TD Sequential

What is it for?
Applying Tom DeMark’s TD Sequential serves the purpose of identifying a price point where an uptrend or a downtrend exhausts itself and reverses.
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What are the main components of TD Sequential?
TD Sequential has two parts – TD Setup and TD Countdown. The first phase of TD Sequential starts with a TD Setup and is completed with a 9 count. When the 9 count is completed, it is at that point, a price pause, price pullback, or reversal is likely. It is also at that point where TD Sequential starts the second phase with TD Countdown and is completed with a 13 count. When the 13 count is recorded, it is at that point, a price pause, price pullback, or a reversal is likely.
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Just 9 and 13. Is it really that simple?
Absolutely not. Other DeMark indicators and other technical analysis indicators should align with TD Sequential’s ability to pinpoint potential reversals. For example, if a leading indicator identifies a condition for a market reversal is likely in the near future, the job of TD Sequential is to provide the “when” for the reversal is likely to take place.
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What is TD Buy Setup, TD Sell Setup, TD Buy Countdown, and TD Sell Countdown?
TD Buy Setup is the name for a TD Setup when the DeMark counts are recorded as prices are trending lower. Conversely, TD Sell Setup is the name for a TD Setup when the DeMark counts are recorded as prices are trending higher. The same goes for TD Countdown. A TD Buy Countdown is the name for TD Countdown when the DeMark counts are recorded as prices are trending lower and a TD Sell Countdown is the name of TD Countdown when the DeMark counts are trending higher.
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Are the rules of TD Sequential flexible?
Yes. There are many variations floating out there and modifications and filters can be experimented with.
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Below are four visual examples in describing the components of TD Sequential.
TD Buy Setup for Ebay (EBAY)
TD Buy Countdown for Zynga (ZNGA)
TD Sell Setup for Netflix (NFLX)
TD Sell Countdown for Network Appliance (NTAP)
The written explanation of each example is numbered in order.
Screen Shot 2013-04-07 at 8.39.04 PM Screen Shot 2013-04-07 at 8.46.07 PM Screen Shot 2013-04-07 at 8.48.37 PM Screen Shot 2013-04-07 at 8.49.16 PM

46 Responses to TD Sequential

  1. Jonnie Lappen says:

    hey art, i like your blog. programmer here in sunny AZ, would you be interested in a discussion regarding TD Sequential? thank you for posting the charts, it’s probably the only way i can verify my outputs without access to a terminal!

  2. Aspecialprice says:

    Very interesting blog. I am interested in Market timing thank you for your sharing

  3. kneedeepin says:

    Can you tell me what time frames you generally use for your charts?

    • Art says:

      I use them all – 5, 15, 30, 60 ( aggregated and non -aggregated), 120, 4hr, daily, 2day, 3day, weekly, monthly. It’s a bit of an art to to manage the timeframe continuity but it works.

  4. billfarst@gmail.com says:

    I have the TOS platform but couldnt find the TD Sequential study? It wasnt in the list of studies?

  5. Pete Karas says:

    I was hoping that you might help me to better understand the nuances of the Demark SET UPS and COUNTDOWNS. It seems that in some cases the TD BUY or SELL Set up 9 count can stand on its own in terms of being able to predict a directional change in the price of a security. In other instances it seems to be immediately followed by a TD BUY or SELL COUNTDOWN 13 count. In this instance the 9 count seems to have no predictive quality to it unless it is followed by the 13 count. What is the theory or logic that explains what I describe above? A second question that I have is, would it be more useful or practical to wait for a circumstance where the 9 count is followed by the 13 count before taking any investment action?

    I, of course, understand that this is not simply an exercise in counting to 9 and 13. I understand that other market conditions need to be present to support an investment action.

    New to the Demark methodology.
    Pete

    • Art says:

      I know exactly what you are asking. Hope I can explain it. The 9 count TD Setup is the momentum component of TD Sequential and the 13 count TD Countdown is the trending component. DeMark has TD Setup as the first component and uses other qualifiers to help determine if TD Countdown is probable or if a reversal will occur upon a completed TD Setup. It doesn’t stop there. After a completed 13 count TD Countdown, another TD Setup can be renewed. DeMark calls this ‘recycling’. So while the forces are greater for a reversal upon a recorded 13 count TD Countdown, they can also consolidate and ‘recycle’ into a new count. The main takeaway is 9 and 13 counts stand out as areas of reversals. This is what DeMark observed when he developed TD Sequential.

      You are correct in that simply following a 9 and a 13 is not the catch-all answer. My approach is to assume something will happen when a 9 count is recorded. DeMark wrote that it is typical for a reversal, consolidation, or a “price hiccup” will occur at the recorded 9 count. Therefore, I use a 9 count as a period of evaluation and try to determine if a 13 count will ensue or a possible reversal is at hand. Utilizing other DeMark indicators like TDST is a tremendous help. Other conventional analysis can also help determine the possibilities if TD Setup will enter into TD Countdown. (e.g., if a stock breaks out of a long base with a bar 1 gap, I would assign a pretty high probability that a completed TD Setup will go into TD Countdown.) Finalized 13 counts should also be evaluated. All out reversals are not guaranteed there and counts can recycle into new counts.

      • Pete Karas says:

        Hi Art,
        Thank you for resonding to my questions. And thank you for your very eloquent answers and commentary.

        Pete

      • Dave Seremek says:

        Hi Art:

        Is your TDST a custom code of yours?

      • Art says:

        TDST is DeMark’s. I do have a code for it but it’s not palatable to show on the charts I present. There would be horizontal lines everywhere. Therefore I draw them in when I need to emphasize support or resistance.

  6. taki says:

    Hi Art, I started using the TD sequential indicator on TOS, love your website. Can you tell me how to get the Purple TD combo sell to show up on the TOS platform?

    Do you know any tools that can scan the TS sequentials?
    Thanks so much!
    Taki

    • Art says:

      Hi Taki,

      Thanks for reading. Unfortunately, there are no other DeMark indicators other than the “Sequence Counter” study in TOS.

      The same for scans. There are no predefined filters for DeMark.

  7. taki says:

    Art,

    Can you explain how you come up the price flipping for neutral, bullish or bearish. I am trying to come up more objective ways to look at the market, always curious about how you come up those prices?

    • Art says:

      They mostly come from bullish or bearish price flips. For example on a bearish price flip: Count 4 bars back from the current bar and if the current bar is greater than the previous 4th bar, then there is no price flip. But if the next bar records a close lower than the previous 4th bar, then a bearish price flip becomes official. You can see the stock examples above to get an idea of price flips.

      I often use these as a basis to gauge a momentum turn, but I sometimes defer them if market conditions dictate. That’s my framework, but setting your own rules based on your timeframe and tolerances would be more beneficial.

  8. Dave Seremek says:

    Very interesting blog. What software packages do you recommend for the TD Sequential?

  9. chartbuster says:

    I have a question to the S&P daily chart. The candle on 14.10. fullfils the specifications for countdown, combo and set up but has not been counted by your software but for what reason?

    • Art says:

      Can you elaborate? There was a miscue on TD Buy Setup on October 14th and now shows a bar 6. But when I did a manual count, everything checks out. On October 14th, standard countdown checks out at 6 and using version 1 of TD Combo Buy, bar 7 (starting from September 22) was recorded on October 13th.

      • chartbuster says:

        Yes, I was partial wrong concerning TD combo buy because as you said the candle at 14.10. shows a close higher than the close of the previous candle. But as you have corrected the candle has to be counted as a set up candle.
        But what I further mean is the candle from 08.10. The candle shows a close higher than the close of the candle four days earlier that means the candle is indeed a flip candle. Therefore it should not be counted as day 2 of a buy set up.
        A buy set up could have been started from 09.10. only. But this buy set up started from 09.10. has been negated by the Friday candle. That means there should be no buy set up running actually.
        You can see the count within the chart below.

        http://www.pic-upload.de/view-24963896/sp1.png.html

      • Art says:

        Ah yes! I see it now. Because Friday price flipped bullish, that TD Buy Setup has disappeared and I won’t be able to figure out why it had an erroneous count. The TD Setup code had been reliable so I’m surprised this happened. Appreciate the head’s up – thanks!

  10. Won Yang says:

    hey Art, in the latest TOS, how do you see these studies?

  11. yogart says:

    I was wondering if I could do Demark studies in ToS. You mentioned that it was sequence counter study in 2013? I couldn’t find it.

  12. Victor says:

    Hi Art, I was wondering if the price flip does work if a bar that records the same price as 4 candle sticks earlier is immediately followed by a candle that is higher / lower than the 4 candle sticks earlier. To put it in simple words, a negative to positive means bullish price flips and for bearish price flips. What about from a neutral position (same price compared to 4 candle sticks earlier) to positive? Can we treat that as a bullish price flip?

    • Art says:

      Good question. When looking at price flips, there is a lot of context. ‘Same price’ or neutral positions should be treated in the same manner as ‘different prices’. But more importantly, it’s the context of the overall trend. Some common scenarios that would be actionable would be a bullish price that is also a bullish engulfing candlestick pattern or bearish price flip right after a TD Sell Setup @9 just under the designated TDST Resistance. In other words, price flips should be supported with other bullish or bearish indications. I hope I answered your question.

      • Victor says:

        Thank you very much for your reply Art, very useful indeed. I’m still studying the rest of the TD studies from Jason Perl’s book, the 9-13-9 setup is actually very interesting. On my practical application of TD method however I found out sometimes even after the TD countdown of 13, a price flip may not be enough to determine a buy or sell signal, are there any ways to filter the false price flips that can sometimes very annoyingly occur?

      • Art says:

        You are correct to say a price flip is not enough to determine a buy or sell signal. As for filtering, you may experiment of what works for you. For my style, if I made a decision to trade a ’13’, then I would buy/sell based on a price flip. But I also know I may have to endure alternating price flips before the trade works. I also use TDST levels for reference and other timeframes. I also use both TD Countdown in conjunction with TD Combos. One ’13’ may not give the signal, but the other ’13’ can. As long as the trade stays within your stop parameters, whether your own or Perl’s, then all is good.

      • Victor says:

        Many thanks for your sharing Art, really appreciate your reply!

    • Tony D. says:

      Victor & Art: Vic made mention of the 9-13-9 setup. Are you able to confirm that this setup recently completed (Jan. 27, 2017) with respect to RMR? I’m anticipating a price reversal to the downside. As a neophyte, I’m leaning on more experienced traders to confirm my understanding of TD indicators and thank you for any help you may provide.

      • Art says:

        I wouldn’t call that a 9/13/9 since the selloff from the 9/13 was significant. I would rather treat the new TD Sell Setup as a new one.

      • Tony D. says:

        Good point, Art. That was about a 9% selloff after the completed TD Countdown and then was the ideal time to act. Instead I waited, shorted at the completion of the recent TD Sell Setup but covered today at about breakeven due to fear around earnings announcement tomorrow. I will continue to monitor this one as it once again enters another Countdown phase. Thanks.

  13. Haps says:

    Which will be the suitable timeframes for Intraday ?

    • Art says:

      If your primary chart is the hourly, use that, and use the smaller timeframes such as the 10 & 15 min and larger timeframes such as 2 hr, 4 hr, and daily as secondary charts. Use them to help support movement in your primary chart. It’s been my preferred method.

  14. Tony D. says:

    First, I’m new to and interested in DeMark’s methodology and therefore excited to find you. The 4 charts that you have posted above may be the most user friendly visuals of TD Sequential available online. Thank you for that. I found them very helpful.
    I’ve been reading DeMark Indicators by J. Perl and am confused by Figure 1.6 (page 9). Specifically why the TDST resistance level is identified at what appears to be the close on the trading day *before* the previous (buy) setup in the opposite direction (almost $26) rather than the absolute high during the previous completed (buy) setup (which would be bar 1 @ $25.40). Should you not have a copy readily available, I believe it can be accessed in .pdf format at the link below.
    http://www.forexfactory.com/attachment.php?attachmentid=910547&d=1330688234

    • Art says:

      Thanks! What you see in Perl’s book is not a typo. TDST utilizes the ‘true high’. Therefore, in the event of a gap down, the previous day close of 26 is considered part of the TDST calculation. Since the high of the remaining sequence of 9 counts is 25.40, the true high is 26, and becomes the marker where TDST should be drawn. It makes sense too since gaps are often filled, and TDST takes that into account.

      • Tony D. says:

        Art: Thanks for pointing out the requirement to use the previous (to bar 1) day close as the true high, hence resistance level, in the event of a gap down at the open as seen in the example provided. Somehow I missed that. I agree it does make sense. Best to you.

  15. Nifty Boy says:

    Hi,
    Your diagrams/charts are really helpful in grasping the essentials, thanks for them.
    Do we have any stats on objective rule based performance(winrate etc) of this system for some scrips/indices over a period.
    Of course such studies have limited value but can be useful pointers.
    Thanks
    🙂

    • Art says:

      TD Sequential is probably more of a tool than a system. However, I’m sure someone did some backtesting in some format. If you happen to run into one, do forward it to me. Thanks.

  16. Nifty Boy says:

    Sure, will do 🙂
    TD mentions many more tools. Some originals some tweaked regulars.
    Have you looked at and written about them somewhere.
    Thanks.

    • Art says:

      I’ve seen them on the Bloomberg terminal, but I mostly listen to his media interviews for new developments. I’m not sure how he came up with 2268-2275 estimate on the SPX for example.

  17. Nifty Boy says:

    Came across these, looks like some sort of test etc of TD-Seq. I am unable to decipher 😦
    If can be of some use.
    Thanks

    http://www.oxfordstrat.com/trading-strategies/td-sequential-1/
    https://www.forex-tsd.com/forum/debates-discussions/4180-td-sequential/page2

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