulas for calculating support and
resistance</FONT></DIV>
<DIV><FONT size=2>levels and </FONT><FONT size=2>the WRO and WSO support
and resistance oscillators.</FONT></DIV>
<DIV><FONT size=2>The Traders' Tip was based on my article, "Automated Support
And Resistance,"</FONT></DIV>
<DIV><FONT size=2>also in that issue(actualy in the April98-issue). Since then,
I've received many</FONT></DIV>
<DIV><FONT size=2>E-mail messages from STOCKS & COMMODITIES readers about
it.</FONT></DIV>
<DIV><BR><FONT size=2>While the method was well received, the formulas provided
were a bit confusing</FONT></DIV>
<DIV><FONT size=2>and could use some clarification. Further, execution was slow
and screening of</FONT></DIV>
<DIV><FONT size=2>large numbers of stocks was difficult. Since then, I have
developed a faster and</FONT></DIV>
<DIV><FONT size=2>improved method for computing these indicators.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>- To begin, the support levels S1 through S6 and the
resistance levels R1 through R6</FONT></DIV>
<DIV><FONT size=2> are separate indicators (12 in all), and each
should be entered using the custom</FONT></DIV>
<DIV><FONT size=2> indicator option in the indicator
builder.</FONT></DIV>
<DIV><FONT size=2>- These 12 indicators should be individually plotted with
the price data as points, not<BR> lines (click on each and change
the style to the one on the bottom of the style menu).<BR>- The color red
is recommended for the support levels S1 through S6 and the color</FONT></DIV>
<DIV><FONT size=2> blue for the resistance levels R1 through
R6.<BR>- Entering these formulas and changing the style takes a bit of
time, but once done,</FONT></DIV>
<DIV><FONT size=2> they can be saved as a template and easily
applied to another stock. </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>S1 Indicator:<BR>ValueWhen(1, Ref(L,-4) = LLV(L,9),
Ref(L,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>S2 Indicator:<BR>ValueWhen(2, Ref(L,-4) = LLV(L,9),
Ref(L,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>S3 Indicator:<BR>ValueWhen(3, Ref(L,-4) = LLV(L,9),
Ref(L,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>S4 Indicator:<BR>ValueWhen(4, Ref(L,-4) = LLV(L,9),
Ref(L,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>S5 Indicator:<BR>ValueWhen(5, Ref(L,-4) = LLV(L,9),
Ref(L,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>S6 Indicator:<BR>ValueWhen(6, Ref(L,-4) = LLV(L,9),
Ref(L,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>R1 Indicator:<BR>ValueWhen(1, Ref(H,-4) = HHV(H,9),
Ref(H,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>R2 Indicator:<BR>ValueWhen(2, Ref(H,-4) = HHV(H,9),
Ref(H,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>R3 Indicator:<BR>ValueWhen(3, Ref(H,-4) = HHV(H,9),
Ref(H,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>R4 Indicator:<BR>ValueWhen(4, Ref(H,-4) = HHV(H,9),
Ref(H,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>R5 Indicator:<BR>ValueWhen(5, Ref(H,-4) = HHV(H,9),
Ref(H,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>R6 Indicator:<BR>ValueWhen(6, Ref(H,-4) = HHV(H,9),
Ref(H,-4))</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>- If you are interested only in computing the WRO and WSO
indicators, then these</FONT></DIV>
<DIV><FONT size=2> formulas can be entered as shown here.</FONT></DIV>
<DIV><FONT size=2>- It is not necessary to compute S1 through S6 or R1 through
R6, since the new</FONT></DIV>
<DIV><FONT size=2> formulas are now
self-contained.</FONT></DIV>
<DIV><FONT size=2>- The new WRO and WSO formulas also contain max and min
functions to ensure</FONT></DIV>
<DIV><FONT size=2> that the change for each level is either
zero or 1.</FONT></DIV>
<DIV><FONT size=2>- This avoids a rare but occasional error when
the price change is very large</FONT></DIV>
<DIV><FONT size=2> over a short period. </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>WSO
Indicator:<BR>L1:=ValueWhen(1,Ref(L,-4)=LLV(L,9),Ref(L,-4));<BR>L2:=ValueWhen(2,Ref(L,-4)=LLV(L,9),Ref(L,-4));<BR>L3:=ValueWhen(3,Ref(L,-4)=LLV(L,9),Ref(L,-4));<BR>L4:=ValueWhen(4,Ref(L,-4)=LLV(L,9),Ref(L,-4));<BR>L5:=ValueWhen(5,Ref(L,-4)=LLV(L,9),Ref(L,-4));<BR>L6:=ValueWhen(6,Ref(L,-4)=LLV(L,9),Ref(L,-4));<BR>L1M:=
Max(0,Min(1,Int(L1/C)));<BR>L2M:= Max(0,Min(1,Int(L2/C)));<BR>L3M:=
Max(0,Min(1,Int(L3/C)));<BR>L4M:= Max(0,Min(1,Int(L4/C)));<BR>L5M:=
Max(0,Min(1,Int(L5/C)));<BR>L6M:= Max(0,Min(1,Int(L6/C)));
<BR>100*(1-(L1M+L2M+L3M+L4M+L5M+L6M)/6)</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>WRO
Indicator:<BR>L1:=ValueWhen(1,Ref(H,-4)=HHV(H,9),Ref(H,-4));<BR>L2:=ValueWhen(2,Ref(H,-4)=HHV(H,9),Ref(H,-4));<BR>L3:=ValueWhen(3,Ref(H,-4)=HHV(H,9),Ref(H,-4));<BR>L4:=ValueWhen(4,Ref(H,-4)=HHV(H,9),Ref(H,-4));<BR>L5:=ValueWhen(5,Ref(H,-4)=HHV(H,9),Ref(H,-4));<BR>L6:=ValueWhen(6,Ref(H,-4)=HHV(H,9),Ref(H,-4));<BR>L1M:=
Max(0,Min(1,Int(L1/C)));<BR>L2M:= Max(0,Min(1,Int(L2/C)));<BR>L3M:=
Max(0,Min(1,Int(L3/C)));<BR>L4M:= Max(0,Min(1,Int(L4/C)));<BR>L5M:=
Max(0,Min(1,Int(L5/C)));<BR>L6M:= Max(0,Min(1,Int(L6/C)));
<BR>100*(1-(L1M+L2M+L3M+L4M+L5M+L6M)/6)</FONT></DIV>
<DIV><BR><FONT size=2>- The WRO and WSO oscillators are generally plotted
together on a separate scale</FONT></DIV>
<DIV><FONT size=2> from the price plot.</FONT></DIV>
<DIV><FONT size=2>- It is helpful to add horizontal lines at zero and 100 on
this same scale.</FONT></DIV>
<DIV><FONT size=2>- Horizontal lines can be added by clicking on the
indicator and selecting</FONT></DIV>
<DIV><FONT size=2> "horizontal lines" from the Indicator
Properties menu. <BR></FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>These formulas run much faster (by 40 times) than the earlier
formulas that are</FONT></DIV>
<DIV><FONT size=2>printed below the May98-article, and they </FONT><FONT
size=2>have been tested successfully with</FONT></DIV>
<DIV><FONT size=2>both end-of-day data and real-time data using </FONT><FONT
size=2>MetaStock Professional Version 6.51. </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>-- Mel Widner, Ph.D., 703 791-5910 -
E-mail <A
href="mailto:techstrategies@xxxxxxx";>techstrategies@xxxxxxx</A></FONT></DIV>
<DIV> </DIV>
<DIV><FONT
size=2>=============================================================</FONT></DIV>
<DIV><FONT size=2>
<BLOCKQUOTE>
<CENTER>
<P>
<HR noShade SIZE=1>
<B><FONT size=+1>NEW TECHNIQUES
<HR>
<BR><BR></FONT><FONT size=+4>Automated Support And Resistance
<HR>
</FONT><I>by Mel Widner, Ph.D.<BR><BR><BR>
<HR>
</I></B><I><FONT size=+1>Support and resistance analysis is a proven method
for selecting key price levels for trading decisions; traders usually perform
the analysis by hand. The automatic charting method and new oscillators
presented here are easy to implement and give a precise comparison of price to
these important levels.</FONT></I><BR>
<HR>
<P></P></CENTER>
<P><FONT size=+2>S</FONT>ir Isaac Newton's first law of motion is one that is
familiar to us all, stating that "Every body continues in its state of rest,
or in uniform motion in a straight line, unless compelled to change that state
by forces impressed upon it." It is relevant here, because the same can be
said for price behavior. Like physical objects, prices have inertia and
momentum. When at rest, prices often stay at rest, building congestion. When
in motion, prices often stay in motion, along a trend. But like Newton's
apple, price momentum changes when market forces are applied. The influencing
event is sometimes known and sometimes not, but in any case cannot be hidden
and can be seen in the price. Prices will often move in one direction for a
period, only to stop and flatten or move in the other direction. This occurs
because market forces have changed the momentum. The turning point has
significance for future price behavior.</P>
<P><BR>Consider an example. Suppose prices are moving higher, fed by steady
cash flow and favorable expectations. Then, at some point, the advance begins
to slow. Upward momentum is still dominant, but at that point it is
diminishing and the rate of rise is decreasing, evidence of resistance. It is
like throwing a ball into the air; the ball starts with initial momentum, then
slows under the influence of gravity before eventually falling. </P>
<P><BR>Prices behave in a similar manner. After opposing resistance forces are
applied for a time, prices slow, finally stop, and reverse direction. The
turning point is a resistance level and is the highest high price for that
particular period. The converse is true for declining prices. A slowing
decline results from support forces and a support level is established at the
point where prices turn upward.</P>
<P><BR>Simply, forces cause acceleration. Market forces do not directly
produce momentum, but rather momentum <I>changes</I>. These momentum changes
in turn are integrated or accumulated to establish momentum. The presence of
market forces is evident when the slope of prices, or momentum, changes over
time. The effect is most dramatic when forces also change, triggered by price
moves or changes in expectations, and abrupt reversals occur. Examination of
price histories can confirm the presence of these features.</P>
<P><IMG height=306 src="cid:006901be9f25$1eece300$LocalHost@xxxxx";
width=419><BR><FONT size=-1><B>FIGURE 1: OEX CHART PATTERN. </B><I>OEX chart
pattern illustrating support and resistance levels is defined here using an
isolated high and low method with a lookback period of N = nine
bars.</I></FONT></P>
<P><BR>
<HR>
<BR><I>Mel Widner holds a doctorate in engineering and is the developer of
several new analytical methods, including projection bands, mobility
oscillators, and rainbow charts. Comments are welcome at 703 791-5910 or
E-mail at techstrategies@xxxxxxxx</I><BR>
<P></P>
<H5><I>Excerpted from an article originally published in the May 1998 issue of
Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved.
© Copyright 1998, Technical Analysis, Inc.</I> </H5></BLOCKQUOTE>
<CENTER> </CENTER></FONT></DIV>
<DIV>
<HR>
</DIV>
<DIV> </DIV>
<DIV><FONT size=2>
<H1 align=center>May 1998 TRADERS' TIPS<BR>
<HR>
</H1>
<BLOCKQUOTE>
<P><B>You can copy these formulas and programs for easy use in your
spreadsheet or analysis software. Simply "select" the desired text by
highlighting as you would in any word processing program, then use your
standard key command for copy or choose "copy" from the browser menu. The
copied text can then be "pasted" into any open spreadsheet or other software
by selecting an insertion point and executing a paste command. By toggling
back and forth between an application window and the open Web page, data can
be transferred with ease. <BR><BR></B>This month's tips formulas for:
<STRONG><U><FONT color=#0000ff>METASTOCK FOR WINDOWS</FONT></U></STRONG>
(May 1998 Contents)</P></BLOCKQUOTE>
<CENTER>
<P><A name=METASTOCK></A>
<HR SIZE=3>
<P></P></CENTER>
<H3>METASTOCK FOR WINDOWS</H3>
<BLOCKQUOTE>
<P><BR><FONT size=3>In my article "Automatic support and resistance" in this
issue, I present a computerized approach to finding support and resistance
levels on a chart. To recreate the indicators and system described in my
article using MetaStock for Windows, enter the following formulas:</FONT></P>
<P><FONT size=3><B><TT>Indicators: </TT></B></FONT></P>
<P><FONT size=3><TT>S1: IF(Ref(LOW,-4)=LLV(LOW,9),Ref(LOW,-4),PREVIOUS) S2:
IF(Fml("S1")=Ref(Fml("S1"),-1),PREVIOUS,Ref(Fml("S1"),-1)) S3:
IF(Fml("S1")=Ref(Fml("S1"),-1),PREVIOUS,Ref(Fml("S2"),-1)) S4:
IF(Fml("S1")=Ref(Fml("S1"),-1),PREVIOUS,Ref(Fml("S3"),-1)) S5:
IF(Fml("S1")=Ref(Fml("S1"),-1),PREVIOUS,Ref(Fml("S4"),-1)) S6:
IF(Fml("S1")=Ref(Fml("S1"),-1),PREVIOUS,Ref(Fml("S5"),-1))</TT></FONT></P>
<P><FONT size=3><TT><B>WSO:</B>
100*(1­(Int(Fml("S1")/CLOSE)+Int(Fml("S2")/CLOSE)+Int(Fml("S3")/CLOSE)+Int(Fml("S4")/CLOSE)
+Int(Fml("S5")/CLOSE)+Int(Fml("S6")/CLOSE))/6)</TT></FONT></P>
<P><FONT size=3><TT>R1: IF(Ref(HIGH,-4)=HHV(HIGH,9),Ref(HIGH,-4),PREVIOUS) R2:
IF(Fml("R1")=Ref(Fml("R1"),-1),PREVIOUS,Ref(Fml("R1"),-1)) R3:
IF(Fml("R1")=Ref(Fml("R1"),-1),PREVIOUS,Ref(Fml("R2"),-1)) R4:
IF(Fml("R1")=Ref(Fml("R1"),-1),PREVIOUS,Ref(Fml("R3"),-1)) R5:
IF(Fml("R1")=Ref(Fml("R1"),-1),PREVIOUS,Ref(Fml("R4"),-1)) R6:
IF(Fml("R1")=Ref(Fml("R1"),-1),PREVIOUS,Ref(Fml("R5"),-1))</TT></FONT></P>
<P><FONT size=3><TT><B>WRO:</B>
100*(1­(Int(Fml("R1")/CLOSE)+Int(Fml("R2")/CLOSE)
+Int(Fml("R3")/CLOSE)+Int(Fml("R4")/CLOSE)
+Int(Fml("R5")/CLOSE)+Int(Fml("R6")/CLOSE))/6)</TT></FONT></P>
<P><FONT size=3>The indicators S1 through S6 and R1 through R6 should be
plotted as points and not as a continuous line.</FONT></P>
<P><FONT size=3><TT><B>Trading System Formulas and Parameters:</B> Enter long
positions on either building support or sustained uptrend and exit position
using stops. No short positions.</TT></FONT></P>
<P><FONT size=3><TT><B>Enter Long:</B> Fml("WSO") > Mov( Fml("WSO") , 4 , S
) OR Mov( Fml("WRO") , 30 , S ) > 95</TT></FONT></P>
<P><FONT size=3><B><TT>Stop Out: -</TT></B></FONT><FONT size=3><TT>Breakeven
stop: Floor level at 2%</TT></FONT></P>
<P><FONT
size=3><TT> -</TT></FONT><FONT
size=3><TT>Trailing stop: Profit risk of 10 Percent, ignoring 10
periods</TT></FONT></P>
<P><FONT size=3><TT>
-</TT></FONT><FONT size=3><TT>Maximum loss stop: Maximum loss of
7%</TT></FONT></P>
<P><FONT size=3><B><TT>Other Conditions: </TT></B></FONT></P>
<P><FONT size=3><TT>Initial equity = 1000, Long positions only, Trade price =
close, Trade delay = 0, Entry commission = 0%, Exit commission = 0%, ,
Interest rate = 5%, Margin req. 100%</TT></FONT></P>
<DIV align=right>
<P><I>-- Mel Widner, Ph.D., 703 791-5910 </I></P></DIV>
<DIV align=right>
<P><I>E-mail techstrategies@xxxxxxxx</I></P></DIV></BLOCKQUOTE>
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<DIV><EM><FONT size=2><I>© Copyright 1998, Technical Analysis,
Inc.</I> - <A
href="http://www.traders.com";>http://www.traders.com</A></FONT></EM></DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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