The Morrisian Indicator

Just 1 more day before I can start releasing the results of my indicator.  I will be going to Maine for vacation though, so I may not post anything for another 2 days from my Hotel room in Maine.

I now continue my letter grades for long term Index & Sector charts.  I posit that a C chart shows an overall increase from the left side of the chart to the right side of the chart of less than 45 degrees that has 2 or more major inflexion points in price that are above the current price.  An inflexion point separates a series of higher bars where the 5th preceding weekly bar or greater has a lower high and lower low than the current inflexion bar low and following bars to the 5th following bar or more has a lower high and lower low than the current inflexion bar low.

A D graded chart is basically a sideways moving chart from left right showing a minimal angle from the opening bar and price to the closing bar and price.  Any angle should be no more than 10%  positive to less than 10% negative and there should be multiple inflexion points both above and below the latest price within about the same distance.

An F graded chart should simply be the opposite of a B graded chart.  This chart should have a clear downward bias between negative 10% and negative 45% with two or more inflexion points below the current price.

We are unlikely to see a G graded chart since any such company should simply be out of business, but it would be opposite to an A graded chart.  It would slope downward at a negative 45% angle or more.

In a future post I intend to rate the long-term charts of at least 4 major Indexes and about 9 sector charts.

 

EC Morris

 

The Morrisian Indicator

In only two days I will be ready to start showing the results of my indicator.  In the meantime I think it is a good idea to start work on a trading plan, which is a major purpose for this blog.  When thinking of building a trading plan I think it is helpful to look at long term chard for the purpose of not only finding the most important trends in the market.  We also want to find major support and resistence points that we can work off of.  Let’s start by grading long term charts.  When I think of a long-term chart I think of the 900 period weekly chart from off of Stockcharts.com which is a website that I use mostly for my research.  Right now the long-term charts that I woll be mostly interested in are the Major indices chart and sector charts.  The major indices are thing like the Dow Industrials, the NASDAQ, the S&P 500 and so on.  Examples of sector charts are the consumer cyclical sector, the Technology sector or the Utility sector.  Sectors group together industries by the function these industries serve in out society.  I want to be able to grade the long-term sector charts for these indices and sectors so that I may better be able to drill down on where the best trades are to be found.  I propose giving long-term Index or Sector charts letter grades just as we received in School.  I will be using this blogpost to begin talking about these letter grades.

Let’s start with letter grade ‘A’.  A letter grade ‘A’ long-term chart is essentially a chart that has been going up at about a 45 degree angle or better over the course of years.  There have been pullbacks of course, but nothing significant and the chart is either at new highs or close to maintaining new highs.

A letter grade of B is a chart that is less than a 45 degree angle where current price is lower than at least one major pullback.  A major pullback is defined on the weekly chart as one where the high and low of the weekly bar is lower than the high and the low of a bar at least 5 bars back.

I will talk about letter grade ‘C’ and so on tomorrow.

 

EC Morris

The Morrisian Indicator

In just 3 days I start talking about my indicator and the way certain securities that I mentioned yesterday are affected.  The reason it will take 3 more days has to do with the way my indicator is calculated.  I need at least 30 trading days worth of data till I start subtracting the results of data 31 days ago and divide that figure by fifteen to come up with my final result that is plotted on a chart.

I will not go into anymore detail than this as to how my indicator is calculated.  This is both to protect the proprietary nature of my indicator and to not bore readers of this blog silly.  I think it makes sense to describe the chart on which my indicator is plotted.  I plot it on graph paper.  I draw a line down the center of the graph paper lengthwise and I draw another line down the far left side of the graph paper from top to bottom, leaving only about 3 rows of blocks to the right of the line.  Going from the center line of my graph up using the up/down line I mark each new block increment with a positive multiple of .2.  The series goes from .2 to .4 to .6 to .8 to a whole number starting at 1 and going up to 3 positive.

The same proceedure is done from the center line down using negative decimals and integers that are multiples of .2-.  So the entire chart goes from a positive 3 at the highest to a negative 3 at the lowest.  When a security plots above the centerline the security should be moving in an upward trend.  When a security plots below the centerline it should be generally going down.  When an indicator line through my plotpoints crosses the centerline from below to above or from above to  below this could constitute a signal.  When I talk about a plot point I will say something like this.  The security CBG plots at .47 above the centerline.

When a security plots with especially heavy volume I will say something like the securityh AMD with .8 with a positive asterisk.  Securities that move down on heavy volume will be said to do so with a negative asterisk.  The asterisk in this case is below the plot point as opposed to above.  This is all very boring stuff.  What isn’t boring is the potential to make money using this indicator.  When I talk about this indicator giving a signal I will discuss the strategy for using that signal to make money taking into account what ones potential stop loss should be and where one should seek to enter a position taking maximum advantage of the signal.  Tomorrow I will further discuss this indicator and the beginnings of my own personal trading that will take shape using this signal.

 

EC Morris

The Morrisian Indicator

This Blog is meant to be a financial services blog in which I will discuss my indicator that I developed and call the Morrisian Indicator after my last name ‘Morris.’  Because this Indicator is not coded, I will be doing by hand and applying to a list of 20 securities.  Eventually I will get a developer to make a plug-in out of it so that it may be used with any set of securities that one wishes to follow.  I will use this indicator as a part of my investment plan which I intend to discuss and develop within the context of this blog.  I will be following 20 securities with my indicator for now.  The symbols for these securities are: AKS, AMD, CBG, CIE, CX, DNR, EXEL, FCX, GNW, MPC, MRO, MS, MT, MTW, NBR, OAS, ODP, PBR, SDRL, & TCK.  After only 3 more trading days I will begin plotting the Morrisian Indicator for all of the above mentioned securites.  I will invite anyone who wishes to, to follow along as I point out when this indicator is signally a buy or short sell of a particular security or perhaps the purchase of call or puts based on these securities.  Options are available for all of these securities.

I will not be discussing the inner workings of my indicator but I will discuss what it looks like and how the indicator gives a signal, at least until I can get the Indicator professionally developed as a plug-in.  When I see that the indicator is indicating a long or short position on something, I will explain how this is the case.

 

EC Morris