2008issue C121-5
Construct Special K so short-horizon signals stay inside the primary trend
Special K stacks or sums smoothed rate-of-change windows so primary direction, short-horizon triggers, and early reversals can be read together. The construction keeps those short-horizon signals inside the longer cycle instead of treating them as isolated flips.
- Price is treated as three concurrent cycles, each represented as a smoothed rate-of-change series that can be stacked by horizon or added into one Special K plot.
- The long-horizon series is judged first, because a short-horizon signal that opposes primary direction is treated as more likely to fail.
- Weekly Special K uses twelve rate-of-change windows spanning 10 to 65 periods, each smoothed with a 10-period exponential moving average and combined with weights of 1, 2, or 3.
- A daily version multiplies each lookback and smoother by five. Zero crossovers confirm a primary-trend change, and a companion daily rate-of-change series is kept because the summed plot does not show extremes.
Three concurrent cycles
The construction treats price as the interaction of three concurrent cycles. The primary trend is the multi-month bull or bear phase, commonly framed as lasting about nine months to two years. The intermediate trend is the multi-week to multi-month swing that interrupts that phase, commonly framed as lasting about six weeks to nine months. The short-term trend is the brief swing inside the intermediate trend, commonly framed as lasting about two to six weeks.
Each cycle is represented as a smoothed rate-of-change series. Those series are then either stacked by horizon or added into one Special K plot so primary direction, short-horizon triggers, and early primary reversals can be read together. Stacked by horizon, the series form a Know Sure Thing reading, with each cycle judged separately. Added together, they form Special K, a single summed momentum series.
Primary direction before short-horizon triggers
A long-term rate-of-change series is used first to judge primary direction and maturity. The premise is that short-horizon rallies are larger when that primary series is rising and declines are larger when it is falling.
A short-horizon buy or sell that agrees with the prevailing primary direction is a pro-trend signal. A short-horizon reversal taken against that direction is a contratrend signal and is treated as more likely to fail. The summed indicator is built to keep those triggers inside the primary context rather than as standalone flips.
Weekly assembly and daily-to-weekly rescaling
The weekly Special K is assembled from twelve rate-of-change windows spanning 10 to 65 periods. Each window is smoothed with a 10-period exponential moving average. The smoothed series are then combined with specified weights of 1, 2, or 3.
A daily Special K uses the same twelve windows and the same weights. Daily-to-weekly rescaling multiplies each lookback and each exponential moving average span by five so the daily construction approximates weekly sampling. That choice is used even though some weeks contain only four trading sessions.
Bands, zero crossovers, and extremes
When the long-horizon series is clearly declining, the short-horizon series is expected to crest from the upper part of a bearish band. A move far outside that recent band is treated as raising the chance of a primary reversal. A zero crossover on the intermediate series is used as confirmation of a primary-trend change, not as the first construction step.
The daily Special K path stays close to a separately plotted daily rate-of-change series. That companion series is retained because the summed plot does not itself show overbought or oversold extremes. The blended path is summed cyclicality: it shows combined trend direction, but it does not by itself display those extremes.
All readings on this track · 46 readings
- 1985Constructing excess and momentum difference-curve oscillators
- 1988Five reading rules for smoothed indicator charts
- 1989Momentum overlays that speed moving-average oscillators
- 1990A laboratory template that constructs Rate of Change as a pane module
- 1991Volume-scaled rate of change as a momentum construction
- 1991Three-indicator market overview from tape, sentiment and rates
- 1991Three-component trend model with rate-of-change filters
- 1992A KST oscillator from a weighted rate-of-change stack
- 1992Four-window weighted rate-of-change composite
- 1992Constructing multi-span smoothed rate-of-change filters
- 1992Constructing a four-horizon summed rate of change
- 1992Constructing KST from four weighted smoothed rates of change
- 1992Constructing a composite from weighted smoothed rates of change
- 1992Three-horizon KST maturity alignment
- 1992Construct a bond-led dividend-to-bond-yield regime first
- 1992Constructing relative-strength KST from weighted rate-of-change
- 1993Constructing a volume oscillator from average ratios and smoothed rate of change
- 1994Gold as a cycle clock for commodities and yields
- 1994Constructing a composite from weighted, smoothed rate-of-change windows
- 1994Constructing gold-mining rate-of-change tripwires for Treasury bonds
- 1994A capacity-stress checklist across commodities, bonds, and breadth
- 1994Rate of change parameters for testable entries
- 1994Constructing rate-of-change midpoints, lookbacks and divergence
- 1994Lead oscillator breaks need price trendline confirmation
- 1994Nested averages for an annual momentum curve
- 1994Evaluating a Coppock-style rate of change as a bottom-regime filter
- 1995A weighted eleven-month Dow rate of change as one testable timing procedure
- 1996Named lookbacks, thresholds, and streaks for entry rules
- 1997A midpoint rate-of-change test for bond trend follow-through
- 1997Constructing a short-rate-adjusted equity momentum filter
- 1998Daily momentum rank-churn as a portfolio-construction problem
- 1999Constructing a lagged rate of change cycle system
- 2000A triple delay line then a one-bar elliptic oscillator
- 2001Confirming rate of change divergences with price
- 2001Momentum trendline breaks need price confirmation
- 2001Market breadth, On-balance volume, and Rate of Change as a combined timing framework
- 2001Know Sure Thing with stacked horizons and trendline confirmation
- 2003Constructing a mechanical system from a rate of change condition
- 2003Constructing momentum from two closes and spotting divergence
- 2003Formula choice tilts which momentum mismatches count as divergences
- 2004RSI and momentum agreement as an asymmetric filter
- 2005Constructing price-normalized moving-slope hybrids
- 2005Unsigned speed gates on a fixed average-cross pair
- 2007Rebuilding rate of change as a path-weighted oscillator
- 2008Construct Special K so short-horizon signals stay inside the primary trend
- 2013Restore volume balance before adding another price-time indicator