Copyright (c) B.Achutha 1992 - 2000 Malaysia

Market States

In an earlier section of this web site I had mentioned that markets shift states. Here I would like to introduce the reader some basics has to how to determine the states. I believe I need to carry out about a years worth of research to tie up the relationships between probability theory, wave theory and states analysis. I have heard of other researchers just beginning to use Quantum Mechanics to analyse the stock market movements. I do not know anything about Quantum Mechanics and over the last eight years have built the theory of markets piece by piece to the point where I had shown the relationship between probability theory and wave theory.  I shall come back to this "particle / wave nature" of markets later but let me introduce the subject of states.

Using a scatter graph and plotting opening vs closing values we can observe the scattering of the points. The gaps represent Transition Zones, that is when the market moves from one state to another it passes through this zone. Hence there are very few if not no points in this zone. A concentration of points within a region of the graph is a State. Repeat this with the high vs low prices scatter graph. Analysuing the state movements will give us clues as to how the market will eventually move. In commodity markets I had noticed that the daily low prices will shift to a lower state days or weeks before the high, open and close prices shift. There are a lot of other observations that cannot be covered here and now.