Understanding Know Sure Thing Indicator
There are altered cycles that accomplish over abounding altered time frames. An archetype would be a 12-month amount of change (ROC) indicator. It alone reflects a bound amount of cycles associated with the set 12-month timeframe. It occurred to me that an indicator that combines several altered time spans could action bigger results. Also, the raw ROC indicator can be absolutely jagged, so one- or two monthís abstracts could calmly accord you an apocryphal faculty of a trend reversal. Smoothed adaptations of the ROC ability as well prove advantageous in anecdotic trend reversals. For these reasons, I developed a bland summed amount of change indicator alleged the Know Sure Thing indicator.
The KST abstraction was originally acquired for abiding trends, but the abstraction of four (4) smoothed summed ROCs can calmly be activated to short-, intermediate-, and even intraday trends. Iím not suggesting they are the best ambit that can be devised; itís actual acceptable they can be improved. It is important admitting to buck in apperception that a lot of us are searching for absolute indicators, which is an unrealistic Holy Grail. The best anyone could achieve for is reasonable consistency, and thatís my cold with the KST.
The blueprint for the abiding Know Sure Thing indicator assumes the alternation is getting advised adventures circadian rhythms associated with the business cycle. This agency beeline up or down trend is experienced, the KST, like any drive indicator, gives apocryphal or badly abortive signals. A balmy bootless arresting developed in Blueprint 1 during the 2000/01 period. Fortunately, beeline trends are the exception, rather than the rule. Recent examples cover the Japanese banal bazaar in the 1970ís and 1980ís, and U.S. equities in the 1980ís and 1990ís. Also, back the indicator involves several affective averages, the KST is not afflicted by abrupt and/or aciculate turns, such as those associated with the 1987 blast or the abatement in the Hong Kong disinterestedness bazaar anon afterward the Tiananmen Square annihilation in 1989.
Know Sure Thing indicator signals are triggered either if the alternation changes direction, or the indicator crosses its 9-month affective boilerplate (MA). The red and blooming highlights in Blueprint 1 announce if the KST is beneath or aloft the abject red line; i.e., the 9-month MA.
KSTs occasionally bandy up absolute and abrogating divergences, as well. An absolute alteration developed amid 1999 and 2002, if the Index confused lower but the KST bottomed out at a college akin (this has been is flagged on the blueprint by the two blooming arrows.) Overbought and oversold zones can as well be complete and acclimated to announce if the amount alternation in catechism is abutting to its accustomed overbought level. Like all drive series, KST signals should be accepted by some affectionate of a trend change about acceptance from the alternation it is monitoring. Afterwards all, we are affairs and affairs the price, not the momentum, and amount occasionally adventures a beeline trend that does not calmly abatement into the accepted business aeon accent affected by the Know Sure Thing indicator formula.
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