A shows the MEJT bars of the morning session.
Figure A: the morning session MEJT bars
The three five minute bars beginning at 12:10 Central time are labelled MEJT, MEJT+1 and MEJT+2. The MEJT bar is identified by an arrow in a circle.
The MEJT bar is also the default reference bar of the afternoon. If MEJT+1 has a higher high and a lower low than MEJT, it becomes the reference bar. If MEJT+2 has a higher high and lower low than both MEJT and MEJT+1, then it becomes the reference bar. If the sequence of these three bars indicates a move in the afternoon is not sustainable, then prices are forecast to return to or through the reference bar. The reference bar is identified by dashed lines at its high and low.
Figure B shows the MEJT bars of the afternoon session.
Figure B: the afternoon session MEJT bars
MEJT is different (very different) from other systems
In most systems a buy signal means one places an order to buy and a sell signal means one places an order to sell. That is not how MEJT signals work.
In the MEJT system a buy signal means that a price target at a higher price has been established. A sell signal means there is a price target at a lower price.
The target may be hit immediately (in MEJT terminology this means the target is hit before prices trade through the reference bar) or it may be delayed (in MEJT terminology this means the target is hit after prices trade through the reference bar). The target may be far away or close by. If the target is too close there may be a valid signal but no trade.
A critical feature of the system is that there is resistance just above higher targets and support just under lower targets. The resistance and support levels are not required to hold, but they frequently do.
This feature of the system makes it very different from other systems. To put it bluntly, if the system gives a buy signal and the market hits the higher target immediately (which is not rare) then the market is at a resistance area. One should be considering whether exiting a long or entering a short position is appropriate, even though a buy signal has just been given.
And there is another feature of the system that makes it unique: It works only for the S&P 500. I tried briefly, and without success, to use it for individual stocks and for other indices.
I also have tried, again without success, to use data providers other than TradeStation. I cannot speak for every data provider, but there are a number of free services available on the internet that have slightly different prices to those provided by TradeStation. When I tried to use those data the system did not work. For most forms of technical analysis a difference of a small fraction of a point means very little. In the MEJT system, a difference of as little as 0.01 points can change one’s prediction. For instance, it can determine whether or not the reference bar changes.
Summary
The MEJT system helps one to identify support and resistance areas while day trading the S&P 500. There is one signal given in the morning and another in the afternoon. Unlike other trading systems, one frequently takes no action when a signal is given but uses the information in conjunction with other forms of technical analysis to plan one’s trades.
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