Click on the chart to enlarge it.
As we move forward in time on the monthly chart, notice the NMC opposite Cross Kiss ZeroHit sell setup that occurred in early 1998. This setup is a little later into the move than we would have liked but still occurred in plenty of time to capture almost 2/3rds of the remaining bear market.
Prices had crossed below both NMA and Fast NMA and were meeting Fast NMA resistance at the time of the sell setup, again an added reliability component of the ZeroHit. Also, NMS (bottom pane) was well below zero and below both its moving averages, with all of them showing downside momentum.
This setup set the stage for a further three+ year decline, with additional NMC Add On opportunities developing from mid-1998 through late 1999 (shown as thin arrows in the NMC pane). Although I won't go into a detailed explanation of each of them, one produced a losing whipsaw, which might have been avoided at a lower time frame analysis.
The standard Ocean rules (taught at the Ocean Workshop) insured that none of the remaining setups resulted in an entry until the high (arrow above prices) in mid-1999, where NMA resistance once again repelled prices.
Two additional Add On short trades developed during the ensuing down draft, one in December 1999 and the other in December 2000, both marked with arrows above prices. Both of these proved to be excellent places to add to current positions or to initiate new positions.
Note the magenta arrows shown in the NMC and NMC2 panes (early 2001) marking the locations where the oscillators finally violated their lower boundaries (dashed black lines), suggesting that the move had become over-extended. In fact, that proved to be one bar prior to the precise bottom that has set the stage for the advance that we will now analyze.
(This is the end of Part 2. Go to Part 3.)
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