BarroMetrics Views: The Tubbs Model
In the 1920’s Frank Tubbs wrote his much respected Tubbs’ Stock Market Correspondence Lessons. His model of price action remains as valid today as when he wrote it. Figure 1 shows the model. When trading, I start an analysis by asking:
- What is the trend of the trader’s timeframe?
- Is it likely to continue or change?
- If continuation, where are we in the Tubbs Model, in particular are we seeing as directional move or correction? If correction, is it a simple or complex structure?
- If change in trend, what change in trend pattern is the instrument exhibiting?
Now if the markets weren’t fractal, a trader’s life would be so much easier. The problem is they are. This means we need a tool to distinguish between timeframes – because a correction in the proximate higher timeframe usually means an attempted change in trend in its next lower timeframe. The principle is important in our trading to prevent whipsaws and to enter at optimum levels. Figure 2 shows the principle in action.
We see an uptrend in the AUDUSD from the October 2008 lows. I define an uptrend as a sequence of higher swing highs and higher swing lows. The red lines represent the 18-day swing (monthly trend) and the blue lines represent the 5-day swing (weekly trend) I have highlighted with green rectangles the corrections in the 5-day which broke their lows but resumed their uptrends. The rectangles labeled with numbers are those that turned the 18-day line down. Each ‘breach of lows’ constituted an 18-day buying opportunity.
We then see (Figure 3) the equivalent of the 13-week line turn down to .8065 from the .9400 high. But instead of breaking down, we see 13-week support (MIDAS, Fibo 38.2%, and 13-week corrective stats) hold. Had we sold because of the 18day change in trend, the area .8250 to 8065 was an important one. The break back above .8600 was a warning/signal of a 13-week resumption of the uptrend and for me acceptance above 50% of the 13-week range was the final pattern that signaled the resumption of the 13-week uptrend. This last pattern I read in Don Vodopich’s ‘Profit with Precision Timing’ (1984) [The book is out of print]. I still use the pattern today.
Throughout this up move, using the Tubbs Model and asking the questions I raised in the second paragraph would have helped you stay with the uptrend.
What’s the target for this move?
Figure 4 is a long-term chart of the AUDUSD from 1914. The chart suggests we are currently forming a sideways pattern between .9850 to .6074. The target for this move would be the Primary Sell Zone .9850 to .9378 with the probable target being between .9567 to .9739.
FIGURE 1 Tubbs Model
FIGURE 2 18-day and 5-day
FIGURE 3 13-week Equivalent
FIgure 4 Long-term AUDUSD
Figure 5 12-Month Swing