Indicator

9-13™

The Sequential® and Combo® family of indicators are famously known for their 9 Setup® and 13 Countdown® results. A completed indication is also referred to as a 9-13 reading, representing a fulfillment of both phases.

Symbolik Sequential Step 1 Setup
01

Setup Phase

A Buy Setup occurs when there are 9 consecutive closes less than the close four bars earlier. A Sell Setup occurs when there are 9 consecutive closes greater than the close four bars earlier.

02

Perfected Setup

Setups can be classified as either “Perfected” or “Im-perfected.” The Setup is classified as “Perfected” when the 9 is completed and the 6 and 7 bars have been exceeded. The point at which the Setup is perfected is displayed with an arrow.

Symbolik Sequential Step 2 Perfected Setup
Sequential Step 3 TDST
03

TD Setup Trend

The TD Setup Trend (TDST) indicator is derived from use of the Setup indicator to confirm market trends and likely trend failures. The TDST indicator is used to establish reference levels from the lowest true low and the highest true high of recent underlying trends, providing market support and resistance to help evaluate the integrity of its price movement.

04

Countdown Phase

The Countdown phase is identified with non-consecutive numbers. Countdown is used to measure the depletion of buyers and sellers determined by the direction of the underlying trend (Setup) and anticipates the area at which the trend is vulnerable to a reversal (trend exhaustion).
 

Countdown is calculated by comparing the close of the current bar to the high or low two bars earlier in addition to three other requirements for the Combo Countdown phase. Each fulfilled comparison produces a number, which helps to describe the stage of the current trend. Once the series reaches a 13 the market is prone to a reversal, with the Risk Level defining the zone within which the trend should flip and the 12-bar rule defining the time within which it should do so. A completed Countdown marks the fulfillment of the 9-13 process.

Unlike the Setup phase, Countdown does not require that the counts be consecutive. As a result, Countdown can occur in both trending and trading range markets.

Sequential Step 4 Countdown
Sequential Step 5 Risk Level
05

Risk Level

The Risk Level identifies the potential residual trend momentum once Countdown is completed. The Risk Level is often considered a secondary level of price exhaustion, not only defining the zone in which the market is primed for a reversal but also providing support/resistance to the chart.

When a Countdown series is completed a Risk Level is generated, identifying the zone within which there should be a reversal, as well as the amount of residual momentum the trend could experience and yet still preserve the buy or sell reading. The Risk Level associated with a completed Buy Countdown represents the price above which the 13 buy remains active, and serves as support on weakness; conversely, the Risk Level associated with a completed Sell Countdown represents the price below which the 13 sell remains active, and serves as resistance on strength. It is helpful to think of this level as the maximum threshold that the price exhaustion series can withstand before the momentum overwhelms the signal and renders it ineffective.

As with many other DeMARK Indicators, the qualified and disqualified Breakout Rules apply to help gauge whether or not the Sequential signal remains intact.

06

12 Bar Metric

Also known as the 12 bar rule, the twelve price bar metric states that a reversal should occur within 12 bars of a completed 13. If the chart has not responded in that time the 13 is unlikely to have the desired response, and the existing trend is likely to continue.
Sequential Step 6 - 12 Bar Metric
Sequential Step 7 Countdown Deferral
07

Countdown Deferral

The 13 vs. 8 Countdown Deferral rule is unique to the Sequential Countdown phase and is designed to ensure that the tail end of the Countdown phase is representative of the existing trend as opposed to market noise due to an early break in the trend. To fulfill this qualifier, the high of the 13 bar must be greater than or equal to the close of the 8 bar in the case of a Sequential sell, while the low of the 13 bar must be less than or equal to the close of the 8 bar in the case of a Sequential buy. Because the Countdown can accrue in a sideways market, requiring the 13 to exceed the 8 bar’s close, be it upside or downside, assures that there is some trend intact and provides a higher level of accuracy as the chart reaches its completion.

The Countdown Deferral condition is represented by a ‘+’ and indicates that the Countdown requirement was met but the 13 vs. 8 rule was not fulfilled, thereby postponing the count.

Whereas the 13 vs. 8 Countdown Deferral rule is designed to ensure that the tail end of the Sequential series is representative of the existing trend, the 8 vs. 5 Countdown Deferral rule is designed to ensure that the body of the Countdown phase is properly configured. The 13 vs. 8 comparison is critical to the Countdown phase, while the 8 vs. 5 comparison is elective and affords greater comfort that the trend has remained intact.

08

Countdown Recycling

The fundamental picture is constantly evolving to reflect new information. Just as the fundamentals experience occasional adjustments impacting the expectations of the asset, so too do technical analysis and market timing. This is most often reflected in Countdown phase by a process known as Recycling.

Recycling occurs when a Countdown is interrupted by a subsequent Setup of certain criteria in the same direction. Recycling suggests that the new trend is strong enough to weaken the impact of a confirmed Countdown series and resets the process.

Two situations can cause the Countdown reading to Recycle. Either the overlapping Setup continues beyond its minimum requirement of 9 consecutive closes greater than/less than the close four bars earlier, reaching a count of 22. Alternatively, the size of the more recent Setup, as measured by the difference between the highest true high and lowest true low of the series, is between 100% – 200% of the size of the prior Setup.

Sequential Step 8 Countdown Recycling
Sequential Step 9 Countdown Cancellation
09

Countdown Cancellation

Once completed, a 9-13 confirmation is permanent and never altered. However, it’s important to note that Countdowns can be cancelled during their construction phase. There are two scenarios where a Countdown series would be removed from the chart.

The first Countdown cancellation scenario occurs when a subsequent Setup is confirmed in the opposite direction prior to the completion of the Countdown phase. The reasoning is that current market conditions have changed from the point at which the initial Setup was confirmed, to where the new Setup more accurately reflects the current status. Therefore the Countdown that was constructed off the Setup that is no longer relevant is canceled and removed from the chart.

The second Countdown cancellation scenario takes place when the TD Setup Trend (TDST) is violated, suggesting a conclusion to the previous trend and a confirmation of a new one. In these cases, a True High that occurs below the TDST Downside, or a True Low that occurs above the TDST Upside, cancel the construction of the incomplete Countdown phase and removes the counts from the chart.

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