MESA Spectrum
For Ehlers
The MESA Spectrum study has two parts: a colorful spectrum contour display, in
the main study window, and a small line graph in a subwindow at the left end
of the main window.
The subwindow graphs wavelength in bars on the horizontal axis against
relative amplitude (in negative decibels or a related unit) on the vertical axis, at
the current position of the prediction cursor. The graph shows the raw MESA
cycle measurements over 30 bars, the same measurements used to generate the
dominant-cycle wavelength and the standard prediction, calculated from the current
position of the cursor.
The line graph is like a cross-section or
Note that the highest point on the line graph does not always correspond to
the dominant cycle as shown in the spectrum contour
The spectrum contour plot itself shows the same relative strengths of the
different cyclic components shown in the line graph, but represents them with the
color scale that appears on the left side of the line graph, and charts them
against wavelength on the vertical axis. So the yellow parts of the spectrum
(using the default color scheme) correspond to the strongest cyclic components,
while the light gray parts correspond to the weakest color-coded ones. The green
line in the spectrum indicates the dominant cycle
As noted above, to read the current dominant cycle
Next look at the spectrum in the main study window. An ideal indication of
cyclic activity would be a horizontal, straight green line with no other colors.
This would correspond to a single, sharp peak in the line graph subwindow, and
its meaning would be a persistently dominant cycle of unchanging wavelength,
with no cyclic components of significant strength at any other wavelength.
Bright colors far away from the dominant cycle line, or high secondary peaks or
plateaus in the line graph, correspond to significant cyclic components of
multiple wavelengths, which suggests that the dominant cycle may not be dominant for
very long, and therefore may not be worth trying to trade on.
In practice, a perfect indication is extremely unlikely. What you do want to
see for a tradable cycle is a reasonably horizontal, preferably straight
dominant-cycle line, with little color anywhere except right next to the green line.
You are very unlikely to see this combination of features across the whole
spectrum; but you do want to see it for a distance corresponding to at least half
of the wavelength of the dominant cycle. So, for example, if the dominant cycle
Because the spectrum contains so much information, it is difficult to specify
exactly what the minimum requirement for a positive indication is. However,
there are some rules of thumb for each type of information presented by the
spectrum display. In general, bright colors any distance away from the
dominant-cycle line are worse than dark colors; more color showing is worse than less color
showing; and more distance from the dominant cycle line is worse than less
distance.
Finally, particular features in the MESA Spectrum studies can alert you to the
onset of a trending mode in the market, and the end of a cycling mode. The
clearest sign of such a shift can be seen in the subwindow graph. If the line
graph slopes upward to the top of the graph on the right side, this indicates
that a trend is developing. When a trend is developing, when you move the main
chart cursor from the left toward the current bar, the right side of the graph
rises up to form such a sloping line. This phenomenon is called a
Determining Questions for MESA Spectrum
1. What is the dominant cycle length?
2. Over a range corresponding to at least half of the dominant cycle length,
does the spectrum display show a fairly horizontal, preferably straight line
with little or no color, especially bright color, far away from the line? If yes,
this is a positive indication. If no, try looking at another time- or
tick-base or another instrument, or wait for more favorable indications.
3. Alternatively, does the line graph in the subwindow show a sharp peak with
the line near zero elsewhere? Does this pattern hold for a number of bars to
the left of the current bar equal to or greater than half of the dominant cycle
4. Does the graph show a line sloping up to the left, to the top of the graph?
If you move the main cursor toward the current bar, do you see the right side
of the graph rise to form such an upward-sloping line? If yes, this is a
negative sign for a cyclic trading opportunity, but it is a positive sign that a
trend is beginning and that trend-following trading opportunities may present
themselves.