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Enter a Stock or ETF symbol, press [Submit] and the following page will illustrate the Proprietary Volatility Momentum Levels on a daily basis for the symbol you entered over the past 10 years (Beginning Jan 2001). This page is dynamically calculated on the fly and the data is updated every evening. It will show 3 different Momentum Level calculations ranked according to their probability of reversal. The higher the ranking, the lower the probability of the stock / ETF going from that an R1 to an S1 or an S1 to an R1. This method is used to demonstrate that the directional trade is not a gamble, as well as to illustrate how probabilities come into play when trading. These Momentum Levels could be used to help with entry. The application of these Momentum Levels could be used in discretionary trading or system development. While one is certainly capable of entering before these numbers, the trader should be aware that the probability of a reversal is much greater upon early entry and a tight stop-loss should be implemented in that case.

Enter a Stock or ETF symbol and see what the historical probabilities say

The following numbers are calculated once a stock begins trading and are calculated from the Open.

Sample Momentum Level Data
Momentum Levels for AAPL on 2011-09-29				Quotes
Level	3 Stars	4 Stars	5 Stars
R 3	409.81	413.08	411.43
R2	407.18	409.36	408.26
R 1	404.55	405.64	405.09
Open = 401.92				High = 402.21
S 1	399.29	398.2	398.75
S 2	396.66	394.48	395.58
S 3	394.03	390.76	392.41	Low = 386.21	Close = 390.57

In the table above, you see different price levels for the Proprietary Volatility Momentum Levels. These levels indicate areas of support and resistance. In the case above, you can see that AAPL never traded to or above any of the R1 Resistance Levels and there was no reason to enter a long position. AAPL met the S1 Pivot and continued down for most of the day, closing below the S3 Pivot. There is a lot to be said about the speed of the move in either direction, if the Momentum Levels were met early in the day, such as was the case on 9/26 in AAPL, one may look for a reversal as "False moves come from Fast moves". The information that follows explains more in detail as to why the Proprietary Volatility Momentum Levels were created and how they may be used.

Proprietary Volatility Based Momentum Levels

I developed my own Momentum Levels because the calculations traditionally used by traders do not reveal what I have been looking for. I wanted to know if a stock goes a certain distance from the OPEN, whether or not the stock has a good probability of continuing in that direction. One might ask why would this be important and why would you want to know that. I know that the Open is within 30% of a typical day's trading range from the High or Low 30% of the time. This number varies and is sometimes more, sometimes less. This means that if I can estimate what the day's range is going to be, I can be on the right side of the trade ~ 60% of the time. This also tells me that there is almost always a reversal in the morning, being that the Open is rarely the High or Low for the day. I developed the formula to determine the Pivots so that if the market went to the first Resistance (R1) or the first Support (S1), that the chance of a total reversal to the other side of the Open for most stocks is less than 35%. This really depends on the instrument being traded because some markets trend much better on an intraday basis than others. (For example, Sector Based ETFs Trend much better on an intraday basis than do Market Based ETFs). There is often a rather large variance as to what occurs when a stock / ETF opens inside the range of the previous day versus a Gap above or below the previous day's prices.

The Speed of the Move

It's often said that "Fast moves come from False moves" and this would indicate that you should be wary of a move that occurs in either direction quickly. A slow steady move is much more powerful than a price spike in terms of sustainability. In other words, in regards to speed, you might want to look at a reversal trade if the move was fast, as opposed to a continuation trade.

Traditional Pivots

The most popular methods of determining pivots enable you to know the Pivot numbers before the market opens. This creates a stationary Pivot, but the issue here is that the Open is NOT stationary. The Open may occur in above or below the Traditional Pivot. The Traditional Pivot numbers are somewhat extreme and it takes a strong or weak market to move from one pivot to another. I also am not concerned with yesterday's price action, but today's price action and how it relates to yesterday's. (This will be explained in much more detail in more research that will be published based on where a stock open's in relation to the previous day's range and how it affects the current days action - this information will surprise you).

A New Way

I wanted to create something a little more dynamic and my only concern is the current day’s price action. To do this, I based my pivots on the volatility of the stock and calculate them from the market OPEN. As soon as a stock opens for trading and has its opening print, at that time, the Volatility Momentum Levels can be calculated. The Volatility Pivots allow you to determine a few things about any stock or exchange traded fund (ETF) that traditional methods haven't been able to determine:

• Does intraday trend trading work?
• Do stocks continue to climb after they have gone a certain distance from the Open?
• Would it be better to fade the breakout or trade the breakout?
• Does the stock continue in the direction after reaching this point or does it reverse?
• What percentage of the time does the stock reverse by this I want to know how often does the stock go from one extreme to the other from 1st Pivot up to 1st Pivot down and vice versa?
• If the stock gets to my 1st Pivot, what percentage of the time will it get to the 2nd and 3rd Momentum Levels?
• If a stock reaches the Pivots - 1st, 2nd, 3rd what percentage of the time will it close beyond the Pivot?
• Is a stock more likely to trend or reverse at each Pivot Point?
• If a stock moves in one direction is it likely to continue in that direction.

Momentum Levels

Momentum Levels can be referred to as areas of Resistance and Support. If a stock opens and goes up a specific amount (measured move), there is resistance. This is obvious from the fact that we know that there is a reversal at some point in the day (otherwise, the Open would be the High or the Low of the day more often). Below illustrates where the Momentum Levels are located and each move is a measured move from the OPEN of the market. The Momentum Levels are labeled just as the traditional Pivot Points are labeled.

• Resistance 3 - R3
• Resistance 2 - R2
• Resistance 1 - R1
• OPEN
• Support 1 - S1
• Support 2 - S2
• Support 3 - S3

The following link will show the difference between the Traditional Pivot Points and the Volatility Momentum Levels. Pivot Example

The Standard, Woodies, and Camarilla methods are quite common and these pages are currently still under construction as we will be adding conditions for the Open in relation to the Pivots.

A description of the traditional methods for calculating Pivot Points can be viewed here:

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