StockFetcher Forums · Filter Exchange · Elder Ray<< 1 2 >>Post Follow-up
maxreturn
745 posts
msg #39158
Ignore maxreturn
11/28/2005 9:58:14 AM

Riggs, I noticed your posting in the suggestion forum for Elder Ray. I don't know how you intend to use it but using the "set" command you can create your own bull power and bear power:

set{bullpower, high minus ema(13)}
set{bearpower, low minus ema(13)}

Best Regards
Max


TheRumpledOne
6,359 posts
msg #39159
Ignore TheRumpledOne
11/28/2005 12:09:47 PM

http://www.investopedia.com/articles/trading/03/022603.asp

The Elder-Ray Indicator: Seeing Into The Market
By Jason Van Bergen
Contact Jason
February 26, 2003

Dr. Elder cleverly named his first indicator "Elder-ray" by virtue of its function, which is figuratively similar to that of x-rays. Developed in 1989, the Elder-Ray helps determine the strength of competing groups of bulls and bears by gazing under the surface of the markets for data that may not immediately be ascertainable at a mere superficial glance at prices. Here we take a look at this indicator. (The main resource for this article is Elder's book "Trading for a Living: Psychology, Trading Tactics, Money Management".)


The Elder-Ray
Understanding the Elder-ray is inextricably linked to an understanding of oscillators, which are figures used to find turning points in the markets. Oscillators are seen to be indicative of the emotional extremes of both bulls and bears. These extremes are fleeting and unsustainable levels of optimism or pessimism that the vast majority of market participants are exhibiting. Knowing that these extreme conditions never last long, professional traders often fare better than average investors in betting against such extremes. When the market rises and the bulls are greediest, the pros sell short. When the market is at its lowest and fear runs rampant, the pros jump in to buy.

Elder-ray labels its oscillator components as "bull power" or "bear power". These are combined with an exponential moving average, which is a trend-following indicator essential to the calculation. Bull power is a simple calculation, derived by subtracting an exponential moving average (perhaps a 13-day EMA) of closing prices from a high price of any given security. Bear power subtracts the EMA from the corresponding low price of that trading day. Both bull power and bear power are plotted as histograms under the bar chart of your chosen security.

Interpreting Elder Ray
Now, how do we go about interpreting the Elder-ray and its inherent components? First, you may remember that price is a consensus of value for any given security at a particular point in time. The moving average is simply a consensus of value that is extended for a certain window of time. The 13-day EMA referenced earlier is the average consensus of value over the past 13 days.

In interpreting the moving average, we are most concerned with its slope. When the slope rises, the crowd is becoming more bullish. When it falls, the crowd is more bearish. Clearly, the best course of action is to trade in the direction of the EMA. The high of the consensus of value occurs when bulls cannot lift prices any higher, thereby reaching their maximum power. And the low represents the lowest value to which the bears are capable of pushing the price, thereby reaching their maximum power. So the low shown on the daily bar is the maximum power of bears for the day; on the weekly bar is their maximum power during the week, and so forth.

By measuring the distance from the bar's high to the EMA, bull power represents the capacity of bulls to push prices above the average consensus of value (price). Bull power rises when bulls are stronger and falls when they are weaker, even becoming negative when they are utterly weak. Bear power, by contrast, is the capacity of bears to push prices below the moving average. The distance between the low and the EMA, which widens when the bears are weaker and narrows when they are stronger, gives this figure. Bear Power is typically negative, so if it turns positive, the bulls have taken complete control.

There are some very specific conditions you need to look for when using the Elder-ray in making buying/selling and shorting/covering decisions.

Here are the conditions essential for buying:


The trend is up as indicated by EMA.
Bear Power is negative but rising.
There are two additional conditions fine-tune the buying decision:

Bull power's latest peak is higher than it was previously.
Bear Power is moving higher from a bullish divergence. This situation provides traders with the strongest buy signal.
The corresponding sell signal is realized when prices hit a new high but Bull Power reaches a lower peak than that of its previous rally.



For shorting, two conditions are absolutely necessary:

The trend is down as indicated by EMA.
Bull power is positive but falling.
Two additional conditions provide a stronger signal for shorting, but they are not absolutely essential:

Bear power's latest bottom is deeper than any previous bottom.
Bull power is declining from a bearish divergence. As in the case of buying, the strongest signals for shorting are rendered by bearish divergences between Bull power and prices.
In deciding when to cover short positions, it is important to interpret the time at which bear power indicates the weakness or strength of bears. A new low in price with a new low in bear power points to a continued downtrend; however, with bear power tracing a shallower bottom than prices, a bullish divergence is realized: cover your shorts and prepare for the ensuing uptrend.

Divergences between bull or bear power and prices indicate the best trading opportunities. The Elder-ray is an extremely accurate and effective means of identifying these opportunities.

Good luck with all of your trading endeavors!

By Jason Van Bergen

===============================================================================

Fetcher[/* Going long with BullPower filter - simple criteria */
set{bullpower, high minus ema(13)}
set{bearpower, low minus ema(13)}

ema(13) above ema(13) 1 day ago
bearpower below 0
bearpower above bearpower 1 day ago

/* use your price/volume criteria below */
close above 20
volume above 1000000

/* display */

add column ema(13)
add column bullpower
add column bearpower

draw bullpower
draw bearpower
]



MAY ALL YOUR FILLS BE COMPLETE.


jacobnbr1
37 posts
msg #39177
Ignore jacobnbr1
11/28/2005 10:55:05 PM

that is pretty neat but only displays 3 stocks that look to me as a tug o war. i wonder if you can define the filter to pick out the bullish winners and the bearish winners seperatly? i guess based on those three i didnt see a buy signal' but you would have to wait for the signal based on the filter.


BFreshour
139 posts
msg #39184
Ignore BFreshour
11/29/2005 7:34:38 AM

Here's my BullPower, BearPower filters I created last night...

For longs:

Fetcher[/* avoid gaps */
low below high 1 day ago

/* variables */
set{bullpower, high minus ema(13)}
set{bearpower, low minus ema(13)}

/* criteria */
bearpower below 0
bullpower reached a new 12 week high

/* columns */
add column bullpower
add column bearpower

/* draw */
draw ema(13)

/* sort */
sort by column 5 descending
]



Shorts:

Fetcher[ /* avoid gaps */
high above low 1 day ago

/* variables */
set{bullpower, high minus ema(13)}
set{bearpower, low minus ema(13)}

/* criteria */
bullpower above 0
bearpower reached a new 12 week low

/* columns */
add column bullpower
add column bearpower

/* draw */
draw ema(13)

/* sort */
sort by column 5 descending
]



I have a lot more criteria in my globals that limits these down to just a few stocks; price > 2, average volume(100) above 500000, stock is optionable


TheRumpledOne
6,359 posts
msg #39187
Ignore TheRumpledOne
11/29/2005 11:11:49 AM

BFreshour:

Thanks for sharing your filters.

MAY ALL YOUR FILLS BE COMPLETE.


jacobnbr1
37 posts
msg #39209
Ignore jacobnbr1
11/29/2005 10:49:40 PM

yes, thank you pie. i will not be able to look them over yet for the wife just gave birth. its a boy, 7.3 lbs, 19 inches long, 8:01 am... thanks


BFreshour
139 posts
msg #39229
Ignore BFreshour
11/30/2005 5:54:46 PM

Modifications. I added a column for the last 10 days action for the required indicator. The higher this number the better the trade:

Bullpower:
Fetcher[/* avoid gaps */
low below high 1 day ago

/* variables */
set{bullpower, high minus ema(13)}
set{bearpower, low minus ema(13)}

/* criteria */
bearpower below 0
bullpower reached a new 12 week high

/* columns */
add column bullpower
add column bearpower
add column count(bearpower above bearpower 1 day ago,10) {days bearpower increasing}

/* draw */
draw ema(13)

/* sort */
sort by column 5 descending
]



Bearpower:
Fetcher[/* avoid gaps */
high above low 1 day ago

/* variables */
set{bullpower, high minus ema(13)}
set{bearpower, low minus ema(13)}

/* criteria */
bullpower above 0
bearpower reached a new 12 week low

/* columns */
add column bullpower
add column bearpower
add column count(bullpower below bullpower 1 day ago,10) {days bullpower decreasing}

/* draw */
draw ema(13)

/* sort */
sort by column 5 descending
]



Also, I avoid gaps because I hate seeing stocks that overextend too fast. I'd actually like to make the gap a percentage but haven't had time to write the code yet.


riggs
313 posts
msg #39309
Ignore riggs
12/3/2005 3:51:16 PM

Maxreturn & BFreshour -

I am so very grateful to the both of you. The "Elder Rays" is an indicator that has been neglected by SF for reasons that I cant imagine. This is an indicator that gives an MRI of a given stock, where as most other indicators can only penatrate with an X-Ray. Thanks to you both, here is my version of "BullPower / Bearpower."

Fetcher[

DMA(28,-14)is more than 3% above close
Set{Bullpower,high minus EMA(13)}
Set{Bearpower,low minus EMA(13)}
Draw Bullpower
Draw Bearpower
Bullpower is below 0
Bearpower is below 0
Bearpower has been increasing the last 1 day
Draw EMA(3)
Draw EMA(13)
Draw EMA(39)
Draw Parabolic Sar
Draw Double Stochastics(10,3)
Average Volume(90)is above 100000
Volume is above 100000
Close is above 2
Add column DMA(28,-14)
Add column Slow Stochastics(5,3)
Add column Industry
Sort column 2 Descending
Offset 0 days
]




This is just the begining! I will soon Build this filter to have X-Ray Vision! Or is that MRI....Anyway, start looking for DIVERGENCE! The Elder-Ray was designed for it. If you find divergence in Bearpower between the two latest peaks below the zero line, and DMA is lurking above, Forget what "RSI-2" says, forget about "waiting for green." Hell, you wont even need to how to trade! Just get on board and ride it all the way to white water baby! Start playing with the "offset" feature and you'll see what I mean. Many thaks again to Maxreturn and BFreshour for getting this started!

RIGGS

RIGGS.






TheRumpledOne
6,359 posts
msg #39351
Ignore TheRumpledOne
12/4/2005 2:18:40 PM

Riggs, I guess you had me on IGNORE before there was an ignore.




TheRumpledOne
6,359 posts
msg #39353
Ignore TheRumpledOne
12/4/2005 2:31:17 PM

BFreshour:

Small fix:

Fetcher[
/* avoid gaps */
low below high 1 day ago

/* variables */
set{bullpower, high minus ema(13)}
set{bearpower, low minus ema(13)}

set{BPb,days(BullPower is above BullPower 1 day ago,100)}
set{BPa,days(BullPower is below BullPower 1 day ago,100)}
set{BPxBP, BPa - BPb}

set{BRb,days(BearPower is above BearPower 1 day ago,100)}
set{BRa,days(BearPower is below BearPower 1 day ago,100)}
set{BRxBR, BRa - BRb}


/* criteria */
bearpower below 0
bullpower reached a new 12 week high

/* columns */
add column bullpower
add column bearpower
add column BPxBP
add column BRxBR

/* draw */
draw ema(13)

/* sort */
sort by column 5 descending
]



BPxBP is days BullPower increasing/decreasing.

BRxBR is days BearPower increasing/decreasing.

MAY ALL YOUR FILLS BE COMPLETE.





StockFetcher Forums · Filter Exchange · Elder Ray<< 1 2 >>Post Follow-up

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