Below is a slider tutorial for the swing rule. Captions appear below the pictures in red for guidance, so be sure to scroll down far enough to read them.
1 / 5
I learned about the swing rule from Sam Weinstein's book, "Stan Weinstein's Secrets for Profiting in Bull and Bear Markets." The rule is a way of predicting how far price
will rise. For example, the swing down from A (the high is at 9.37) to B (the low is at 6.47) measures 9.37 - 6.47 or 2.90. How far will price rise above the high at A? The next slide provides
2 / 5
The answer is to add the height of swing AB to A. In this case, that's 2.90 + 9.37 or 12.27, which I show at C. The stock reaches the target about two weeks before COVID-19
virus takes the stock (and markets) down. Does the swing rule work for time? Let's explore that in the next slide.
3 / 5
Here's another swing from A to B. What is the price target? The high at A is 136.03 and the low at B is at 129.17 for a height of 6.86. Add the height (6.86) to the high
at A (136.03) to get a target of 142.89. Using calendar dates (not price bars), the difference between A and B is 7 days. How long will it take to reach the target, on average? The next
slide shows the answer.
4 / 5
My study of chart patterns shows that price drops about twice as fast as it rises. If the drop from A to B measures 7 days then the rise from B to A should take twice as
long, or 14 days. The rise from A to C should take twice as long, or another 14 days for a total of 28 days. In this example, point C is 28 days after A, so it meets the time target exactly.
The price target is 142.89, so it falls just short of that by 7 cents. The next slide provides statistics on how often the swing rule works.
5 / 5
The chart shows that the swing rule works about half the time. This article explains the swing rule in more detail.
Support this site! Clicking any of the books (below) takes you to
Amazon.com If you buy ANYTHING while there, they pay for the referral. Legal notices: "As an Amazon Associate I earn from qualifying purchases." Paid links).