The Tradesight SEEKER has been designed to warn traders of high probability inflection points. An effective market timing tool such as the SEEKER has many benefits. It may keep a winning trade in position longer and increase profits or it may spot a reversal point to enter a trade.
All traders are familiar with both the price and time axis on a chart. Unfortunately, many traders under-utilize the horizontal time axis. The SEEKER is a pattern recognition tool that evaluates both time and price.
There are two main components in the SEEKER that represent different phases of a move. The first is a Setup ‘9’ which is momentum based and then followed by a Countdown ‘13’ which is trend based.
The momentum setup ‘9’ evaluates the bars on a chart that first show organized construction. In an uptrend, when a momentum move begins, the first recognized bar will be labeled with a green ‘1’ above the bar. Each successive bar that continues in the momentum move will be numbered until at least 9 bars have been consecutively labeled. Once 9 consecutive bars have been counted, price will typically either pause or retrace. This is useful information for either managing open positions or evaluating levels for entries.
After a momentum move has been identified by the 1 through 9 bar count, the second phase of evaluation may commence. The countdown ‘13’ phase will begin to evaluate the trend and look for construction that will terminate when a total of 13 new candles have met the trend criteria for both time and price. After the 13th bar of the trend phase, traders will be on high alert for significant price reversal.
The two distinct phases of the SEEKER are the setup momentum 9 bar move and then the subsequent trend countdown 13 bar move.
Below is a 65-minute intraday chart of Lululemon (LULU). At the left of the chart there is a 9 bar momentum move (green numbers above candles) that ran for about $2.00 before retracing, consolidating, and resting. After the completion of the 9 bar run, the second phase of the tool began numbering the 13 trend exhaustion move with red numbers. This part of the study ran for about $4.50 before marking the chart with the red ‘13’ and red exhaustion arrow. The ‘13’ trend exhaustion phase reversed price and produced a wave of profit taking. The value of the Seeker here is that it kept traders long and correctly identified the reversal candle on the chart:
Both the 9 bar momentum phase and the 13 trend exhaustion phase of the SEEKER study provide real time objective information. Not only does the study do on the fly intraday reconnaissance, but it works in all time frames all the way up to the large weekly charts. The SEEKER study produced a daily time frame sell signal on 3/1/12.