Analysis of Nifty with Step Sum

Introduction :

Step Sum is in the form of a new technical tool to evaluate the psychology of the market. It has been developed by Mark Lundeen and it offers a unique insight into the psychology of the market. The step sum is simply a running total of up vs. down  days and it reflects trader psychology.

“15 Count” is  running sum of the daily step used in constructing their step sum over consecutive 15 days.

Now I am trying to measure the "Quality aspect" of Step sum with a simple logic & mathematics ; simply stated here is a plan to quantify the sum of all 'Count of 15' over a period of calendar year. First refer to the Table :

Table is based on OHLC data sourced from NSE site. Step sum were calculated on daily basis, thereafter 'Count of 15' were generated by excel (by adding step up or step down days over 15 days). September 2016 data is as on Thursday 22nd Sept 2016.

Note there had been 5 cases of 'no change' in closing Nifty , resulting in 0 change in Step Sum; consequently 'Count of 15' were rendered even numbers ; such cases were added to nearest odd number (E.g., 2 were counted with 1, 4 with 3, etc)

Z (Sigma) = Net weighted Count_15 for the Year =

 Summation over the year of  [ (Number of count) X (Value of Cnt) ]  for full range of  available Cnt  { from 15 to minus 15 }

For convenience a Template for Calculation was made in excel :

Data for September 2016 were used  (as for example in above)  as in-put taking net number for Cnt 13, .... , Cnt 1 & resulting sum was divided by 15 .

Explanation : Cnt 13 means 14 Up & 1 Down, hence, its numeric value is 14/15 ; Cnt 1 means 8 Up & 7 Down,hence, its numeric value is 8/15 etc etc.

Let us share a chart of Nifty closing with Step Sum :

Incremental Step Sum is a function of  Net_Wt_C-15.

I had used the Cnt_Calculator for classic 2004-08 rise in Nifty . Here is the result :

Nifty : Time Frame 34 Days Cycle as on 14/09/2016.

Nifty index over  20 years period is best covered in a Chart of symmetric 34 days with proper MACD  (5,34,5) aka Elliot Wave Oscillator ; in this instant it is from 23/08/1996 to 14/09/2016. Chart speaks for itself :

Nifty TF 34 DaysCycle with Macd

With out trying to label waves, I had tried to identify "swing" points in the following table :

Let me recall a few observations ; point # 1 may be considered as "0" of  starting Wavewith lowest STEP SUM comprising  of 119 UP days with 154 DOWN days resulting in minus 35..
Next few days with more UP days than DOWN days resulted in recovery of SS to minus 2  with a "swing" up;
followed by more DOWN days than UP days as a result a "swing" down with SS value of minus 30.
These process continued  from one "swing" to next "swing" ; however, since December 2011
 MACD remained positive continously with values changing only.

Another point may be mentioned is that Macd (in time frame of Bi-Monthly ) had been positive since August 2009  in last 44 candles ; but for a breach over 2 periods,  Macd (in time frame of  34 Days Cycle) had been positive 18 periods, breach & then 33 periods . So we may say on long term basis Nifty still in grip of BULLS.

Step Sum Analysis : Nifty Update as on 31/08/2016

Concept of "STEP SUM" & "Count of 15" were discussed in my earlier blog  & not repeated :

http://lalitlk-lalit-lk.blogspot.in/2016/02/step-sum-analysis-of-nifty-as-on.html

I shall like to share a few observations afresh post reviews of all Data at my disposal.

Above covers Nifty over 14 years with Closing & relevant Step sum at monthly rest. Note the median value of Step sum (over the period) is 232.

Next is "Count of 15" ( i.e., consecutive 15 days's step sum duly added ) ; notice a large number of data are in the range of  "+9 to -9  " & their contributions to overall step sum literally small & insignificant.

Here I had explained the concept of "Count of 15" .

The following Table elaborates the details over 4 years from 01/01/2013 & over all period  :

Let us focus our attention over four years since 01/01/2013 :

Nifty Chart of 2013-6 with key observations.