Cross Asset Technicians

image1.jpg
explication aux boxes.jpg

Cross Asset Technicians

Managing is often anticipating probable future events.

MJT’s Cross Asset Technicians was created from the start to provide a .......

MJT's proprietary 3T methodology
a) Early identification  and monitoring of the Trend  Direction (Trend)

b) Anticipation and confirmation of relevant inflexion points (Timing)

c) Automatic assessment of possible price Targets and hence of risk/reward ( Target )

a) Early identification and monitoring of the Trend direction

Identification of a TREND: by calculating two different standard deviation envelopes around price (chart middle rectangle), MJT can capture current trend direction (slope of larger envelope) as well as identify intermediate or decisive turning points within the trend (when both envelopes cross each other, i.e. stress point or periods of exaggeration).

Using two standard deviation envelopes over two different calculation periods delivers very robust stress signals and helps reduce the fat-tail flaws often associated with normally distributed statistical methodologies.

 

b) Anticipation and confirmation of relevant inflexion points (Timing)

Timing Oscillators

To anticipate and confirm the timing of probable top and bottom zones, MJT uses timing oscillators. The long term oscillators are the drivers of the timing analysis. The medium term oscillators are calculated over a period half as long and use a slightly different formula. These serve as confirmation tools for the long term oscillators as well as monitoring instruments for shorter / intermediate trends. 

Each oscillator (blue, red or black) is meant to capture a specific time cycle.

Their relative positioning delivers specific situations ( so called "Cases") to always know where you stand within either an uptrend or downtrend. The long term oscillators (lower rectangle) serve as the basis for the automatic analysis. The medium term ones (upperrectangle) are used as confirmations and to fine tune sub-segments of the model.

Please find below the ideal uptrend  and downtrend model ( oscillators, derived model and case sequence) :

Ideal Uptrend Model : (left to right) from an oscillator black bottom (usually a Low Risk or a Case 2), the oscillators and prices will start moving up. An uptrend is confirmed once a red top can be made above a blue one. The correction down that follows delivers a buying opportunity (“Resume Uptrend”) followed by an intermediate top (Case 3). A new period of consolidation down or sideways then starts, ending with a Case 5 acceleration up towards an important top (usually a High Risk or a Case 1).

Ideal Downtrend Model :(left to right) from an oscillator black top (usually a High Risk or Case 1) the oscillators and prices will start moving down. A downtrend is confirmed once a red bottom can be made below a blue one. The correction up that follows delivers a selling opportunity (“Resume Downtrend”) followed by an intermediate bottom (Case 4). A new period of consolidation up or sideways then starts, ending with a Case 6 acceleration down towards an important bottom (usually a Low Risk or a Case 2).

Overall, the MJT system, which was first developed in the 1970s, brouhght online in 1982 and  can be applied to any asset class, any time frame, to relative charts or to portfolios with many positions.

 

c) Automatic assessment of possible price Targets and hence of risk/reward ( Target )

The larger envelope is also used to monitor volatility i.e. the width of the larger envelope, labelled “delta” is MJT’s measure of volatility.

Delta can be used over all time horizons to calculate price targets and hence capture the risk/reward profile of any investment decision at any given point. The width of the larger envelope changes with every frequency and so does delta – the larger the frequency, the greater the width of the larger envelope and the larger the delta. Targets, which are confirmed over two to three investment horizons, usually offer extremely powerful support and resistance levels.

Corrective Target Range

The Corrective target range is calculated using "delta" (Δ: larger envelope width and volatility measure) multiplied by a corrective factor of 0.5x to 0.8x and subtracted/added from the relevant top or bottom (usually but not always MIN and MAX of the graph).

The Corrective Objective is considered "Done" once the price leaves the Corrective range. Prices will probably resume the previous primary trend. A move beyond this corrective range could confirm a change in this primary trend.

Impulsive Target Range

The Impulsive target range is calculated using "delta" (Δ: larger envelope width and volatility measure) multiplied by an impulsive factor of 1.3x to 1.7x and subtracted/added from the relevant top or bottom (usually but not always MIN and MAX of the graph).

The Corrective Objective is considered "Done" once the price leaves the Corrective range. Prices will probably resume the previous primary trend. A move beyond this corrective range could confirm a change in this primary trend.

The Impulsive Objective is considered "Done" once the price overruns the target range, i.e. the price move carries on beyond 1.7x "delta".

In rare occasions, when the primary trend is very strong, a Super Impulsive target range (I2) is calculated using a super impulsive factor of 2.3x to 2.7x. This Super Impulsive target range is envisaged starting at above 2.0x delta and is considered done above 2.7x delta.

Example: Weekly chart of S&P 500 in early November 2016