Who this entry is for — Chapter 1's stock returns as the computational method's test bench: four half-span reversals, four predicted zones, four outcomes inside the zone. With the numbers, one by one.
Source: J. M. Hurst, The Profit Magic of Stock Transaction Timing, Prentice-Hall, 1970 — Chapter 6 (pp. 99–112, Figs. VI-1/VI-8). Measured trading cycle: 17–22 weeks, assumed 20 (half-span 10, full-span 20).
Prerequisites
Half-span and full-span — the method here put to the test four times in a row.
The four predictions
In plain words — Every time the 10-week average turns: extrapolation to the crossing, leg already done, symmetric target, ±10% zone. Then you watch what the stock does.
| # | The half-span… | Crossing | Leg done | Predicted zone | Outcome |
|---|---|---|---|---|---|
| 1 | bottoms | 41 | from 32: 9 points | 48–52 (target 50) | zone entered 8 weeks later, top at 48¾ |
| 2 | tops | 42 | from 48¾: 7 points | 33½–36½ (target 35) | zone 4 weeks later, low at 35⅛ |
| 3 | bottoms | 43¾ | from 35⅛: 8⅝ | 50⅝–54⅛ (target 52⅜) | price "rocketed" into the zone the next week, three weeks inside, top at 52⅞ |
| 4 | tops | 46¾ | from the top: 6⅛ | 39⅜–41⅞ (target 40⅝) | zone 2 weeks later, low at 41 |
Nor were the predictions academic: the first generates a "hold" (~9 more points of upside), the second a sell/sell-short at ~47–48, the third — after covering and re-buying at ~37, possible "any time within a five-week interval" — another hold to the zone, the fourth the comfort for the short opened at 51–52 while price had "refused to go down" for nine weeks.
The finest moment: the turn seen in advance
In plain words — After the 32⅛ low the chart was ambiguous: a lower high, the channel apparently still down. Not the full-span: it was rising. And if the long sum rises, the channel has bottomed.
This is where the computational method "sees" before the envelopes: the 48¾ cycle high was lower than the preceding 49¾ — suspicion of a still-bearish channel. But the 20-week average was "definitely up": the sum of everything longer than 20 weeks pointed up, so the 20-week channel had to have bottomed at the 32⅛ low and was curving upward. Envelope analysis alone could say so only when the next top was confirmed at 52⅞ — "a full three weeks later".
And when the 51–52 short seemed not to pay, the inverse closed the circle: the 12.7-week cycle and the 21.7-week trading cycle both heading for lows → estimate 40½ against the half-span's 40⅝. Actual low: 41, the next week.
Warning — The book itself tempers expectations: "it will not always provide as much information as in this example". The timing estimate in particular is rough (5 weeks predicted against 9 observed, in the worst case). The order stands: graphics first, the computational ruler as confirmation — and Chapter 5's whole defensive armoury always on the field.
Summary card
| Number | Value |
|---|---|
| Trading cycle | 17–22 weeks → assumed 20 |
| Averages | Half-span 10 · full-span 20 (smoothing a 12-week remnant) |
| Correct predictions | 4 of 4 inside the ±10% zone |
| Misses on target | 48¾ vs 50 · 35⅛ vs 35 · 52⅞ vs 52⅜ · 41 vs 40⅝ |
| The added value | The channel turn seen 3 weeks before the envelopes |
Links
- Half-span and full-span — the method
- Inverse moving average — the 40½ confirmation
- Computational methods — Chapter 6's framework
- Operating philosophy — where Alloys first appeared (Ch. 1)
- Hurst tradition — chapter index