Written by:
Patrick Mikula CTA
Mikula Forecasting Company
www.MikulaForecasting.com
support@MikulaForecasting.com
Copyright © 2011 by Patrick Mikula All Rights Reserved
I would like to discuss one of the most over looked forecasting indicators in MarketWarrior. This is the Dewey Cycle indicator. This is a simple cycle indicator based on the work of Edward Dewey. This indicator can set up to 6 cycles and and create a composite cycle if desired. In the first picture, I have added the Dewey cycle indicator to the daily S&P500. I have set the cycle length based on the low to low distance from the market at point A and the bottom at point B. This low to low distance defines the short term cycle in red that I will use.
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The next picture shows the second cycle that I am using with the S&P500 daily chart. This is a medium length cycle and is in green. This cycle is set up based on the low to high length between the bottom at point A and the top at point B.
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The third chart below shows the cycles after the set up dates. I have manually added the arrows where these simple cycles lined up with the Change In Trend (CIT) points on the S&P500 daily chart. You can see these simple cycles did very well to line up with market CIT points.
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The next chart shows the future space on the S&P500 chart. This is the area that shows the cycles out to June 2012. This indicator is very easy to use. You only need to watch the market approach each cycle top and bottom and watch for a market CIT point. If the market makes a CIT near the cycle turning point, then you can make a trade and try to capture some of the ensuing market move.
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The final two charts below show how to use the composite feature in the MarketWarrior Dewey cycle indicator. On the next chart I have added a 3rd cycle. This is an extra long cycle and is drawn as a blue line. Now we have three cycles. A short red cycle, a long green cycle and a extra long blue cycle.
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On the final chart below I have selected the composite option in the indicator and now the indicator is drawing as a composite cycle line. This composite cycle is shown out through June 2012 for the S&P500 daily chart.
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