From a practical sense, I look at where we are within the S/R levels. Note though that multi-timeframe pivots make this more complicated (quarterly as a support and monthly as a resistance, for example), so I think that it's not as clear cut as John Person writes. Dis-aggregating back into one time frame doesn't necessarily help here either, as you could be anywhere within the S/R range depending upon the time frame chosen.
This is where I think the power of the weights of each time frame matters, so my work in this area has been trying to identify if there is truly an edge. Note that simply placing a limit order at the 3:1 buy point when a cluster pair is 1:2 S/R weighting isn't necessarily a sure-fire win strategy for major tracking indexes, as it seems to be quite random in performance. I'm still playing with this though, and in certain trending markets, it does seem to work nicely.
As to the 2nd part of your question, I've not looked at the constituent stocks of an index to see where they lie. Obviously, my indicator doesn't care if the input is the tracking index ETF or a stock, and there is nothing preventing looking at all the stocks and seeing which ones have the most favorable weighting structures. For example, if you take my "leaders universe" (
Attachment 12850), the best stocks going into the open on Tuesday are:
Note that these are sorted using the column all the way to the right in ASC order. This "bal" column is simply the ratio of the Resistance columns to the Support Columns.
Also note that for a 3:1 price R/R within the range between the lower support cluster and the upper 1st resistance cluster, the column "RR" provides you a map of where you are. Noet that many of these are between R2 and R3, and again, according to John Person, this is SHORTING territory, not going long territory in an up trend, so this is NOT an exact science.
What is compelling to me though is to watch stocks with a yearly support and monthly overhead resistance, and see that we're only a fraction of a percentage away from the optimal "3:1" R/R. Look at TGI, TSCO, and SSS: each is within 0.4%, 0.3%, or 1% respectively of an optimal 3:1 buy point. This suggests that we could place a limit order at the level indicated in "BuyPt" and be done with it.
Conversely, with the upper stocks listed, and knowing that they are between MR3 and MR2, we could place limit orders to Sell to Open at the "ShortPt" level indicated. GILD is 5.3% away from this, FAST is 3.0% away, etc. You get the idea.
All work in progress, so I would not do ANYTHING with these stocks. This is simply a thought experiment at this time.
Regards,
pgd