Neural Nets Neural nets are constantly unfolding in countless forms in the markets. In short, a neural net is a "tell." The markets are always "telling" us something. Anything which can "foretell" future pricing behavior is a neural net. System traders are continually designing neural net programs on their computers. A neural net program, though similar, is not be confused with simple pattern recognition programs. There is an awful lot more input that goes into a neural net. In the example shown above of the Nasdaq market following the April 4th 2001 low, it is not simply an inverted head and shoulders. Take a closer look at the chart. Note how the inverted head and shoulders was preceded by a gap down. That gap down was then followed by a symmetrical time and price move to form the inverted head. Even the left shoulder and armpits unfolded at the exact same times of day. Guess what happened the day after this neural net setup, Greenspan did a 4th surprise rate cut on April 18th 2001. Now, there was no way to anticipate the surprise rate cut, but the neural net did allow us to anticipate that a rally would begin with a gap up opening on the next trading day. No, neural nets are much more sophisticated than simple pattern recognition, and when spotted are a great aid. Another neural net example that is setting up for July 2001 is in the 30 year Treasury market. In this instance, the May - July 2001 pattern has been mirroring the triangular pattern of Sept - Nov 2000. This potentially foretells that a pretty sizeable rally may be in the works off a secondary low in early July 2001.
	2001 Bentron Systems