The Market Symphony
by Trader Garrett. January 4, 2010Print
“In 1581, Galileo, while attending services at the Cathedral of Pisa, observed a chandelier swinging back and forth. Energized by shifting air currents, the chandelier moved in a variety of arcs and amplitudes. Thus was born the concept of the pendulum which Galileo used as a time measurement device in his later experiments”
Any stock, bond, commodity or index is a symphony of cycles, rhythms and trends. All charts and price movements reflect a kind of mood music of notes and scales revealing a pendulum of elation and depression, greed and fear. This is truly the “motion of emotion.”
A musical score has a beginning and an end. All we try to do is to measure, from start to finish, any particular rhythm, story or theme. In this setting, choosing the right time frame, period and motion values to measure the changing moods, notes and inflexion points is always a challenging endeavor. To that end, we want to demonstrate graphically the musical motion of emotion across a pendulum equilibrium point. One method to uncover the equilibrium point is the Gravity Center (GC) theme formula.
Gravity Center is the point around which prices fluctuate cyclically. This point is constantly changing but it is a prime determinant of the overall trend theme. Gravity Center is a simple formula that recognizes the intricate and delicate balance of recent highs and lows and then integrates them with today’s closing bell in a pendulum format. In effect, gravity center is the background theme music all by itself.
The Gravity Center formula line is smoothed much like a moving average. The MSM signal line is a summed derivative of this formula. Working in concert with our Trend Directional Indicator (TDI), the Gravity Center formula does an excellent job of identifying complete rhythms, scores and storyline.
In the world of gold and silver investments, we are constantly aware of the trend, the desire for direction, and a place of harmony. This is the motion of emotion that guides our choices and decisions. The goal is gravity center...an equilibrium point. Let’s see how the XAU melody is playing in three time frames given the background score noted above.
As the New Year starts, the daily is in a down mode but the weekly and monthly charts are clearly hitting the right positive notes. In addition, four out of five portfolio selections were instrumental in successfully completing their tours in 2009. Let the music begin.
© 2010 Trader Garrett