EbbChart Primer (Public Thread)

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Triple-pattern strategy: Plenty of triple patterns (14), but using only six moves in less than six years. Here are the moves:

1st move: (100% F) Bearish pattern 1-1-1 (+0.80%). Total gain: +0.80%.
2nd move: (50% S, 50% I) Bullish pattern 6-6-6 (+4.59%). Total gain: +4.59%.
3rd move: (100% F) Bearish patterns 4-4-4-4 (+2.27%); 4-4-4 (-0.82%); 7-7-7 (-0.08%); 2-2-2 (-0.66%); 7-7-7 (+5.71%). Total gain: +6.42%.
4th move: (50% S, 50% I) Bullish patterns 5-5-5 (+31.99%); 5-5-5 (+26.97%). Total gain: +67.70%.
5th move: (100% F) Bearish pattern 2-2-2 (+4.24%). Total gain: +4.24%.
6th move: (50% S, 50% I) Bullish patterns 3-3-3-3 (+12.39%); 8-8-8 (+8.75%); 3-3-3 (-8.04%); 8-8-8 (+4.96%). Total gain: +18.00%.

All six moves resulted in gains -- even during the market crash of 2008. I won't say if we have a new triple pattern (as of this writing) in deference to current subscribers, but six moves??? That's the power of cycles at work -- without it, everything is just a crapshoot.

[ebbnflow]

Besides the market crash of 2008 (3rd move), the triple-pattern strategy also had gains during the summer crash of 2011 (5th move). To show how simple it is to recognize a triple pattern on the ebbchart, here's that bearish pattern 2-2-2 making an appearance last year (June 10-14, 2011). The strategy's move to the F-fund gained +4.24% while the S-fund lost -17.24% and the I-fund lost -21.12% (June 10 thru Sep. 22). There's nothing simpler than the triple patterns -- it's either there or not. Confirmations? What's that?

Note: Daily ebbchart patterns are posted a couple of weeks ahead of time.

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Triple-pattern strategy (4th move): Right after the crash of 2008 and before the summer crash of 2011 (see chart above), the ebbchart produced a couple of bullish red patterns (5-5-5) on April 20, 2009 and June 29, 2010. Amazingly, during this two-year bull market run, no other triple pattern showed up. I didn't know what the triple patterns meant back then, but that doesn't mean it didn't happen. It did, so for new subscribers, here's another look at the patterns:

April 20-22, 2009


June 29 - July 01, 2010

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I will keep adding past comments that can help folks know more about the ebbchart's triple patterns.

Like I said before, there is nothing simpler than the ebbchart patterns. Data are gathered mostly from price and volume. I use known cycles for timing purposes. There are no unnecessary parameters and if conditions to gum up the works. Simply put, what you see is what you get (WYSIWYG). The TSP system I will be using in 2013 will solely be based on the 90-day cycle of triple patterns.

Triple patterns are aberrations or anomalies that mark turning points in the market and need to unwind its bear or bull cycle phase, hence the importance of the 90-day cycle.

[ebbnflow]

This is how we follow the triple-pattern strategy and what it looked like at the end of 2012:

A viable triple-pattern strategy (six moves, six years, triple-digit gains): The chart below shows 13 of 14 triple patterns landing on the right side of the trade. The triple-pattern strategy catches long-term trends and has been in equities since Sep. 23, 2011. Current triple pattern: Bullish red pattern 8-8-8 (June 13, 2012). Strong 90-day cycle expired on Sep. 10, 2012. It will keep on going, but if any bearish green pattern (1-1-1, 2-2-2, 4-4-4, or 7-7-7) shows up, then it becomes the new triple pattern, 90-day cycle resets, and the strategy exits to the sidelines (100% F). The complete timeline for triple patterns can be found in the EbbChart Primer page. Gain (2007 - 2012): +158.75% (50% S, 50% I, or 100% F); +176.85% (100% S or 100% F). Year-to-date: +18.59% (50% S, 50% I); +18.57% (100% S).

All seven of the bearish green patterns that turned up on the ebbchart resulted in losses. Do we have one in store for 2013? With this strategy, you'll always know where the market is headed. Signals are given two weeks ahead of time, so you're never stuck on the computer. And most importantly, the 2-IFT rule (sure, I'll take the blame for it) is moot . Take that Mr. Long!

[ebbnflow]

I knew there's something about the triple patterns, but without doing the complete timeline (done last year) I wasn't able to see the whole picture back then. These are old comments that show the genesis of the triple patterns (as long-term indicators).

Updates for 06/29/10:

The ebbchart is showing a triple pattern 5 starting today (this happened only once back in April 20, 2009). The pattern didn't fare too well, but it was interesting to note that SPY's price at the time was 81.74. By the end of year, SPY's price had gone up 29 points to 110.91 (36% gain).

Updates for 07/06/10:

For the TSP: I will be making my 1st IFT (interfund transfer) this Tuesday morning back to the F-fund (100%), so I'll be on the sidelines by Wednesday (Pattern 7/exit signal). It's going to be just for the week. Our long-term indicator remains bullish with a buy signal (triple pattern 5 made an appearance in April 20, 2009 and last week). If one wishes to do an IFT only once or twice in a year, then following the long-term indicators is the way to go.

It took a long time but we finally have our long-term indicators (sorely missing) from the ebbchart. The triple pattern 7 in Feb. 22, 2008 (SPY 132.43) would have saved us from the crash of 2008 and the triple pattern 5 in April 20, 2009 (SPY 81.74) would have gotten us back in stocks for the ride back up. I know it's all in hindsight, but the ebbchart is fairly new (started in 2007), so we're still discovering a lot of things. If you were wondering about the triple pattern 1 (2nd lowest win-loss percentage on the ebbtally), it made its only appearance back in April 16, 2007 (SPY 141.21) so this pattern gave us an even earlier warning.

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The chart below shows how the triple patterns would have done each year (2007 - 2012) using an allocation of 50% S, 50% I, or 100% F (total gain +159.68%). If 100% S-fund is used, the total gain would have been +177.85%.

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I also observed an alternating cycle going on between the S and I-fund. Notice the shift in gain/strength (highlighted) during the change in bullish red patterns. The only time when no shift happened was when there was no change in the red patterns (5-5-5 to 5-5-5). This simple to follow cycle could tell us in advance which equity fund will perform better. Total gain (2007 - 2012): +199.82%.