Click on the chart to enlarge it.
Let's begin the current trade analysis by focusing on the NMC2 cross kiss zero hit in mid-2002 (labeled Setup Being Studied).
NMC and NMC2 had been below zero for 5 years and then each of them crossed from below zero to above it. Immediately thereafter NMC2 returned to zero, forming a Cross Kiss ZeroHit.
Note that NMC did a one bar zero cross back below zero before finally generating its own pure ZeroHit signal. As we've shown elsewhere, this is predictable behavior from NMC when NMC2 (it's companion) is generating a zero hit, and generates a perfectly valid signal.
At the time of the NMC2 setup prices had broken above the Fast NMA (6 months earlier) and were finding support back at it. Additionally, NMS (bottom pane) had crossed above zero as well as its NMA and Fast NMA, indicating that major support could be expected.
Subtle in appearance but profound in implication, notice the contraction of the NMA Bands that's taking place throughout 2002.
As mentioned elsewhere, one of the tools in the Ocean software library includes an indicator that quantifies the degree of NMA Band Contraction. Though not shown to save space, that tool tells us that the NMA Bands have contracted to their lowest level since 1994, a full decade ago! So if we get a signal we anticipate a BIG event.
When that information is added to the mix of a zero cross of NMC and NMC2 for the first time in five years and then generating a Cross Kiss ZeroHit buy setup, it all adds up to a major bull market being born!
Now that we understand the significance taking place in the monthly chart, let's dial down to a lower time frame to see if we can get an even more precise picture:
(This is the end of Part 3. Go to Part 4.)
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