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Glossary

1 A B C D E F G I K L M O P Q R S T U V W

1% Rule

When a reversal is elected by a close greater than 1.0% away from the actual number, the market will retrace to the Reversal Point to that price level. The greater the percentage move away from the reversal, the greater the time period to retest.

 

Advanced Channel

Constructed from drawing both channels from highs and lows

 

Aggregate Model

The top row on the Forecast Array represents a combination of all the Array models converged to indicate important dates ahead.

 

Arrays

See: Forecast Arrays

 

Bearish Reversal

Bearish Reversals are generated from a high. If the market should close below the Reversal Point, then the uptrend will reverse into a bearish or declining trend. Bearish Reversals can only be elected if the market closes below the reversal.

 

Breakline

Breaklines are the key to understanding the angle of a market. Charting parallels of a breakline will reveal how an angle will stay within a market for the long-term.

 

Breakout Mode

A breakout refers to a security's price movement through a historical resistance level. A breakout typically precedes heavy trading volume and increased volatility.

 

Bullish Reversal

Bullish Reversals are generated from a low. If the market should close above the Reversal Point, then the downtrend will reverse into a bullish or increasing trend. A Bullish Reversal can only be elected if the market closes above the reversal.

 

Capital Flow Analysis

A form of analysis developed by economist Martin Armstrong in which international capital flows are monitored and studied between nations to provide a basis for forecasting the effects upon domestic markets within a given economy. Likewise, internally, capital will flow between sectors, stock markets, commodities, bonds, and real estate creating booms and busts in one sector at a time.

 

Channel Analysis

Channels show the direction of the trend in motion. Channel maps are created by drawing a breakline around a high or a low. A parallel is then drawn from that particular high or low to define the channel.

 

Composite Model

See: Aggregate (formerly known as "Composite")

 

Counter Trend Reaction

A movement in price opposite to the prevailing trend that exceeds 3 units of time and is a separate cycle in and of itself.

 

Crash Mode

A sudden and significant decline in the value of a market.

 

Cycle

Taken from the Greek word “kyklos” meaning circle or returning to the point of origin. A rhythm or frequency of repetitive nature as in weather or in regular oscillations from peak to trough in a time series.

 

Cycle Inversion

Normally each turning point produces the opposite of the previous. However, a Cycle Inversion takes place most often on a breakout or a break down in a market. That means that instead of the opposite, when two turning points both produce the same event, a high or a low, caution is warranted for you may see a very strong movement.

 

Cyclical Convergences

Numerous cyclical waves combine and produce an abnormally large wave that causes the amplitude of the individual waves to blend together, thereby producing the abnormally large event.

 

Cyclical Strength

Indicates the strength of time-related trends. This indicator tends to pick highs and lows in extremely volatile moves.

 

Directional Change Model

The sixth row of the Forecast Array is the the Directional Change model, which notes when the market begins to make a decisive move.

 

Double Reversal Points

Double Reversal Points are generated twice on the same high or low. These usually occur a few times a year on the daily level, and once every two to three years on the weekly level.

 

Downtrend

The targeted move does not need to be an actual high or low. During periods of high volatility, it is likely that the turning point and directional change will converge in the same time period. This normally occurs when a market is making a spike high or low.

 

Downtrend Line

A standard technical analysis method of connecting the highest point on a chart to a subsequent reaction high. The resulting trendline is normally interpreted to define the overall trend of the market. A downtrend is said to continue in effect as long as current price activity remains below this downtrend line.

 

Economic Confidence Model (ECM)

The Economic Confidence Model (ECM), sometimes referred to as the Pi Cycle, is our base model for comprehending the global economy. This model has accurately predicted major economic events well in advance. The ECM focuses on the global concentration of capital to provide a timeframe for shifts in confidence that lead to major economic events. The ECM should not be used to forecast a single market since each market has its own cycle (see: forecast arrays), but if a market lines up with the ECM then it is an indication of a potential boom or bust.

 

Elected Reversals

If a market closes above a bullish Reversal Point or below a bearish Reversal Point, it is considered "elected" and will subsequently cease to exist.

 

Empirical Model

The third row on the Forecast Array is the Empirical model, which represents a transverse wave. These hardwired frequencies are of fixed durations that have been determined manually through decades of research.

 

Energy Models

Energy models reflect the amount of excess energy within a market.

 

Envelope

A type of technical indicator typically formed by two moving averages that define upper and lower price range levels. An envelope is a technical indicator used by investors and traders to help identify extreme overbought and oversold conditions in a market. The envelopes, which typically appear overlaid on a price chart, are also useful in identifying trading ranges for a particular trading instrument.

 

Fish Bowl Economy

An isolated concept that focuses only on the domestic perspective. This theory is used to justify government intervention to alter domestic trends that may be set in motion externally. 

 

Five Downtrend Rule

Five false breakouts in a bear market followed by the sixth, which provides a high probability of a major change in trend breakout. The final breakout confirms when the current rally is exceeding the high of the previous false breakout.

 

Forecast Arrays

Forecast Arrays provide a graphical overview of ideal highs/lows and important changes in trend and volatility for a given timeframe. Each row represents an individual high-level model that is composed of various smaller models; each column represents the analyzed time frame.

 

Gap (Reversal Gap)

A Reversal Gap in the void between two reversal points. Whenever large gaps from between reversal points, sharp swings become possible as the market moves from one side of the GAP to the other leading to a higher degree of panic. When reversal points are evenly dispersed, there are greater number of support and resistance levels to penetrate. This requires more energy within the system to create a panic situation. But when Reversals are clustered together in particular areas leaving gaps between them, then price movement can become much more abrupt.

 

Global Market Watch (GMW)

The GMW is a proprietary model developed by AE Global Solutions, Inc. This model provides an objective computer analysis of all leading world markets based upon technical price movement manifested through pattern recognition to provide a visual of what is unfolding on a global basis.

 

Immediate Reversal

Immediate reversals are generated from a very short-term (immediate) trend.

 

Intermediate Reversal

The three possible indications are Negative (below), Neutral (within), and Positive (above). The reason why we want to gain insight on the system is so if one were to use this in addition to other tools, entering or exiting strategies within markets can yield desirable results when protective stops are put into action. Our Indicating Ranges provide an invaluable tool to assess the strength (or lack of strength) in a given market on all levels of price activity and from several different perspectives. The numbers provided in our Indicating Ranges are not derived from moving averages, oscillators or stochastics, nor are they generated through technical charting. This study is based purely upon models that merge both time and price and therefore incorporate certain timing qualities that cannot be obtained through any linear form of analysis.

 

Invisible Hand

A concept put forth by Adam Smith in 1776 to describe the paradox of a laissez-faire market economy. The invisible hand doctrine holds that, with each participant pursuing his or her own private objective without interference from the state, furthers the wealth of the economic society through their collective efforts. This effort forms the “invisible hand” and was the surest way to increase efficiency and wealth.

 

Knee-Jerk Reaction

A one time unit event. This event will not continue.

 

L-Wave Model

The second row on the Forecast Array is the L-Wave model, which represents a longitudinal wave that expands and contracts through time.

 

Long-term Model

The fourth row on the Forecast Array is the Long-Term model, which represents a transverse form of cyclical frequency analysis. This model is typically three times the duration of the normal Empirical Timing model. For example, if the Empirical model represents a frequency that occurs every 16 weeks, then the Long-term model will represent a frequency of approximately 48 weeks.

 

Major Reversals

Major reversals are generated from highest highs or lowest lows within a given time series.

 

Minor Reversals

Minor reversals are generated from a reaction high or low that appears within a short-term trend.

 

Momentum

The market’s ability to move quickly in either direction.

 

Oscillators

An oscillator is a technical analysis tool. An technical analyst bands an oscillator between two extreme values and then builds a trend indicator with the results. The analysts then use the trend indicator to discover short-term overbought or oversold conditions. 

 

Outside Reversal

A trading session that exceeds the previous high or low and thus it can be a session that exceeds both directions.

 

Panic Cycle Model

The seventh row on the Forecast Array is the Panic Cycle model, which represents whether an abrupt move is about to occur within the market. A Panic Cycle differs from a turning point or a Directional Change as it reflects neither a high nor a low and it is not the beginning of a change in trend.

 

Peak

The high; the highest point within a time series.

 

Phase Transition

The Phase Transition explains abrupt movements in price and always unfolds from a prior base in order to create the energy needed for the movement to take place (transitions). This is not a normal bearish or bullish state, rather it is a compressed state of time that convinces the majority within the marketplace to switch sides. In other words, this is a sudden exponential move that marks a departure from a normal trading event to an explosive move that wipes out both sides. An important point to keep in mind: a phase transition is typically 52-59 weeks in general.

 

Pi Cycle

See: Economic Confidence Model (ECM)

 

Pivot Points

A pivot point is a technical analysis indicator used to determine the overall trend of the market during different time frames. The pivot  point itself is simply the average of the high, low and closing prices  from the previous trading day.

 

Plateau Move

This move creates a completely new trading level that is sustained. There is no return to the former trading range. Such events are profound and often are interlinked with the Economic Confidence Model.

 

Quadruple Reversal

Quadruple Reversals are generated when three reversals are elected on the same high or low. This historic event has only occurred once during the 1929 stock market crash.

 

Reaction (high or low)

A three (or more) time unit event that does not penetrate the previous high or low.

 

Reversal Points

Reversal Points are generated each time a market produces a new isolated high or low on an intraday basis.

 

Reversal System

The reversal system was born through the theory that specific pressure points (the reversal points) exist within price movement. If enough pressure builds in either direction, there will eventually be a final point which, if exceeded or penetrated, signals a change in trend. Reversals define the trend in place, and when elected, they provide precise trading targets that manifest into buy or sell signals.

 

Slingshot Move

A fake move down, taking out the previous low, followed by a blow-off parabolic move up, taking out the previous high.

 

Spike (high or low)

A quick thrust that may be 3 actual time-units within 4 or 5, and creates a v-shaped event followed by a quick reversal in price.

 

Spiral Panic

A cascading collapse where people try to pick the bottom but rapidly resell once they begin to lose money.

 

Superposition Principle

The Superposition Principle states that, for all linear systems, the net response caused by two or more stimuli is the sum of the responses that would have been caused by each stimulus individually. This principle applies to cyclical behavior within a single market which we can qualify as simply a linear system without interfacing it with all other markets that introduce a nonlinear system of super-complexity.

 

System Resistance

See: System Support

 

System Support

Refers to levels of market support or resistance as represented by Socrates

 

Target Date

See: Turning Point

 

Technical Resistance

See: Technical Support

 

Technical Support

Refers to levels of market support or resistance as determined through chart analysis

 

Time Unit

A time-unit is reference to the time frame being considered: days, weeks, months, quarters, or years. For example, if GMW observes a knee-jerk reaction (which is a 1 time-unit event) in the weekly time frame, it is projecting a 1-week event (a 1 time-unit event). If it projects a knee-jerk reaction in the monthly time frame, then it is projecting a 1-month event (a 1 time-unit event), and so on.

 

Timing Arrays

See: Forecast Arrays

 

Trading Cycle Model

The fifth row on the Forecast Array is the Trading Cycle model, which represents a union of time and direction that determines when a high or low is likely to occur.

 

Triple Reversals

Triple Reversals are generated when three reversals are elected on the same high or low. This very rare event has only occurred twice in history.

 

Trough

The bottom; valley; the lowest point within a time series.

 

Turning Point

A turning point is a point in time in which a market "turns" up or down.

 

Uptrend Line

Occurs when the market breaks and quickly closes above. This often signals a low is in place.

 

Vertical Market

Vertical Markets appear as Phase Transitions or Plateau Moves. That means that we are dealing with is the Phase Transition or the Plateau Move that are distinguished as the former is typically not sustained and is followed by a Waterfall collapse, whereas the latter creates a whole new trading dimension that is permanent.

 

Villa Economy

One based upon a self-sufficient group of estates that produce little if any excess to be sold in a market, a feudal enclave.

 

Volatility Model

The eighth and final row of the Forecast Array indicates when a change in the current volatility trend will take place. Unlike timing, volatility is only concerned with percentage movement rather than the direction or whether it is a high or low. The targets reflect turning points, but in volatility terms.

 

Waterfall Effect

Resembling a waterfall when charted, a waterfall event generally begins with a curve of 45 degrees and rapidly turns downward to a near 180 degree drop at the end.

 

Wave

A single oscillation measured from one peak to the next or from one trough to the next.