Trader Vic's "Four Day Rule"

These rules are in Trader Vic Sperandeo's book "Trader Vic II - Principles of Professional Speculation".

The Four-Day Rule

"When the market has a reversal, in the form of a 4-day up or down sequence from a high or a low, after an intermediate move has taken place, the odds of the trend having change is very high."

"The Four-Day Rule" is illustrated by the green line and arrow on the chart below -- the first four-day sequence since the metals complex topped last September.

The Four-Day Corollary

"After a long move of intermediate proportions, when you have 4-day (or longer) sequence in the direction of the trend, the first day in the opposite direction often signifies the top or the bottom and change in trend."

And "The Four-Day Corollary" is illustrated by the red line and arrow in September -- the four or more (five in this case) days in the direction of trend with the first day down signifying the top.

And to my mind, they are both examples of why Trader Vic has been and still is one of the greatest traders and technical market analysts ever.

Good luck and good trading.

http://stockcharts.com/c-sc/sc?s=$HUI&p=D&yr=0&mn=11&dy=0&i=p06333605083&a=268908935&r=1338996161502.png

P.S. If you have not read Vic's books, you probably should not be in this game. Just my opinion.

Take the "Frequently Bought Together"

when you say change in trend, is that IT, LT or what? what does the 4 day rule portend for the durability of the change? in this case, are you suggesting miners see blue sky for a week, month, quarter?

when you say change in trend, is that IT, LT or what?
what does the 4 day rule portend for the durability of the change?
in this case, are you suggesting miners see blue sky for a week, month, quarter?

That's the ringer in Trader Vic. He said intermediate term but never defines its duration.

But four-days in a row is compelling stuff. There's only two of them on that chart and one of them is the top and so far the other is the bottom. Might draw a horizontal line through the high of that fourth day up (411.05) and call that a line in the sand of sorts. Under his "1-2-3" rule for reading trends, Trader Vic would put a trend line under the lows of this advance and watch how the index acts in relation to that trend line. He's a trader so I think he'd consider it an up trend as long that trend line is not violated. Could for days, weeks, months, years...whatever. He'd let the market tell the duration. Anyway, that's my read.

Probably need to note we have not had the kind of pullback/retest yet that would give a clearer indication of a true change of trend. That likely will come.

I just updated the chart to reflect some of those lines.

Good luck and good trading.

yes waiting to see that pullback tommorow or Fiday is my guess for a week if we go straight up into mid june instead, something else is at work