com Traders world January/February 2011 ISSUE #48 Being Accountable Dynamic Trading Workshop Catching Significant Trends Vantage Point Review The Trading Strategies Time Factor Points of Force Notes on Day Trading from Novy Principles of Market Flow Minimizing Financial Risk What Really Matters Most About Markets 17-Year Cycle & Interest Rates Introduction to Roger Babson’s Action Reaction Trading Technique The Gartley Trading Book Review Calibrating Gann’s Planetary Lines
Traders World MagazineSonata Trading ComputersTraders World Online Expos
Traders World Magazine Digital Edition is now 100% digital. It can be read on our computer, and Ipad or any device the reads pdf files. The benefits of this the digital medium is already very clear. And those benefits will continue to multiply in the coming months as digital evolves. With Traders World Digital Magazine, subscribers will continue to receive the same quality reviews and articles from expert traders that you have come to expect from us in the last 20 years. Our coverage will not alter, only the format, which offers these benefits:
1) It arrives in your e-mail when it is released automatically.
2) It’s in a completely portable pdf document. Once you’ve downloaded the issue (which takes a matter of seconds) you can view it anywhere on your computer.
3) It looks like the Traders World Magazine you’ve known. The format is the same, only tweaked for the digital experience.
I think you will enjoy this issue.Larry Jacobs - Editor
Editor-in-Chief Larry Jacobs - Winner of 2001 World Cup Championship of Stock TradingOffice 2508 W. Grayrock Dr., Springfield, MO 65810Contact Information417-882-9697,800-288-4266Email: [email protected]
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From the time we are born, most of us learn that we must be accountable for our actions. First it is to our families and then later to our teachers, preachers, coaches,
and society. Since traders are already conditioned to be accountable, they should make use of this tool in reaching for trading mastery.
Sweeping it under the carpetTraders like to think that they only need to be accountable to themselves in order to get the best out of their trading. But it has been my experience that most traders fail miserably at this task. So why are traders not able to do this?
They do not want to:• Be wrong• Admit that they are changing their rules• Face up to the fact that they do not
have good rules• Realize that they need psychological
help• Realize that they do not have what it
takesIf you are committed to doing whatever
it takes to follow your rules to reach a higher level of profit, you should consider asking someone to help you with this task if you are not doing a good job of it yourself.
Who could take on the role of a trader’s accountability?• A significant other• A friend• A trading buddy• A teacher• A coach
What would a person need to help you be more accountable?• A clearly defined set of rules from you• Your commitment to telling the truth to
them• An accounting of the trades you took• Why you think the trades you took were
good opportunities• The risk/reward ratios before the trade• The money management procedure
you followed• Whether or not you followed your rules• The lessons you learned• And at the four month periodical review,
the changes you would make and why
Reward or punishment There should be a clearly defined
predetermined punishment or reward that both of you agree upon for not following your rules. Here are some examples of punishments or rewards to consider.
Punishment• No trading the rest of the day• Walk around the block before taking
the next trade• Twenty push ups• Limit the size of your trades for the rest
of the week
Rewards• Ten percent of every good trade will go
into a rewards account for you• A food or entertainment treat• Time with a special friend• Any - my favorite, a massage
ConclusionWhen you make yourself accountable in trading to someone else, you activate that part of you that has already been programmed for accountability. In doing this you will be more accountable to yourself.ADRIENNE TOGHRAIE, a Trader’s Coach, is an internationally recognized authority in the field of human development for the financial community. Her 11 books on the psychology of trading including, The Winning Edge1-4 and Traders’ Secrets have been highly praised by financial magazines. Adrienne’s public seminars and private counseling have achieved a wide level of recognition and popularity, as well as her television appearances and keynote addresses at major industry conferences.
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In the past few years, trading courses have proliferated for almost any type of trading. Some have taken advantage of new technologies to deliver their educational material,
others have been little more than Power Point presentations with voice over. The Dynamic Trading Multimedia E-Learning Workshop takes advantage of E-learning techniques to deliver a comprehensive learning experience unlike most other self-study trading courses.
Robert Miner has been educating traders since the mid-1980’s. He was one of the presenters at our first conferences in 1989 sponsored by Gann-Elliott Trader Magazine, the predecessor to Traders World Magazine. At that conference over twenty years ago, he presented his W. D. Gann Home Study Trading Course which was the first independent study course for traders that we are aware of. So, Miner does have a long and successful history producing educational materials for traders.
Miner’s credentials include publishing an advisory service since the mid-1980’s, writing two of the best selling trading books of all time (Dynamic Trading and High Probability Trading Strategies), winning first place in the Robbins World Cup Championship of Futures Trading, being named Guru of the Year by the Super Traders Almanac, speaking at many of
the trading conferences for over 20 years beginning with the Computrac conferences over 20 years ago and more.
Miner calls his latest self-study workshop the culmination of over twenty years of real world trading experience and trading education. He has taken advantage of contemporary, self-study learning techniques with the Dynamic Trading Multimedia E-Learning Workshop. Following the introduction sections where Miner discusses trading as a business, trading verses forecasting and more, he begins to focus on each of the three primary areas of technical analysis that are a part of a complete trading plan he teaches including pattern, price and indicator strategies.
Act now for your $400 Traders World discount (through January only)
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Miner describes that his trading approach is to identify conditions with a high probability outcome and acceptable capital exposure. He teaches three technical areas to identify the trade setups including simple pattern recognition, price reversal zones and multiple time frame momentum strategies. None of these technical areas should be foreign to traders but Miner does approach them from unique and more simplified perspectives than we usually are taught in other trading courses.
As one of the leading Gann, Elliott and Fibonacci traders and trading educations for more than twenty years, we would expect the course to include complete price and pattern analysis strategies. Miner delivers with a quick and simplified trend and counter trend pattern approach derived from Elliott wave and price reversal zone strategies, as he describes, go beyond simple Fibonacci retracements.
A unique feature of his trading plan that we have not seen implemented in other trading courses is the Multiple-Time-Frame-Momentum-Reversal strategy which is the primary filter taught to identify which markets have the best trading opportunity regardless of the time frame traded.
But, the heart and soul of the workshop are the last two major sections, Practical Trade Strategies and Trading The Plan. In these major sections, The Dynamic Trading Multimedia E-Learning Workshop teaches the student a complete trading plan from objective entry strategies to how to manage the trade to the exit. This is where the bar-by-bar screen recordings are put to good use as Miner challenges the student to identify what to do (or not do) as each new bar is added to the chart. This is as close to a live trading and educational
experience that is possible. Each section is divided into 5-10
relatively short modules. Each module includes background instruction, step-by-step and bar-by-bar details of the specific technical or trading strategy followed by a summary and short quiz. Each module also includes a PDF file of the summary of the key strategies taught in the module so the student will compile a complete quick reference guide of the entire workshop and trading plan.
The Dynamic Trading Multimedia E-Learning Workshop is not a quick study. Miner states it should take a student about 30 hours to complete the course including all of the study materials and the quizzes. We don’t believe this is too much time to learn a comprehensive trading plan from a 20+ year veteran. Miner warns the students to study the workshop in the order the sections were designed because each module builds on the strategies taught in the prior modules. After the entire course is complete, the student can then go back to specific sections to review at any time.
I think The Dynamic Trading Multimedia E-Learning Workshop is an exceptional course for any trader and any time frame.
To view a video of the trade strategies taught in the Dynamic Trading Multimedia E-Learning Workshop and a special offer for Traders World Magazine, CLICK HERE.(goes to (http://www.dynamictraders.com/dtw-tw-1201.html)
• A true multimedia learning experience.• Video, bar-by-bar screen recordings, support material and quizzes.• Incorporates the latest in accelerated learning techniques for total comprehensive.• A far more comprehensive learning experience than possible with any live trading workshop.• Learn a complete trading plan from entry to exit for any market and any time frame.
Act now for your $400 Traders World discount (through January only)
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Through
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by Robert Miner, the 20-year trading veteran who developed the practical application of Fibonacci price analysis and multiple time frame momentum strategies and much more.
Most money in trading is made from catching a significant trend. Most money lost in trading occurs by missing or being on the wrong side of trends. So the real question is “How do we protect and preserve our trading capital as we position ourselves to catch the next profitable trend?
Significant trends are known to emerge from market consolidations and it is during these consolidations that traders experience “whip-sawing” leading to psychological trauma that can cause havoc with a trader’s life, which can cause the trader to miss the trend altogether!
It is said that markets trend approximately 35% of the time, meaning that 65% of the time they are trend-less. Consolidations are known to occur before many significant market trends and to be a profitable trader you must learn how to exploit these trends while not losing your money when the market is trend-less.
Consolidations: A Textbook DefinitionLet’s define a market consolidation. A dictionary definition of a market is “the world of commercial activity where goods and services are bought and sold; without competition there would be no market”. A dictionary definition of a consolidation is “something that has consolidated into a compact mass; combining into a solid mass; an occurrence that results in things being united”. Reading these two text book definitions leads one to believe that
a market consolidation is one where the competition between buyers and sellers unite to form a compact mass. A trader’s definition of a market consolidation is one where prices have remained range bound within a narrow price channel.
Is market consolidation an area where little or no new information has come into the market to cause a greater disagreement of value or perceived value which would move prices? And do trends occur because the value or perceived value is changing so much that the price must change to represent the new value? Answering yes to these questions leads to the conclusion that market consolidations are areas where no new value perceptions are being generated. Thus, prices remain “tight” or range bound.
The Nature or Psychology Of Market ConsolidationsConsolidations by their very nature can not last too long since they become increasingly unstable with time. Most traders view consolidations as a stabilization of price, but consolidations actually become increasing unstable with time. In fact the longer a market remains consolidated, the more unstable it becomes.
Market consolidations have their own cycles. During their initial formation traders are undecided as to value and the price oscillates. If this condition continues, traders’ perceptions of this asset’s value remain the same until new information enters the market to change perceptions.
Catching Significant Trends Equals Big Profits!
By Bennett McDowell, President, TradersCoach.com
WWW.TRADERSWORLD.COM January/February 2011 15 14 WWW.TRADERSWORLD.COM January/February 2011 TRADERSWORLD.COM Fall 2008 / Early Winter 2009 5
As a trading coach and financial advisor, Bennett McDowell has used his own proprietary trading system--Applied Reality Trading or ART to enhance the performance of his clients’ portfolios. Now McDowell outlines the unique benefits of his system and makes the case for trading the reality--not the fantasy--of financial markets. Readers will discover the importance of simplicity in a trading approach; how to develop “The Trader’s Mindset;” how to use ART(r) technical analysis software; and much more. The ART of Trading will enlighten readers in how to use reality to enrich both their financial portfolio and their own financial psychology.
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trader to unnecessary risk, and possibly destroy their account. A few essential money management techniques can make a big difference to the bottom line. In A Trader’s Money Management System, author Bennett McDowell introduces readers to the most important elements of money management in trading. Topics covered throughout this
a trading system; how to calculate the best trade size on every trade; how to analyze profit/loss results and identify weaknesses in a strategy; plus much more. Along the way, McDowell also addresses
Until new information arrives, the consolidation becomes narrower and narrower to a point where the consolidation is now very unstable and this is where new trends are born.
The longer or more mature the consolidation is, the larger the trend usually is as well. Lengthy or mature consolidated markets are so unstable that even just a whisper of new information coming into a consolidated market can make it move, but a shout of information can make it trend fast!
Once you spot a mature consolidation, your trading approach should be to bracket the upper and lower part of the consolidation. This helps to avoid unprofitable “whip-sawing” trades within the consolidation channel caused by insignificant trading reactions from minor market information. It is important that
your trading approach not react to every “whisper” of information that the market ultimately finds meaningless.
By bracketing your trade entries above and below the consolidation channel, you automatically eliminate unnecessary losing trades. If you are an aggressive trader who welcomes the additional risk of a few losing trades within the channel to achieve a superior trade entry price, then you should wait for the mature consolidation to get very tight and thus very unstable.
This will increase your odds of successfully timing the next significant trend and therefore reward your aggressive entry approach. Just as important as the length or time of the consolidation is the low Average True Range or volatility of prices in recognizing the mature end of the consolidation before a significant new tend emerges. It is important to note that not all significant trends emerge only
from market consolidations. But if you recognize a consolidation in the market, the potential is great for a significant trend to emerge if the consolidation has become so consolidated it is now also become unstable.
Finding & Monitoring Market ConsolidationsThe first step is to find markets that are in consolidation so you can be ready to trade the breakout when it occurs. To find these consolidated markets, it will be best to scan for markets will low volatility and narrow price movement. Look for a consolidation with at least 20 price bars before considering it for a potential trade based on “bracketing the high and low of the channel.
Since markets can consolidate for weeks and even months, you will want to monitor several markets simultaneously while they are in consolidation, this way you do not have to wait a long time before entering a trade.
Active traders can use this technique to scan for trade setups, and with 9,000 + stocks the trader can be quite active! If you are a day trader, you can scan intraday charts looking for consolidations as well.
Trading Market ConsolidationsOnce you have identified the consolidation of at least 20 price bars, the next thing to do is to draw a line on the top and the bottom of the consolidation channel effectively “bracketing” the consolidation Then place your long trade entries one-tick above the upper consolidation band, and your short trade entry one-tick below the lower consolidation band.
Where To Place Your Stops Once the market breaks and begins to trend, stops can be adjusted according to market activity, with the initial stop-loss being placed on the opposite side of the consolidation channel in relation to which way the market started to trend.
Trade Example Combining BracketingThe stock chart below illustrates a market consolidation in the Nortel’s stock with upper and lower lines drawn in that bracket the consolidation. Trade entries are placed above and below the consolidation. Also note how prices become even more compressed towards the end of the consolidation just before this market begins to trend. This occurs often since markets usually spring from compressed price consolidation.
When the market finally breaks above the channel you should enter your trade one-tick above the upper green colored band or line drawn on the chart above. Your initial stop-loss is placed one-tick under the lower band and adjusted upward as market activity warrants.
ConclusionSometimes one good technique is all we need to be profitable traders. Trading from market consolidations may just be the trading technique you have been looking for.
Whether you’re a futures trader, stock traders, day trader or position trader, adding these trading concepts to your trading toolbox should prove worthwhile.
Trading is hard work normally, but in these tumultuous times of algorithmic trading, hedge fund dominance, and global, macro
forces driving markets, traders need a sharp edge to compete successfully and come out on the winning side. VantagePoint Intermarket Analysis Software from Market Technologies gives individual traders that needed edge.
To be clear, VantagePoint does not produce buy or sell signals, nor is it an automated trading system. Instead, VantagePoint uses proprietary, patent-pending technologies involving neural networks applied to global intermarket analysis to analyze how related markets influence each other. These technologies produce unique predictive, technical indicators that make short-term, highly accurate trend forecasts.
In the trading world, the trend is truly your friend, and having a tool that can identify trends – particularly impending changes in trend direction -- reliably and consistently is a big step toward trading success.
VantagePoint has been serving traders since 1991 when Louis Mendelsohn first introduced trading software that utilized what, at the time, was his revolutionary intermarket-analysis approach using the pattern recognition features of neural networks. Mendelsohn is no stranger to
technical analysis. In 1983, he was the first person in the world to introduce strategy backtesting in commercially available trading software for personal computers.
Market Technologies has continued to increase VantagePoint’s predictive accuracy over the past two decades by refining its application of neural networks to global intermarket data, while adding more leading indicators, expanding the markets covered, and generally improving the software’s functionality and user-friendliness. Even newcomers to trading can easily benefit from its forecasting capabilities without having to “look under the hood.”
Product OverviewVantagePoint software provides leading indicators for more than 600 markets in four major categories: forex, futures, stocks, and exchange-traded funds (ETFs). The forex category includes the eight major currency pairs and 13 important cross rate pairs. The futures category covers all of the major financial and commodity markets.
In prior versions, VantagePoint forecasted only U.S. Stocks comprised of 12 popular U.S. Stock Sectors. The newest version has added even more U.S. stocks in response to customer demand. Even more exciting to VantagePoint’s customer base in over 125 countries is the
Market pros Dr. Chris Kacher and Gil Morales provide stock set-ups and ETF recommenda-tions in real-time via email so you can immediately act on their alerts (for both beginning and advanced investors):
• Dr. Chris Kacher used his timing model to help generate a long term return of +18,241.2% in the stock market as verified by KPMG.
• Gil Morales achieved a return of +10,904.25% as audited by Rothstein Kass.
• Dr. Kacher and Gil Morales wrote the book, “Trade Like An O’Neil Disciple: How We Made 18,000% in the Stock Market”.
• CONSERVATIVE APPROACH: using market timing model: June 9, 2009 - June 9 2010 +55.1% with exposure to the market less than half the time as audited by Rothstein Kass.
• CONSERVATIVE APPROACH: 2008 market timing results: +38.8% using no leverage (unaudited results).
Watch for Gil Morales and Chris Kacher on Traders World Online Expos
addition of 12 Sectors of Indian stocks as well as 12 sectors of Canadian stocks.
VantagePoint has also expanded its forecasting coverage of ETFs and now includes Canadian ETFs in addition to U.S., international, short, and ultra short funds.
VantagePoint makes searching all of these global markets extremely easy with its IntelliScan® feature. Users can choose from more than 70 filters when scanning markets for a potential trade. When a market fits the selected
criteria, a mouse click takes you to that chart so you can decide if you want to make a trade. (This information is also available in daily and historical data tables, which are also exportable into Excel).
Leading Technical IndicatorsThe real power behind VantagePoint comes from the forecasts provided by its leading technical indicators derived from Mendelsohn’s patent-pending technologies, which he and his research team have been perfecting
over the past quarter-century.
Predicted short-term, medium-term and long-term moving average crossoversWhen a predicted moving average crosses an actual moving average, it suggests an impending trend change. VantagePoint provides the optimal moving average combinations, but users can also choose their own combinations from among six predicted exponential moving averages of typical prices and three actual simple moving averages of the daily close.
Predicted short-term, medium-term and long-term differences These indicators compare the differences between a predicted moving average and an actual moving average for the various time periods. The predicted differences act as a momentum indicator in evaluating a trend’s strength or weakness and often provide an early alert about an impending trend change.
Predicted Neural Index (PIndex)This proprietary indicator compares today’s actual three-day moving average with a predicted three-day moving average to forecast whether the typical price will be up or down in two days. PIndex is the indicator cited by Market Technologies for its accuracy rates of up to 86% across a broad range of markets over a broad range of time. Predicted next day high and low
This indicator gives traders a heads-up on what to expect for the next day’s
trading range. Breakouts from this range can be used to identify precise entry/exit points to go along with the short-term forecasts provided by other indicators.
Other Predicted technical indicatorsThese indicators actually forecast values one day ahead for such popular indicators as Moving Average Convergence-Divergence (MACD), Stochastics, Relative Strength Index, and True Strength Index.
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The VantagePoint charts also provide other information, such as volume, open interest, differences between the predicted high or low and actual high or low. Included as well is the nifty ProfitCalcTM tool, which lets you instantly see the difference in points and dollars between two dates on a chart. The tool even calculates pips for forex traders, and ticks and points for futures traders.
The Accuracy of the Leading IndicatorsExtensive evaluations and certified independent, scientific studies conducted by Ph.D. mathematicians and rocket scientists over decades verify VantagePoint’s accuracy statistics.
A recent study demonstrates, once again, VantagePoint’s predictive indicators live up to the expectations set by Market Technologies. Here is a summary of the accuracy study broken down by market segment for the period 10/30/2009 to 4/30/2010.Commodities: The average percent accuracy for the Neural Index was 78.1%, with a low of 73.3% for E-mini Silver, to a high of 84.7% for ASX All Ordinaries, E-Mini Japanese Yen, Gas Oil.
Forex: The average percent accuracy for the Neural Index was 79.1%, with a low of 74.8% for Euro / U.S. Dollar, to a high of 82.4% for Australian Dollar / Canadian Dollar.
ETFs: The average percent accuracy for the Neural Index was 76.4%, with a low of 71.8% for iShares MSCI Germany IDX, to a high of 84.7% for iShares COMEX Gold Trust.
Stocks: The average percent accuracy for the Neural Index was 77.3%, with a low
of 70.2% for Adobe, to a high of 87.0% for Cheesecake Factory.
Of course, there is no “holy grail” in trading, and nothing works 100% of the time, but increasing the odds of success is what trading is all about. VantagePoint does this. The fact that traders across the globe have successfully utilized VantagePoint since 1991 is a testament to its predictive accuracy and increasing relevance in today’s globally interconnected trading environment where correlations and hidden relationships between related (and even seemingly unrelated) markets now dictate market movements more than ever.
ConclusionIntuitively, traders realize that today’s markets influence each other, and the VantagePoint indicators, relying on intermarket analysis and an “intelligent” neural-network process, provide a unique perspective on markets, a perspective you won’t find in any other analytical software package. Traders still need to develop their own strategies using these indicators, but with the outstanding customer support and the educational materials available, traders quickly get up to speed, which makes it possible to recoup the cost of the software very quickly. The quality of VantagePoint speaks to the adage, “You get what you pay for.” If you are serious about becoming a successful trader or investor and you are looking for an edge that spots and helps confirm potentially profitable trading opportunities, while helping you to avoid dangerous traps, VantagePoint is the tool for the job.For more information go to www.Tradertech.com
Through the autumn and winter of 1948, W. D. Gann hand charted the May 1949 Soybean futures contract
traded on the Chicago Board of Trade. Unlike much of Gann’s work, this chart survived and is publicly available from numerous sources. Many analysts have commented on this chart and a number of them have cited Gann’s use of planetary longitude. I have reproduced it here with certain planetary lines highlighted, as defined by the color key below, showing exactly what each of these lines represents.
W. D. Gann’s 1949 May Soybean Chart –Planetary Lines Colored
Red Line = Mars Longitude – Blue Line = Jupiter Longitude
Green Line Jupiter 255° Horizontal – Dashed Blue = Jupiter 270° Horizontal
We can see here that Gann is drawing trendlines and price level lines based upon planetary longitude on this famous chart, and these lines perfectly define the trend as well as the top in the Soybean market. Gann never spoke or wrote in any detail about this technique, and the few references we have to it appear only on some of his most complex and messy charts, having to be deciphered and reverse engineered by the astute Gann analyst in order to determine what he was actually doing.
Many people have experimented with using this technique, and a number of software programs have functions which produce variations on this application. However, often after years of experimentation, researchers are still unable to discover the true potential of
TO 110 YEAR ANALYSIS OF THE DOW JONES INDUSTRIAL AVERAGES
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It further teaches how to determine the ongoing energetic background environment that the market is traveling through at all times. This environment is defined by the summation of the underlying planetary energies at any time. Any projection you have from any system can now be cross-checked with the Planetary Energy Background, and you can affirm whether a turn will likely be a top or a bottom, or a trend will go up or down. This is very simple to understand and to apply to your future charts, giving you an ongoing read on the energetic forces behind the market! VOLUME 1 TEXT 240P. - VOLUME 2 CHARTS 90P. 170 IMAGES - BLACK SUEDE HARDCOVERS
this powerful tool, because there is just too much variation in planets, harmonics, settings, and markets to easily make sense of this phenomenon. But it turns out that it is not only due to the range of factors that leave most people incapable of applying this technique effectively, but also due to a price and scaling issue.
When Gann drew his May Beans chart, Soybeans was trading below 360 on the price scale, so his planetary longitudes could easily be drawn right on his chart using their exact longitudinal values. But in many of our modern markets, prices have gone through many multiples of a $360 price scale, and when trying to apply planetary lines to these new scales, the lines skew and do not provide the effective insight that they did for Gann above. This has been the issue that has led so many analysts to fail in finding a real use for this tool. What is needed is a calibration factor which realigns these Key natural planetary forces to different markets with different
price scales, so that the planetary lines can be usefully plotted on modern day markets.
I have come across only one person who has resolved this problem, Daniele Prandelli, who in his new trading course, The Law of Cause and Effect, solves the puzzle of Gann’s Planetary Price Line technique, by developing a mathematical offset factor, or calibration rate, through which powerful and effective planetary lines can be laid out on any chart, in any market, showing important price and time trigger points and support/resistance levels, which the market moves between as if it were pushed and pulled by some kind of magnetic force. Without the use of this conversion factor one can put planetary lines on charts all day long, but they do not give accurate or consistent results that one can count on. The endless variations between the aspect harmonics can overload a trader with so much information that it all becomes essentially useless, unless
CREATING A PLANETARY PRICE-TIME MAP OF MARKET ACTION THROUGH SYMPATHETIC RESONANACE
BREAKTHROUGHS IN GANN’S PRICE/TIME RELATIONSHIPS
BY DANIELE PRANDELLI
SEE HOW LINES ON CHART CALL MOVES!Notice how the market just bounces along from one line to the next, and particularly how it often turns exactly upon these lines.
Planetary price lines are Magnetic Attractor Fields which draw the market to them, then push them away again, giving a trader a map of the geometric, electro-magnetic lattice that the market is influenced by. In the same way that electrons jump between orbital levels, the market will vibrate between these zones defined by planetary resonance.BLACK SUEDE HARDCOVER 240 PAGES
SACRED SCIENCE INSTITUTE Ө WWW.SACREDSCIENCE.COM EMAIL: [email protected] Ө US TOLL FREE: 800-756-6141
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FOR A DETAILED WRITEUP INCLUDING CONTENTS, SAMPLE TEXT & CHARTS, FEEDBACK & MORE SEE: WWW.SACREDSCIENCE.COM/PRANDELLI/LAWOFCAUSEANDEFFECT.HTM
W. D. GANN’S PLANETARY LINES CRACKED USING CALIBRATION FACTOR!
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DETERMINE THE SLOPE OF THE EXPECTEDTREND THROUGH PLANETARY ANGLES
LONG-TERM, INTERMEDIATE AND INTRADAY
This new course unravels the correct application of WD Gann’s Planetary Longitude Lines. Gann used these lines on his famous May Soybeans chart, but most people have never been able to figure out how to apply them as effectively as Gann did. Until now!
This new course explains why most analysts have failed here! There is a missing conversion factor or calibration rate which must be used to adjust the planetary relationships to the scale and vibration of the market at any particular price level. This book CRACKS the conversion factor and makes Planetary Lines one of the most valuable tools you’ll have in your toolbox.
Simple to apply with the proper software, which is easily available, this powerful technique will give an added dimensional perspective to market action. These lines call both price and time, and are one of the easiest but most powerful of all Gann tools. Once you know them, you will NEVER stop using these lines to trade from!
one understands how to mathematically calibrate these lines with each particular market. When this is properly done, the planetary lines serve as a kind of lattice or grid work through which the market moves in a predictable and tradable manner.
The following example shows the S&P500 Index from 2007 to 2010 with only one planetary influence, shown by the blue lines. Notice how the market just bounces between these blue planetary lines, and particularly how the extreme tops and bottoms find their reversal points exactly upon, or very close to these pre-determined price levels.
This is because planetary price lines act as Magnetic Attractor Fields which draw the market to them, then push them away again, giving a trader a map of the geometric, electro-magnetic lattice that the market is influenced by. In the same way that electrons jump between orbital levels, the market will vibrate
between these zones defined by planetary resonance.
The prior example showed only one planetary influence overlaid on the chart, but there are other important planets which will determine other important levels, providing confluence points between the lines for stronger indications. For example, on the following chart we are zooming in on the same chart and adding some other planetary lines, in order to observe how a confluence of multiple lines can give us an even clearer indication of an important bottom in the market. This low is the same major bottom from the last chart.
Notice that with the addition of other resonant planetary lines at this March 2009 Low, there was not just one line that confirmed this Key turning point, but a huge confluence of multiple lines, the first lines creating the initial resistance from the precipitous drop, with the final Low falling EXACTLY upon the resonant confluence of
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FOR A DETAILED WRITEUP ON THIS COURSE INCLUDING CONTENTS, SAMPLE TEXT & FEEDBACK SEE: WWW.SACREDSCIENCE.COM/GOULDEN/BEHINDTHEVEIL.HTM
FORECASTING RECORDSIn August of 2009, Dr. Goulden produced 7
forecasts in 7 different markets. His results were impressive, 7 out of 7, yielding 3,161 points in 7
days, with 7 trades, in 7 different markets! Wouldn’t you like to forecast like this?
T-Notes 20-22 August. Result - a pivot low on 21 August, followed by a rally of 241 points to 2 Sept. Soybeans 17-20 August. Result - a pivot low on 17 August, followed by a 710 point rally in 6 days. Gold 17- 20 August. Result - a pivot low on 17 August, followed by a 780 point rally to 8 Sept. Platinum - 23/4 August. Result - a pivot high on 24 August, followed by a 607 point drop in 7 days. NY Cocoa 21-24 August. Result - a pivot high on 25 August, followed by a 257 point drop in 4 days. NY Cotton 21- 24 August. Result - a pivot low on 26 August, followed by a 426 point rally in 7 days. German Bund 21-24 August. Result - a spike low on 24 August, followed by a 140 point rally in 7 days.
We are extremely happy to announce the release of a new and deep Trading Course. Behind The Veil presents powerful trading techniques based upon the deepest scientific and metaphysical principles. It unveils many mysterious and difficult theories and applications similar in approach to those of W.D. Gann and shows a trader how to use these principles to successfully forecast and trade the markets. DON’T MISS THIS VALUABLE COURSE!Dr. Goulden, a Cambridge educated scholar, penetrated many of the hidden techniques used by Gann, and has developed numerous new and original trading applications based upon similar principles, leading him to the forecasting results in seen here.The techniques developed by Dr. Goulden will teach traders how to identify future pivot points following which profitable market moves ensue. All of the timing tools needed to forecast these pivot points and the geometric tools used to identify price entry and exit points, and to determine the nature of the ensuing trend are demonstrated in the Course. Based upon a deep level of metaphysical and cosmological insight, these techniques are easily applicable, clearly presented and shown through numerous chart examples in multiple markets, including stocks, commodities & Forex, in all time frames, monthly to minute.
3 different planetary lines!Another fascinating element of this
technique is that it will demonstrate that the markets are controlled by natural order, even at times where people think there was random error. The following chart illustrates the influence of the planetary lines on a move that was considered by main-stream media to have been caused by a “trader” or “computer” error, causing the S&P 500 to plummet 100 points during the day’s trading session (with the Dow falling about 1000 points that day in intraday trading).
As can be seen above, the low of that day touched EXACTLY upon the confluence of two overlapping planetary lines! After seeing this, how can anyone believe that the markets are merely random? Traders who understand these techniques KNOW there is no random movement in the markets, and are well poised to take advantage of
such seemingly chaotic events!It is a simple fact that the overlay of
these powerful planetary price techniques upon any chart adds an extra dimension to one’s market vision and trading indications, giving a profound insight into the forces behind real market action. Whatever trading tools you may use, the addition of the Gann’s planetary lines will provide a significantly deeper insight into the true cause of market reversals! We have no doubt that, once understood, no trader will ever again place a trade without consideration of these essential planetary price lines.
William Bradstreet StewartSacred Science InstituteInstitute of CosmoEconomics800-756-6141 - 951-659-8181www.sacredscience.com [email protected]
The Trading Strategies to Employ in Today’s Challenging Markets
By Glenn Neely, Founder, NEoWave Institute
No matter what trading technique or methodology you employ, ultimately, there are only three zones you can enter a market:
near the bottom, near the top or near the middle. If you enter a market near the bottom of its range, you could be called a Bottom-fisher (if you bought) or a Trend-follower (if you sold). If you entered near the top of the range, you can be called a Trend-follower (if you bought) or a Top-picker (if you sold). When you enter after a market’s high or low, on a pull-back toward the center of its range, you might be called a Bargain hunter (which breaks down into two categories - an Accumulator, if you bought, or a Distributor, if you sold).
Despite the incredible universe of market systems available to the financial industry, ALL trading techniques fall into only one of three categories (i.e., Top/Bottom-fishing, Trend-following or Bargain hunting). By definition, a market will spend about 1/3 of its time in each portion of a market’s 3 ranges; so, each approach to trading works about 1/3 the time. As a result, if you do what most do (i.e., stick to one trading style) you will make money about 1/3 the time and lose money the other two-thirds. If you want to trade successfully 3/3’s of the time, you must understand all three phases of market activity, learn to determine which phase is unfolding, then adjust your trading style to fit that environment.
In this article – second in my “Stock Market Predictions” series – I outline
the three phases of market activity – Bottoming/Topping, Accumulation/Distribution, and Trending (up or down) – and the best trading strategies for each, including Elliott Wave/NEoWave and other techniques. At the end, I provide specific trading recommendations for today’s difficult trading environment.
Bottoming/Topping phase of market activity A major market top or bottom is rare, which means it holds for a long time. Therefore, you can’t have a major top or bottom every week. Recognizing a market top or bottom can be difficult, yet extremely profitable if you’re right. Unfortunately, this phase of market activity is one of the most dangerous times to trade, because it can produce repetitive losses if you continually guess incorrectly. For example, in an expanding environment, a market can be in a topping phase, yet make minor new highs over and over without changing
the fact that a top is forming. The biggest mistake I see when teaching others how to trade is that they expect or forecast major market turns all the time (by definition, that can’t be true), which is why they end up losing so often.
Accumulation/Distribution phase of market activityFor this section, let’s focus on Accumulation first. After bottoming, a market may bounce off its low and experience a period of back-and-forth consolidation. This occurs because financially powerful traders are accumulating positions, preparing for the future market advance. While wealthy traders accumulate positions, less experienced, under-capitalized traders might panic (thinking the market will go lower), or be forced out (due to lack of capital) as the market retests its bottom. . While a majority of traders are selling into the market’s decline, that “public activity” makes Accumulation possible for a minority of wealthy traders. In other words, when the majority of traders are selling, the wealthy understand this is an excellent time to buy (hoard positions), and they have the “financial patience” to wait for the demand environment to change, forcing prices higher. Distribution phase is the exact opposite of the Accumulation phase.
Trending phase of market activity Continuing our discussion from above, once nearly all positions that can be bought have been purchased, the Accumulation phase is complete. Most traders are committed – they’ve laid their claim – and are now waiting for the market to move
their way. During Accumulation, wealthy traders capture nearly all supply in the hope future demand will make their long-term commitment worthwhile. This sets the stage for the Trending phase of market activity. As the economy improves – as it always does – the public realizes the “end of the world” did not occur; so, their willingness and ability to invest increases. Over time, growing public demand forces prices upward. (Remember Economics 101: increasing demand coupled with limited supply creates higher prices.)
In comparison to the prior two phases, the Trending phase lasts the shortest period. Generally, it’s the most difficult phase to profit from because most traders are uncomfortable entering a market well after the bottom (they realize they are no longer getting a bargain).
Which trading strategy should you employ during each phase? Bottoming/Topping – At market extremes, NEoWave or Elliott Wave trumps all other techniques, leaving little doubt what will happen next and what to do. During this phase, Wave theory clearly portends market potential, allowing you to catch major turns. Ironically, at such times, the public (and your friends!) will have the exact opposite market perspective, leaving you a “lone voice in the woods.” Consequently, profiting from Wave theory requires the ability to identify patterns and enter when multiple patterns simultaneously end. Identifying and entering at major market tops or bottoms makes most traders extremely uncomfortable. As a result, placing your trust in Wave theory at this time requires mental fortitude and the
personal confidence necessary to buck the majority and take an unpopular position. Though it often appears contrary to “logic or reason,” following NEoWave (or Elliott Wave) during this phase of a market’s development generally offers the greatest possible reward.
Accumulation/Distribution – After a major top or bottom, a market will transition into a choppy period (above its low or below its high). Wave theory can still be useful at such times, but its usefulness begins to diminish. Instead, oversold and overbought indicators tend to be more useful, allowing you to “trade the range,” getting in or out at each market oscillation. The longer the consolidation, the longer you should institute this strategy.
For example, let’s say you have interest in the Gold market. In this scenario we’ll assume Gold recently began rallying from the $900 level. As one who desires to accumulate Gold, you patiently watch it rally to $1,000, which in hindsight enables you to see the market created an important and obvious low at $900. That observation allows you to objectively implement your accumulation strategy. When Gold begins to pull-back from the $1,000 level (noting this level), carefully watch your indicators for an oversold condition similar to what occurred near the $900 low. If that oversold condition occurs when Gold is around $950, it’s time to buy. If Gold later exceeds $1,000, you can decide to liquidate some of your position OR simply wait for the next “oversold” condition to pick up even more Gold. This process can be repeated over and over each time the market exceeds it prior noted high.
Trending (up or down) – As I discussed in my previous interview, this market phase can be random and unpredictable. Here, Wave theory is least useful. During the Trending phase, it’s best to do what most people are afraid to do: buy into market strength. Keep in mind, strong market trends are not common, especially those in which you can buy into a new high or sell into a new low. When strong market trends happen, they can yield tremendous return in a very short period, far outweighing results you might get from other market phases.
While it’s clear when a market is trending, a safe, low-risk entry may be difficult to identify. So, what do you do? To explain, let’s continue our Gold market example: Gold bottomed at $900, rallied to $1,000, then sold off to $950. If the Accumulation phase has ended, Gold will next move into an uptrend. This is when the “scary” buying-into-highs strategy actually works. In our example, you would place an order to buy Gold at $1,001; if activated, your stop would be just below $950 (say $949). This way, you are “going with the flow” of the market, letting it identify your specific entry and stop points as it progresses. When implemented at the right time, this strategy produces the greatest profit in the shortest period.
Today’s challenging U.S. stock market: What phase is it in? Which trading strategy should you use? After rallying for nearly 2 years off 2009’s low, the U.S. stock market is now (mid January 2011) in the top 1/3 of its price range from the 2007 high. As a result, your focus should be on “Top-picking.” During
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this period, wave theory works best. Make sure to wait for structure to complete on all time frames, starting with the largest time frame first (this means monthly). As monthly structure clears and warns a top is near, drop down to weekly charts and make sure patterns on that time frame are close to ending. If that is true, move to daily wave charts and wait for structure to end on that time frame. If all is in order, you are ready to “sell on weakness” with a stop at the established high OR sell-into-strength with a stop 2-3% above current prices (this approach requires the market not rally too much after you get in, so is a little riskier). Waiting for confirmation, by selling-into-weakness, is generally a better idea, but it does reduce future profit potential.
About the author Founder of NEoWave Institute, Glenn Neely is internationally regarded as the premier Wave analyst. He has devoted more than 25 years to mastering Wave theory, stock market predictions, and successful trading. In 1990, Neely published his advanced Wave analysis process in his classic book, Mastering Elliott Wave. In the following decades, Neely continued to evolve Wave theory to make it objective, practical, and consistently accurate. This evolution produced NEoWave technology – a precise, step-by-step assessment of market structure, which results in low-risk, high-profit trading and investing. See for yourself: Subscribe to NEoWave’s 2-week Trial Service. Learn more about Glenn Neely and NEoWave Trading and Forecasting services at www.NEoWave.com.
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Point of Force is an area on the chart, where strong price levels and significant time
periods intersect. There is a great number of tools, which help to identify levels, where price can meet resistance or support. Congestions of price levels are much stronger than a single level, but there are always few congestions. How do you know where the
trend will finally reverse? Here we find importance of Time Factor. If time for the move elapsed – price will start moving in the opposite direction from the nearest significant level.
Price methods in actionToday we will work with November Wheat chart and reveal reasons for the price soar in July. First we find out that in January-June
by Oleksandr Salivon
2010 price movement was weak, i.e. price slid to the new low and than returned higher that low, while if it remained below - this would be an indication of a strong structure. Only this would tell us that Wheat price is about to change medium-term trend for at least few months rebound. To find where the final bottom might take place - add 50% of the previous range (Figure 1).
Considering the date of reversal we can take 5 months from January 11 top and one year from June 2, 2009 top. If you take some time to investigate reversal dates, you will find more confirmations of the early June importance. Dividing 633 top by 6 you get 105.5 and final bottom appeared exactly on 105th trading day. Buying on June
11th or even on June 30th after classical confirmation, one should hold until daily swings showed strength, consequently moving trailing stop under the swing low or low of the second day back.
To find where Wheat will find resistance on the way up - take 1284 to 473 price range and divide it in 8 parts, adding 1/8th to 473 low we get 574, 676, 777, 879, 980, 1081. Also take 633-473 range and extend it adding 1, 1.5, 2, 2.5, 3 extensions (Figure 2). In the Square of 9 - 47 (473) is 90 degrees from 88 (876) and 473 is 4 cycles minus 45 degrees from 869. Playing with these tools you will understand
that congestions around 675, 870 and 960 will be important. Two of them worked precisely, should we wait for 960?
Time is initial factor for change in trendBut how we would know that June 9 is a final bottom and that price will not stop at 533 or 574. This question can be answered only by studying cycles. No matter how good price levels and indicators signify a reversal, if the cycle is calling for a higher top or lower bottom - it will eventually take place in predetermined time.
Final higher low in the first week of July before price skyrocketed was
extremely important as we had synodic Jupiter-Saturn cycle traveled 45 degrees from Feb 27, 2008 and Saturn proceeded 108 degrees from Apr 29, 2002.
Following only price levels we would close positions on 574, 675 or 770, but understanding that this is a major change for few months you would hold until see 870, and then added after rebound.
We see how beautiful markets are, how amazing and precise results you can achieve after researching market’s own individuality.
Oleksandr Salivon has been studying the markets for 7 years. He learned all known methods of market analysis but was not satisfied with their accuracy until discovered precise tools in the works of W.D. Gann. He did his own research in Astronomy and applied it to the soybean and wheat markets. He may be reached at [email protected] reading: W.D. Gann, Master Commodities CourseW.D. Gann, Tunnel Thru The Air
Since the advent of electronic trading, day trading has become the most sought after and the most elusive of trading regimens.
There are thousands of systems and methods that try to capture consistency of market action only to find that markets display a wide array of personalities that defy coincidental meeting points designated as “the buy” or “the sell” within the system or method.
This article will attempt to shed some light on organizing short term trading as it is viewed from the standpoint of “Novy Principles of Market Flow.”
NOTES ON DAY TRADING from “Novy Principles Of Market Flow”
While there is not enough space in this brief article to cover the many aspects of this large body of work there are some concepts that I would like to share with the readers in hopes of adding clarity to what it is that traders do irrespective of the design of the method or system that
you are using. In “Novy Principles of Market Flow” day
trades fall into one of two categories.
Scalping and Position Day Trading.
SCALPINGMost methods and systems attempt to use very short term intraday time frames for entries and exits while using longer term intraday time frames as a directional guide.
Here are some concepts you might want to consider. I hear traders say that they want to be scalpers….. “I just want to catch a few ticks”. There is nothing wrong with that as long as the term “scalping” is better defined to a condition in the market that will allow that to happen.
We at Training For Traders define
“scalping” as trading an impulse or energy pocket in the direction of the market flow. For those kinds of trades there should generally be no draw down. The expectation should be that the trade is elected and it moves as planned with very little hesitation.
In order to arrive at that condition, short term timing signals should be moving from the center of the scale (ZMZ = Zero Momentum Zone) outwards to the extremes.
Scalping is a technique applied to a condition in the market flow where energy and momentum are about to surge. Once in the trade, the trader can money manage the flow to clip off quick profits or to turn a short term trade into longer term winner.
POSITION DAY TRADING
www.TrainingForTraders.comLeonard Novy
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Novy Principles of Market Flow are not a Method or a System. Use the Natural Flow of the Market to your Advantage Contact: Leonard Novy at [email protected] 760 841 1522 Calls returned Promptly
Position day trading is typically for traders who use Fibonacci Retracements or Pivot Point Support and Resistance or Line Drawings, Bollinger Bands or Moving Average Support and Resistance etc, who are waiting for the market to hit a target for an entry in the opposite direction. Most of the time, these targets will be over run with emotion.
This means there will be draw down. This is a developmental area where the market is running into opposing forces that cause for a lot of back and forth movement. If your expectations are that you will need to place a stop loss that adjusts to the current volatility to allow for the trade to develop then you are in the right frame of mind.
If you try to scalp under these conditions you are likely to lose most of your money. Scalpers don’t like using big stop losses and shouldn’t be playing in this arena. Position day trading is for players who like
to trade areas of support and resistance rather than energy pockets
In Summary: The idea with Scalping is to find a repeatable and consistent action that moves the market instantly in the intended direction with no draw down. It’s a performance trade and it must perform. That is the condition.
The idea with Position Day Trading is that it is developmental in nature and requires patience along with acceptance of draw down. The expectation is that targets will be over run before the turn comes and one must measure risk relative to the current volatility. The condition for Position Day Trading is different than for Scalping.
For more information on Novy Principles of Market Flow please contact me at [email protected] or 760 841 1522 or go to www.trainingfortraders.com
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What every trader needs to know about the astro-trading advantage.
The old man’s advice wasn't given lightly.
As a veteran trader, he had decades of experience under his belt.
He was doing his best to counsel a young man who had decided to become a trader too.
“When you first start out,” the mentor said, “you’ll learn a lot about the companies behind the stocks. You’ll read balance sheets and earnings statements, and look for undervalued equities. But as you begin to trade, you will discover that the fundamental approach has a lot of limitations.
“Then you'll start to explore technical analysis. You’ll try different kinds of oscillators, stochastics, and moving averages, and in every case, you'll eventually discover that they don't give you the trading edge you need.
“If you stick with trading after that, you’ll probably get to the point where you take a look at cycles analysis and Elliott Wave theory, and you'll start to see patterns in price charts that you hadn't noticed before. But after a while, you will understand that those wave counts are pretty subjective, and you won't trust them so much as indicators for your trading, either.
“If you’re lucky, and if you don’t lose your trading capital, you’ll hang around long enough to encounter Fibonacci ratios, and if you work with them persistently you will be amazed at how well they connect with key market movements. There is a lot of value in those Fibonacci numbers, and if you learn to use them they will add a lot of positive potential to your trading.
“And maybe then you will stumble upon the most valuable trading tool of all, the one that not many traders are even willing to talk about. That’s financial astrology. You may hear it being ridiculed, but you should definitely take it seriously.
“Actually, most of the biggest banks around the world have astrologers they confidentially consult with about trading opportunities and market trends. But of course those banks never publicize that fact.
“When you use astrology in your trading, you’ll start to understand the way the markets really work. And then you won’t need to get any more advice from old fools like me.”
I Was Excited To Hear It
I can’t personally vouch for that story. I wasn’t on the scene when the original conversation took place.
But that’s the way it was told to me, and I have to admit I was really pleased when I heard it.
You see, astrology is vital for me and my own trading and analysis.
As you may or may not know, I focus most of my time on applying new and proven astro-trading tools to forecasting and profiting from trends in the stock market.
I started using astrology more than 40 years ago, and have perfected astro-trading techniques for the past 23 years—and I still spend at least 10 to 12 hours each week, doing detailed astrological research and market back-testing. I also publish Financial Cycles Weekly newsletter, create professional astro-trading tools, and privately coach top-performing astro-traders.
Along the way, I’ve exposed key market factors most astrologers ignore and most ordinary traders have never even heard about—Transneptunian dynamics, planetary price indicators, and heliocentric relationships, among other things.
Rapid Astro-Trading Mastery
More recently, I’ve had a major breakthrough in speeding up astro-trading mastery, and I’ve been helping seasoned traders and newcomers alike find more confidence, more profitability, and more money-making insights. . . all more rapidly, and perhaps much sooner than you would expect.
The results have been phenomenal. And I was just wondering if you would be as surprised as I’ve been in discovering what it’s like to enjoy and profit from an outcome like that.
But whether or not you’re an experienced trader, if you’re now thinking about using astrology at all there are a few absolutely critical things you need to understand.
In fact, if you don’t consider them, the markets will eat you alive.
A Gift for You
You’ll find the details in my new book on “Eight Billionaire Strategies for Breakthrough Stock Market Success”.
It has just gone to press, and I’d like to send you a copy with my compliments. There’s no cost or obligation, but you do need to let me know where to send your copy by logging on to the book sign-up page at http://tinyurl.com/traderbook
Roger Babson was at the New York stock exchange on March 14, 1907, at the request of a friend. The
market had started a drop from a high of 111 on March 6, 1907 on the way to a low point of 60. Much of the drop occurred on March 14. “On that day I actually saw men’s hair turn gray.” Roger wrote in his
autobiography. It motivated him to do
a study of stock exchange transactions and what he referred to as foolish investments. He came to the conclusion that the cost
to even thrifty investors was one and a half billion dollars a year at that time. At that point he made a life changing decision,
to do something to prevent the losses. It put him on the path, which resulted in the founding of Babson Business Statistics, Babson Business College and the Gravity Research Foundation.
Prior to Babson graduating from M.I T. in 1898 he sat in Professor Swains Civil Engineering class. To make the class more interesting, Professor Swain used stock market charts to illustrate the application of Isaac Newton’s laws – particularly of the law of action and reaction. Babson used the exercises learned in the class to develop his method of analyzing the stock market and investing, subsequently making his fortune as a financial advisor and investor.
Roger Babson, himself said that his interest in gravity started with the
Introduction to Roger Babson’s Action Reaction Trading Technique
childhood drowning of his older sister in a river near Gloucester, Massachusetts. In an essay called “Gravity- Our Enemy No. 1,” he wrote, “She was unable to fight gravity, which came up and seized her like a dragon and brought her to the bottom
One of the things he valued throughout his life was learning about the British scientist, mathematician, and philosopher, Isaac Newton. Roger Babson was impressed by Newton’s discoveries, especially his third law of motion--”For every action there is an equal and opposite reaction.” He intuitively combined Newton’s various laws of motion, and focused upon the easiest to explain to the public, which was the third law of motion. He eventually incorporated Newton’s theory into many of his personal and business endeavors. Later in this article the reader will see how specifically Newton’s Action Reaction theory is applied to trading.
Upon graduating in 1898, Roger knew for certain that he preferred an
alternative career. His father Nathaniel Babson counseled Roger to find a line of work that would ensure “repeat” business indefinitely. After careful consideration, Roger Babson decided to try the world of finance and looked for work as an investment banker. In 1898, Roger began his business career working for a Boston investment firm where he learned about securities, stocks, and bonds. Inquisitive by nature, Roger Babson soon knew enough about investments to get himself fired. Acting in the best interests of his clients, he had questioned the methods and prices of his employer and quickly found himself out of work. Babson subsequently set up his own business selling bonds at competitive prices in New York City and then in Worcester, Massachusetts.
He published his analysis of stocks and bonds in newsletters and sold subscriptions to interested banks and investors. In 1904, with an initial investment of $1,200, Roger and Grace Babson founded Babson’s
Statistical Organization, later evolved into Business Statistics Organization and then Babson’s Reports, until eventually it thrived as Babson-United Investment Reports. Probably due to the Internet and free stock data, it closed its doors in 2001.
Babson, in his autobiography titled the last chapter “How $2,000 can become $831,543 without borrowing a penny”. As the reader will later in this article, there are powerful techniques that he developed
that are useful for a technical trader to achieve and surpass such a goal.
Roger read several books and kept Brenner’s Prophecies of future ups and downs in prices as one of his prize possessions. He found that a particular quote from the book was important to remember.
“There is a time in the price of certain products and commodities, Which if taken by men at the advance, But if taken on the
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decline leads to bankruptcy and ruin.”It was Brenner’s book and a book
by Henry Hall, How money is made in securities investments, that Roger Babson brought with him to an important meeting with his old friend, Professor Swain. It was Professor Swain that originally introduced him to the idea of applying Newton’s third law of motion to investing.
It was Professor Swain that worked with Roger Babson to come up with a composite
chart called the Babson chart. As can be seen in the Babson Chart,
a normal line is drawn through the chart, Times above this line were thought of as times of prosperity and times below it were times of recession or depression. Babson utilized the charts to forecasts not only the times of prosperity but the degree and length of the periods.
Babson wrote in his autobiography,”Our contribution to the analyzing and
forecasting of business conditions was in connection of the areas above and below this Normal line. Other systems of forecasting considered only the high and low of the charts, while our studies considered the areas of the charts.
Based upon Newton’s Law of Action and Reaction, we assumed that after a depression area, equal in area to the preceding area of prosperity, had developed, another area of prosperity
would be due. In making these studies we took cognizance primarily of the shape of the areas.”
The size and shape of next area of prosperity, which was above the normal line, was independent of the size and shape of the prior area that was below the normal line.
Many scholars have examined the theory and found it to be flawed. As you will see in this article, the scholars did not
truly understand the concept.Recent computer based studies of this
theory have led some to the conclusion, that the area above the normal line is very useful at forecasting the turning points in the area below the normal line. Furthermore, as will be shown, that the extremes of the areas above the normal line can also be forecasted successfully with a few modifications to the application to theory.
An example of the application to the FXI chart above took three steps. First, using a special protocol the Normal line was selected and drawn
There after the high pivot point was selected for drawing an Action line that is parallel to the Normal line as seen in Chart B.
Finally the pivot area of the recession area below the normal line was forecasted by drawing a Reaction line. The Reaction
line is always drawn parallel to the Action and Normal line. It is the same distance to the normal line as the action line is.
In the above gold chart the Normal line was selected using the normal line selection procedure. There after three action points were selected. Note that the Action and Reaction points are equidistant form each other in relation to the normal line. Note that when the normal line is down sloping the action points that are selected are low points and the reaction points are high points. The selection of the low action points from extremes is not universal in the Action Reaction line calculations processes. What is also not universal is that in this case the Action points are equal and opposite to the reaction from the normal line.
After the protocol has been applied to selecting the normal line in the above Semiconductor Index chart. the action points were selected and the computer program drew in the reaction lines. Note that in this case again the normal line is down sloping, the action points are low points and the reaction points are typically high points. The action points are equal and opposite to the reaction points, when measured from the normal-center line.
When Alan Andrews drew the Action Reaction lines by hand, the charts would look like the June 2010 Gold chart above and the action lines and reaction lines would be numbered in order to identify the pairs of Action and Reaction points easily.
It is well known that Roger Babson used Action Reaction theory for indices. Above
is a chart of a stock where the Action Reaction lines are drawn. The Action point is equal and opposite to the reaction point when measured from the center or normal line. The prior three examples utilized a
peak to low line for the normal line, this is the appropriate line in over 5% of all charts.
Roger Babson researched the application of Newton’s third law of motion and used it to forecast important turns in the stock market. Speaking at the Annual National Business Conference on September 5, 1929 Roger Babson observed, “Sooner or later a crash is coming, and it may be terrific”. JK Gailbraith records: “Babson was not a man who inspired confidence as a prophet in the manner of Irving Fisher or the Harvard Economic Society. As an educator, philosopher, theologian, statistician, forecaster and friend of the law of gravity he has sometimes been thought to have spread himself too thin. The methods by which he reached his conclusions were a problem. They involved a hocus pocus of lines and areas on a chart. Intuition and even mysticism played a part. Those who employed rational, objective and scientific methods failed to foretell the crash. In these matters, as so often in our culture, it is far, far better to be wrong in a respectable way than to be right for the wrong reasons. Wall St was not at a loss as what to do about Babson. It promptly and soundly denounced him.”
Perhaps one of the reasons that Roger Babson was denounced by JK Gailbraith, was that his theory seemed to simplistic to those that did not understand it completely. They would have learned that applying the theory was a complex process.
Since Mr. Babson probably did not want to confuse his audience he did not give the details to the general public about his forecasting methods, which as you can see in the above chart forecasted the low in the SPX after the market made a massive
Comments made by JK Gailbraith indicated that, Roger Babsons forecasting methods were far more complex than the public was led to believe. Those that came to the Gravity Research Foundation meetings such as Alan Andrews, Igor Sigorsky and Clarence Birdseye were privileged to the details.
Alan Andrews taught some of the Action Reaction trading concepts to the public in his “Action/Reaction Course” that he offered after he retired as a Professor of Civil Engineering at the University of Miami. In private sessions and writings recently discovered (often referred to as the hidden cache of Andrews writings), he revealed the many rules as well as something he called the “Ore rule”. It is a mathematical formula that Professor Andrews recommended for the selection of the Normal lines for high probability trades.
When it comes to Normal lines, there are a wide variety of types of lines that may be drawn and important rules as to which one to use under varying market conditions. In addition there are rule sets to determine the selection of Action points, which are used to determine the Reaction points. With the advent of computer technology the rule sets are very easy to implement.
There is so much more to understand prior to using the techniques for trading. This leaves lots of material for future articles.
The Author, Ron Jaenisch is a high performance psychologist, and has spent years studying the techniques, much of which was with Dr. Alan Hall Andrews in Miami. Ron has a library of over 900 pages of the writings of Professor Andrews, referred to as the lost cache of Andrews writing. The documents are full of rich details on the day to day use of the Action Reaction
Techniques, how they were applied in real time to generate substantial profits and various techniques that Alan Andrews only told to a select few.
This treasure of documents gave Ron a unique opportunity to apply NLP in order to model the extremely successful trading periods of Dr. Andrews in the 1960’s and early 1970’s. During this time Andrews would send out exact trading directions on Friday for the next week via U. S. mail.
During a 6-month demonstration period Andrews was able to turn $5,000 into $50,000 trading futures while giving his students orders ahead of time via mail.
Ron Jaenisch, lives in the USA and his email address is [email protected]. His website is www.Andrewscourse.com where the Updated Advanced Andrews Course (with manuals and videos) can be ordered as well as a leather bound copy of the hidden cache Andrews techniques.
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Minimizing Financial Risk in a Changing Investment
Environment
Most investors incorrectly think of “risk” as the possibility that the market value of a financial asset might fall below the
amount that he or she has invested in the asset. OMG, how could this be happening!
Think about it. The harboring of these misconceptions (that lower market price = loss or bad and/or that higher market price = profit or good) is the greatest risk creator of all. It invariably causes inappropriate actions within the large mass of individuals who are uninitiated in the ways of the investment gods.
Risk is the reality of financial assets and financial markets: the current value of all securities will change, from “real” property through time-restrained futures speculations. Anything that is “marketable” is subject to changes in market value. It is as the gods intended, and portfolios can be designed so that it just doesn’t matter quite so much as you’ve been brainwashed into thinking.
What is abnormal is the hype surrounding market value changes and the hysteria
such hype causes among investors. No way should a weak real estate market translate into near zero bank balance sheet entries --- it just doesn’t compute, except when it is popular politics.
Similarly, the reality of financial-impact cycles (market, interest rate, economy, industry, etc.) just doesn’t fit at all into the hindsightful, but popular and generally accepted, calendar year assessment mechanisms. Brainwashing again.
The amount, cause, frequency, range, and duration of market value change will always vary in an “I-don’t-care-who-you-listen-to” unpredictably certain way --- the certainty being that the change in market values of investment assets is inevitable, unpredictable, and essential to long term investment success.
Without these natural changes, there would be no hope of gain, no chance of buying low and selling higher. No risk, no profits, and no excitement--- boring!
The first steps in risk minimization are cerebral, and involve developing an understanding of the fundamental economic purpose of the two basic classes of investment securities.
From the investors’ perspective: (a) equity securities are expected to produce growth in the form of realized capital gains, and (b) income securities are expected to produce spendable (or reinvestable) income. But it isn’t real growth until it’s realized, or real income until it’s received.
Alternative investments? These are the contracts, gimmicks, commodities, hedges, and other creative ideas that college textbooks used to call speculations. Once upon a time, fiduciaries, trustees, and unsophisticated individuals weren’t allowed to use them. The stigma is gone, but the artificial demand adds risk to all markets.
They are especially risky for the millions of 401(k) and IRA investors who probably cannot explain the difference between stocks and bonds, from any perspective. Most investors have virtually no clue what is actually being done inside the products they select, and have even less of an interest in learning about it. They dance knee-jerk style to the daily media buzz.
Wall Street knows this, and takes advantage of it mercilessly. In spite of the recent financial crisis, pension plan fiduciaries (particularly in the public sector, go figure) are falling all over themselves to throw money at the very alternative and derivative speculations that crashed the market just months ago.
401(k) participants are force fed products du jour from self-serving providor menus that make little effort to identify risk, much less minimize it. Very few plans allow participants to develop an understanding of their investment choices with the only education provided by the product vendors themselves.
What ever happened to stocks and bonds, the building blocks of capitalism? Do investors recognize the financial interest they have in the very corporations their elected officials are encouraged to tax, constrain, and regulate into competitive mediocrity?
Another mental step in risk minimization
is education. You just can’t afford to put money into things you don’t understand, or which the salesman can’t explain to you in ordinary English, Spanish, French, whatever.
Of course you would prefer to skip this step and jump right into some new product athletic shoes that will hurdle you over the work and directly into the profits. How’s that been working out for you? It was once written (somewhere): no work, no reward.
Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules--- The QDI.
Real financial risk in equities boils down to: the possibility that a company’s stock (that 30% share of your brother-in-laws’ pizza parlor) will become worthless as management succumbs to economic forces, and/or mandated costs imposed by outside entities whose edicts must be complied with.
In debt-based securities, risk is: the possibility that the issuer of an interest bearing IOU (the money your spouse loaned her brother at 6% to start flinging pizza) stops or falls behind on its payment obligations and/or declares bankruptcy and wipes out both owner (shareholder) and creditor (bond holder) interests.
Here’s an interesting risk in the securities markets, one that governments have cleverly refused to address for fairly obvious reasons. The “Masters of the Universe” routinely get paid obscene amounts of compensation for risking OPM (other people’s money) perhaps a bit too cavalierly.
Company fails, shareholder interests become valueless, debt obligations are worthless, while the fat cats keep raking it in, even suing to preserve their bonuses. Boardroom corruption, and direct lobbying (another euphemism, for bribing) of elected officials are two additional risks that investors need to be aware of.
Most people enter the investment arena thinking that “Risk” is a board game they played in college. Today, I would guess that the majority of investors have never owned an individual share of common stock or a Municipal Bond.
The popularity of investment products has heightened the risk for all investors and has indirectly led to many of the policy errors that threaten both capitalism and the economic fabric of America. Market prices are increasingly and inappropriately influenced by decision-making based only on the derivatives that contain them.
Few people consider the investment risk associated with public policy decisions. Product investors and derivative speculators participate in less personal markets, where it is more difficult to connect the dots between their personal financial interests and their political alignments.
So in a very real sense, investors have to deal with public policy risk every bit as much as they need to analyze the risks associated with the securities and other financial products they hold in their portfolios --- complicated, but it is doable.
Apart form these important peripheral considerations, the risk of loss in any equity investment is generally greater than the risk of loss in any debt related instrument. The potential reward from each type is just the opposite, and that’s where all the excitement begins.
Do we risk more for the chance of a greater return, or do we risk less and try to preserve our investment capital? Keeping in mind that investment capital is a measure of cost, not of market value, and that the only real loss is a realized loss.
Typically, the older the investor, the more boring or income focused the portfolio should be --- minimizing the overall level of risk. But it’s difficult to actively minimize or manage your risk in the “open end” mutual fund or passively managed ETF marketplaces.
Risk minimization requires the identification of what’s inside a portfolio. Risk control requires decision-making by the owner of the investment assets. Risk management requires a selection process from a universe of securities that meet a known set of qualitative standards.
Product owners assume the added “fear and greed” risk of the general population, while their fund mangers stand aside and mumble about the opportunities lost in either direction.
Without a risk sensitive menu to select from, 401(k) participants need to minimize risk by: (a) avoiding the poor diversification that may be a requirement of their plan, and (b) developing outside income portfolios with any investable income above the employer matching contribution.
The first and most important management action focused on risk minimization in any “program” is the development of an asset allocation plan. The plan separates “liquid” investment assets into two buckets (Equity and Income) based on cost, not market value. No portfolio should have less than 30% in
The Market Cycle Investment Management Methodology (MCIM)Steven R. Selengut
Most investors, and many investment professionals, choose their securities, run their portfolios, and base their decisions on the emotional energy they pick up on the Internet, in media sound bytes, and through the product offerings of Wall Street institutional boiler rooms. They move cyclically from fear to greed and back again, most often gyrating in precisely the wrong direction, at or near precisely the wrong time.
The MCIM methodology combines risk minimization, asset allocation, equity trading, investment grade value stock investing, and base income generation in an environment whose time frame recognizes and embraces the reality of cycles. It attempts to take advantage of widespread "fear and greed" decision-making by others, by using a disciplined, patient, and common sense methodology.
This methodology embraces the cyclical nature of markets, interest rates, and economies --- and the political, social, and natural events that can trigger changes in cyclical direction. Little weight is given either to the short-term movement of indices and averages, or to the idea that the calendar year is the playing field for the investment "game".
Interestingly, the cycles themselves seem to concur with the irrelevance of calendar year analysis, and it makes little sense at all to think
of investing as a competitive event. What index or average comes even close in content to your unique portfolio of securities?
The MCIM methodology is not a market timing device in any sense of the word, but its disciplines will force managers to add equities to portfolios more during corrections and to take profits enthusiastically during rallies. As a natural (and planned) effect, portfolio "smart cash" levels will increase during upward cycles, and decrease as buying opportunities increase during downward cycles. (See the "Process" Chart)
Absolutely no attempt is made to pick bottoms or tops, and strict rules apply to
both buying and selling disciplines. NOTE: these rules are covered in minute detail in “The Brainwashing of the American Investor” (click on the book on the left to order the book from Amazon.
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the income bucket --- no ifs, ands, or buts. And no investment plan should be
developed “tax” or “cost” first. Risk minimization comes first, and then tax minimization if possible. Finally, transaction cost minimization can be considered if you are qualified to run your program yourself.
A cost based asset allocation approach (Working Capital Model) assures growing levels of “base income” throughout the portfolio development process and, possibly, into retirement. Income growth, by the way, is the only real hedge against that other economic risk, inflation --- a buying power problem that has nothing to do with the market value of the income producing assets.
Minimizing investment risk is done best through the use of disciplined sets of rules for the various operations involved in managing a portfolio. Strict rules need to be developed for security selection, three types of diversification, income production, and for profit taking.
Forget the Wall Street “I-can-fix-that” product menagerie. We’re not interested in massaging our market value to take the sting out of cyclical market value changes. Our plan is to take advantage of these changes as they unwind around us over time, and when they occur unexpectedly, causing short-term disruptions and dislocations.
In the securities markets (stocks and bonds), the real risk of loss can be minimized without products and futures speculations, without commodities and hedge funds, and without the ageda that most people experience throughout their investment lifetimes.
The old fashioned principles of investing: Quality, Diversification, and Income, plus
disciplined, targeted, Profit Taking are the only hedges an investment portfolio needs to assure long-term success. Conveniently, the QDI+PT applies equally well to both classes of investment securities.
“Q” is for quality. If you study the long-term behavior of Investment Grade Value Stocks, and high quality income CEFs, you’ll discover that they hedge themselves quite effectively.
Risk is wrung out of portfolios by investing only in S & P, B+ or better rated, dividend paying, and historically profitable companies and then only when their equity prices are well below their 52-week highs.
“D” is for diversification. Absolutely never allow any position in your portfolio to exceed 5% of total portfolio working capital (i.e., the total cost basis) and never start a position anywhere near maximum exposure. You want to be able to buy more at lower prices.
Similar diversification rules apply to industry exposure and global diversification through the use of the mainly world class companies in the investment grade quality categories.
“I” is for income. Own no security that does not pay regular, dependable, dividends or interest. Regular and growing dividends are a quality indicator in equities. In the income “bucket”, seek out above average yields while avoiding those that seem either too high or two low.
Managed closed end funds do it best and provide easy “PT” and “buy more” opportunities. Buy established CEFs with long term “income” (not ROC) payment records.
“PT” is for profit taking. Absolutely always smile and take your profits willingly, net/net 7% to 10% (dependent upon
available reinvestment possibilities and security class), and never, ever, look back.
Trading this same body of securities, again and again, has been shown to sustain growth of capital and income consistently in a relatively low risk environment.
Market Cycle Investment Management With Ten Time Tested Risk MinimizersIn the recent financial crisis, a very small percentage of (I bought my house to live in) homeowners stopped paying on their mortgages. Still, the hysteria over the bursting housing bubble (i.e., lower market values) led to financial institution road-kill because of ridiculous accounting rules.
When the dot-come bubble destroyed “new economy” gladiators in a gory spectacle destined to repeat itself over time, what investment portfolios cheered unscathed from the coliseum bleachers?
If you reduce the amount of betting in your portfolio (and throw out politicians who don’t have a clue about the workings of free markets) you can safely navigate even the choppiest seas that the market, interest rate, and economic cycles roll your way.
The tide-like change of market values is the normal order of things, and until we embrace the cyclical nature of markets, all markets, our disappointment and disillusionment will continue. Portfolio market values will reflect where we are within the various cycles.
Interest rate sensitive securities (all bonds, government securities, preferred stocks, and relatively high dividend equities) vary inversely with interest rate expectations, most of the time.
Where we are in the interest rate cycle
is fairly easy to determine, and you need to position yourself to take advantage of the higher rates that will sneak into the economic formula as the cycle moves further and further from its recent lows.
How do we prepare for higher interest rates? By designing the income bucket of the portfolio so that it refills itself with at least 30% of total portfolio realized income, and by owning income generating securities in a form that is easy to add to.
With a reality-based perspective, investors appreciate that falling market values are opportunities to add to portfolios. Loss taking and cash hording as stop loss measures for income portfolios is a flawed strategy from all but one perspective --- that of the salesperson.
That seemingly rational form of attempted market timing reduces the amount of income available for reinvestment and living expenses, in an approach that creates victims of higher interest rates instead of beneficiaries. You need to welcome both higher and lower interest rates, if for no other reason than that you can’t prevent them.
Don’t mess with the investment gods; accept the cycles they throw at you; respect and use them wisely for a better chance of investment success. Find meaningful numbers that signal cyclical change and which chart current positioning. Try the IGVSI and related Issue Breadth, High vs. Low, and Bargain Monitor analytics.
Bohicket Creek, in coastal South Carolina, has tides ranging from four to seven feet, twice a day, every day --- not unlike the gyrations of the stock market. If you are in the ocean at high tide, and stay too long, you risk walking home shin-deep
in Pluff Mud a few hours later.Boaters run aground by not paying
attention to tides, charts, navigation tools and their GPSes. Investors get swamped with information, media noise, breaking news, politicians, gurus, and derivatives --- so much so that they can’t see the oncoming fog banks and tsunamis of cyclical change.
Most investment mistakes are caused by basic misunderstandings of the securities markets and by invalid performance expectations. Losing money on an investment may not be the result of an investment sandbar and not all mistakes in judgment result in broken propellers.
Errors occur most frequently when judgment is rocked out of the boat by emotion, hindsight, and misconceptions about how securities react to waves of varying economic, political, and hysterical circumstances. You are the commander of your investment fleet. Use these ten risk-minimizers as lifeboats:
1. Identify realistic goals that include time, risk-tolerance, and future income requirements --- chart your course before you leave the pier. A well thought out plan will minimize tacking maneuvers. A well-captained plan will not need trendy hardware or exotic rigging.
2. Learn to distinguish between asset allocation and diversification. Asset allocation divides the portfolio between equity and income securities. Diversification limits the size of individual holdings in several ways. Both hedge against the risk of loss. Both are done best using a cost based approach.
3. Be patient with your plan and think of it as a long-term voyage to a specific destination --- change direction
infrequently and gradually. There is no popular index or average that matches your portfolio, and calendar sub-divisions have no relationship to market, interest rate, or economic cycles.
4. Never fall in love with a security. No reasonable profit, in either class of security, should ever go unrealized. Profit targeting must be part of your plan, and keep in mind that three sevens beats two tens --- and is much easier to achieve.
5. Prevent “analysis paralysis” from short-circuiting your decision-making powers. Limit the information you allow into your course charting process, and avoid any form of future prediction or bet covering.
6. Burn, delete, toss-out-the-window any short cuts or gimmicks that are supposed to provide instant stock picking success with minimum effort. Consumers’ obsession with products underlines how Wall Street has made it impossible for financial professionals to survive without them. Remember: consumers buy products; investors select securities.
7. Attend a workshop on interest rate expectation (IRE) sensitive securities and learn to deal with changes in their market value --- in either direction. Few investors ever realize the full power of their income portfolio. Market value changes must be expected and understood, not reacted to with fear or greed. Fixed income does not mean fixed price.
8. Ignore Mother Nature’s evil twin daughters, speculation and pessimism. They’ll con you into buying at market peaks and panicking when prices fall, ignoring the cyclical opportunities provided by their Momma. Never buy at all time high prices and avoid story stocks religiously. Always
Super Timing BookW D Gann was one of the most successful
traders of the twentieth century . While many people relate to gann swing trading, the gann wheel, the gann square of nine, the gann angle and the gann line not many appreciate that
William Gann used Astrological methods for his trading.W. D Gann was a trader primarily in the first half of the twentieth century and Gann theory and Gann trading are still widely studied over fifty years later.Many of todays traders of the dow, nasdaq and commodities markets still rely on WD Gann Stock trading methods. Myles Wilson Walker has made a full and detailed study of WD Gann and his trading success and has written a unique work establishing the link to Astrology . This link is as valid today as it was when Gann was trading stocks and commodities. Gann analysis and gann theory are a fundamental part of Trading Technical Analysis and stock market theory and Myles Wilson Walker’s research stands at the forefront of Gann books.
In Super Timing the formula is shown in detail. All of Gann’s public predictions were analysed to reveal the one common factor. Super Timing explains all of Gann’s predictions using the one formula.
It shows you which Planet will be signalling the next trend turn and it works on all markets.
As well as Gann’s timing method there is the price target method which is demonstrated by his predictions and from real life examples in recent markets (this is not a planets longitude converted to price)
On this Website I have used one of
Gann’s charts to prove that he really did use astrology because there are still a lot of people who think he used only swing charts, angles or fixed time periods. None of these can be used to consistently explain all his public predictions.
The real answer is in Super Timing where you will learn the pattern combination that is found in all of Gann’s predictions both long and short term. You will see how this works on a swing basis as we work through whole sequences of short term trades that Gann actually did. Nothing has been omitted.
You will see why he entered the market when he did and the reason he took profits only to re-enter at a better price the next day.
The markets covered are coffee soybeans and cotton but the same method works on any market and more importantly it is still working today. When you take the time to study Super Timing you will prove to yourself that this really is the best timing method available.
The method is quite easy to learn as there is no complex Astrology (It is based only on the positions of the planets as seen from earth and their angular relationships)
There is a freeware program included that will do all the calculations. This also contains all the trades in the book plus nearly 100 years of the Dow’s major highs and lows so you can see how well it has worked for yourself. You will learn Gann’s price target system that solves the price part of the formula.
The book is spiral bound with a cellophane protective front and black plastic laminated back. The book is in colour and contains over 150 pages. Price is $250.00 Click to order Super Timing Now
buy slowly when prices fall and sell quickly when targets are reached.
9. Step away from calendar year, market value thinking. Most investment errors involve unrealistic time horizon, and/or “apples to oranges” performance comparisons. The get rich slowly path is a more reliable investment road that Wall Street has allowed to become overgrown, if not abandoned.
10. Avoid the cheap, the easy, the confusing, the most popular, the future knowing, and the one-size-fits-all. There are no freebies or sure things on Wall Street, and the further you stray from conventional stocks and bonds, the more risk you are adding to your portfolio.
Compounding the problems that investors face managing their investments is the sensationalism that the media brings to the process. Investing is a personal project where individual/family goals and objectives must dictate portfolio structure, management strategy, and performance evaluation techniques. It is not a competitive event.
Do most individual investors have difficulty minimizing investment risk in an environment that encourages instant gratification, supports all forms of speculation, and gets off on shortsighted reports, reactions, and achievements? You bet they do!Steve Selenguthttp://www.sancoservices.com
http://www.kiawahgolfinvestmentseminars.com
Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”, and “A Millionaire’s Secret Investment Strategy”
AVAILABLE ! DECEMBER 15, 2010
The Merriman Market Analyst, Inc.
The Leader in Market Timing Products and Services!
Available Dec. 15, 2010. Approximately 160 pages, 81/2 x 11, perfect bound,glossy softcover, $55.00 plus S&H.
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A unique and fascinating overview of the year 2011. Specialattention upon cycles and geocosmic signatures relatedto the world and national economy, stocks, currencies,precious metals, interest rates, the U.S.A., the FederalReserve Board, weather patterns and grain markets. For only$55.00, this is one of the greatest values offered everyyear to traders, investors, and students of cycles worldwide.Written annually for the past 35 years by noted FinancialMarket Analyst, Raymond A. Merriman.
There is no doubt Elliott Wave is one of those techniques that traders either love or hate. For some it’s almost a status symbol to be
able to count waves. Others find it just too hard. I have looked over some online Elliott Wave forums on an occasional basis just to have a look at how people discuss their wave counts. It’s not an infrequent comment I see when some state “I like Elliott Wave but it’s like something isn’t quite right.” Others tend to not adhere too strictly to the rules and just observe for 5-wave moves. Looking at leading Elliotticians’ analyses their counts rarely any adhered to any relationships…
If you are one of these Elliotticians that
have had these doubts when counting waves
I have news for you… You’re absolutely
right. R.N. Elliott made a misjudgment in
the impulsive wave structure. I am 100%
certain of that.
THE HARMONIC WAVE STRUCTUREGiven that I believe quite strongly in the use
Ian Copsey is a veteran technician having begun his career in Foreign Exchange over 28 years ago. He provides his harmonic daily forecasting report on the Forex market through www.harmonic-ewave.com.
His book “Integrated Technical Analysis” has been read by over 4,000 readers worldwide. His experience ranges from working in Barclays Bank’s trading rooms in London and Hong Kong, acting as a technical analysis specialist for Dow Jones Telerate in Tokyo where he provided seminars for bank traders and later as the regional manager for technical analysis products in Asia Pacific. He is also an experienced speaker at seminars. He has lived in Asia for over 22 years in Hong Kong, Singapore and Tokyo where he now lives with his Japanese wife.
The Position Manager is a new software program now in beta
testing that we have been reviewing. It is not currently available to the public yet. The program is designed around the comprehensive data series offered by CSI data. CSI monitors some 80,000 world stocks and 1000 world futures. It offers charting from this bank of data using updates via the Unfair Advantage® and delayed intraday updates from third party internet sites.
Position Manager keeps track of your positions for virtually any exchange traded investment. It gives you your entry, exit, last price and cumulative profits. It also gives USDA Commercial Interest, and
cash prices to help you gauge market sentiment. It allows you to view CSI’s Seasonal Index data projected forward. See Figure 1 and 2.
For spread trading the program also shows correlation ranks between proposed market pairs and Z-scores (signal line values that measure the dispersion between pairs of markets) from the CSI’s unique Market Correlation Studies. See Figure 3.
Position Manager uses a space-age directional filter logic, developed by Projectory Filter LLC, to help hold onto profits. It gives turning points for timing market entry and exit with expert on-line reversal assistance. See Figure 4. Notice this is a normal bar
Figure 3 Portfolio Correlation chart. You have an option to put various indicators on this chart subject to your needs for research. At the top of the chart you can see in the red/green bar the profits or losses and direction of each trade.
The Position Manager can run on its own or can be launched through CSI’s Unfair Advantage software.
The Position Manager’s greatest value to the trader
is that it helps you to select and time the execution of investments through many tools which provide real insight into the market to help capture and lock in profits, while limiting risks. The program can help you uncover trading opportunities far better than traditional charting programs. One of the beauties of the program is that it allows you to
test your ideas through several approaches such as seasonal tendencies, intermarket correlation and the application of its space-aged stop and reversal signals. To fully take advantage of the program you should understand how seasonal tendencies and Commitments of Traders data works on the markets.
just by entering a position list on actual or proposed trades. From there you can view the system graphically with the stop system which employs a statistical trajectory filter and see how your profits might grow through theoretical testing. You can then add seasonal indices to your chart to see how your market tends to perform during the calendar of the trade and projection into the future based on historical records. Notice in Figure 4 how the market is closely following the seasonal tendency orange line. This can give you an insight to the market that you would not normally have. You can
then go to the correlation window where you find a system for profiting from pairing markets to help you control risks through diversification. You can also add standard indicators such as RSI, stochastics, moving averages, etc. from the indicator window to help you time the markets. See Figure 5.
The program also can give you the summary of performance of equity analysis (Investment + Realized vs Unrealized P/L based on the portfolio of postions. See Figure 6
Stay tuned for the release on this program from CSI. Also check out the comprehensive data
series offered by CSI data, with accuracy unparalleled in the industry.For more information go to www.csidata.com
1.5625 x 9 = 14.0625: 140.625: 1,406.25: 14,062.50
12,500 by 1/8th = 1,562.50 x 3 (3/8th)
= 4,687.50 Run x 3 = 14,062.501,250 by 1/8th = 156.25 Yrs = Mayan:
El Nino” Time x 3 = 468.75 Yr Cycle
T. Henning Murrey created 1992 – ’93 the world’s (only) 100% Harmonic 17 Octaves Trading Platform where all markets
want to run to 37.50% or 62.50% exact: starting with Murrey’s Binary Algorithm: MBA: .00152587890625 doubled out 17, 18 or 19 times will give you every (exact) future reverse for any and all markets set to Base Ten.
If you believe all market reverses to be random, you can’t imagine one number will “present” you with every (exact) future price off M’$pie = 3.125.
Wall Street Experts and “local” experts are (not) allowed to tell you: there are no random market reverses when you set all markets to: MMTS
1900 Oct (09 to 11) S&P 100 Index at 140.625 + 703.125 = 843.75 highs 03.24.2000 1990 Oct 09 Gold at 250.00 + 1,000 = 1,250 + 1/8th = 156.25 = 1,406.25 1990 Oct 09 Crude Oil at 40.625 + 100 = 140.625 1990 Oct 09 Dow 30 Index at 2,500 + 10,000 + 1,562.50 = 14,062.50 on Oct 09 2007 1990 Oct 09 US 30 Yr Bond All Time Highs at 140.625 1990 Oct 09 BRK.A All Time Highs at 140,625.00 1990 Oct 09 S&P 500 Index at 312.50 x 5 = 1,562.50 on 17 Yr. Cycle 2007 Oct 09
The MurreyMath Trading Frame software program will automatically decide for you if a market is Over Bought or Over Sold, and automatically display the Trading Strategy whenever the Daily Price Action
The MurreyMath Trading Frame Software gives:
EOD Murrey Math Software $1000
RT Murrey Math Software $2750
60-Day Trial of Program $250
Murrey Math Trading Book $78
Murrey Math Learning CD $150
MURREY MATH SUPPLIES
• All Gann Lines (8/8ths)• All Vertical Time Lines• All Squares in Time• Entry Price Points• Overbought/Oversold • Set 5 Circles of Conflict• Parallel Momentum Lines• Set Speed Angles (7)• Set Learning Mode Data• Present “Best Entry Price”• Present Daily Volume differential• Sell 50% of Position Price Points
Full Software Package $1000.00End-of-Day version includes: One Set of Software, Murrey Math Book, CD Learning Lessons & EMail Updates
1854 Oct 09: NashvillePrice: M’$pie = 3.125 produces all 17
or (17 x 17) 289 Internal trading Octaves known
Since 1992 – 1993 and “back tested” to Crash (of) Oct 1987: Crash Oct 1929: Oct 2007
Mayan 52 Yr Cycle: 3/8th run 52 x 3 = 156: x 3 = 468 Yr Cycle*
Mayan 520 Yr. Cycle: 52 x 10 = 520 + 1492 Oct 09 Columbus Day = 2012 End*
1519 AD The Mayan Culture (already) knew they would have to “suffer” through 156 x 3 = 468 Yr Cycle (of) torture by Spanish Plague (of) Religious Ignorance when one Spanish Moron Leader burned 10,000 math books (of) Mayans in one day’s hard work.*
*He said: “the Devil made him do it” for the protection of ignorant Christians who hate math and can’t memorize Moses’ 365 Sins (days) of the Covenant Year.
Mayan Culture 1519 AD predicted “suffering” takeover 1562 AD to end Aug 17 1987*
1987 Crash Aug 24 USA Stock Market by way of World Currency Crash
1519 + 468 “Suffering” Cycle = 1987 Aug 17th World Currency Crash*
Aug 17 1987 Negative Cycle to Aug 17 1992 + Cycle and Dow 30 Index moves up + 300%*
5 Yr Cycle2001 Aug 16 Negative Signal: Twin
Towers: World Turmoil: Sept 11 2001*2002 Aug 16 Positive Mayan Cycle: USA
stock market moved up + 100%*
5 Yr Cycle: 2007 to 2012 End 26,000 Sun Light (across) Milky Way (at) 180 Degrees
2007 Aug 17 End Cycle Turns Negative: Dow 30 Index 14,000 (near) 14,062.50*
Mayan Indians set USA Central Time: at 18 x 19 = 342 (almost) (7 x 7 x 7) wheat Stores*
Phi: .618 so we insert 18.618 x 19.618 = 365.24 Yr Year: Wow: 5th Grade Math*
Murrey’s Birthday: 3.125 Yr CycleOct 09 1997 S&P 100 Index at 468.75
= 843.75 + 3/8th (125 x 3) = 843.75468.75 + 2/8th (125 x 2) = 718.75 +
15.625 (1/64th) = 734.375 price on 2007 Oct 11
Oct 25 1997 lows at 406.25: to 843.75 = 437.50 = Perfect Pitch
Oct 25 1997 lows at 406.25 to 734.375 on Oct 09 to 11 2007 = 250 (2/8th) = 656.25
What do you think REALLY matters most about markets? ......................
PRICE!
Most traders focus on TIME. Guess what? Albert Einstein pointed out that time is just an illusion and that everything is happening simultaneously (and this is what quantum physicists also tell us).
Time is an illusion…..price is everything!
However, Einstein also stated that price is a function of time in his method of predicting price movement! Yes, he did discover this and very few traders know this. For more information see my book “The Art of The Trade I…Cracking the Code and Unlocking the Secrets to Trend/Profit” on page 24 and page 67.
Which would you rather know: the
exact price of the high/low or the exact time (day) of the high/low?
Price is EVERYTHING because everything is contained within the price. All fundamental news and thousands of pages of reports, all greed, all fear, all knowledge is contained within the price for that market. Price is everything and price is reality.
Think of a price chart as a puzzle with a million pieces. Eighty percent of that puzzle is already put together for you and is right before your eyes in the form of a daily bar chart. What does the other 20% of that puzzle look like?
One of the key principles of trading success is what is called the 80/20 Rule/Principle.
On page 23 Chapter Two of my book «The Art of The Trade I (Cracking The Code & Unlocking the Secrets to Trend/Profit) I talk about four(4) Key Principles. One of those Key principles is the rule of 80/20 discovered by Vilfredo Pareto in 1897. The rule of 80/20 simply states that 20% of your effort creates 80% of your results.
In my NEW book The Art of The Trade II (The Art & Science of Trading Profits) I discuss this 80/20 rule and how it applies to trading. I state that not only does 80/20 mean 20% of your effort creates 80% of your results but also “both in Time, Energy, and Money!”
I illustrate this 80/20 principle as applied to trading as follows:
The 80/20 Rule as applied to trading is very profound. For every dollar invested in Trade #1 would yield 16 times more profit than the same dollar invested in Trade #2! (400 / 25 = 16). Trade #1 was highly leveraged. Trade #2 was low leveraged. Putting risk aside for a moment you would rather have your money invested in Trade #1.
The 80/20 Rule of trading also applies to maximizing your time. Think about it. Focusing on the critical trades leverages your time AND money with results 16 times FASTER!
All that knowledge about the reality of price is displayed each minute, each hour, each day in graphic form called a bar chart. The chart contains the open, high, low, and close for that time period. So, if price is what matters most about markets then what do you think matters most about PRICE.........
TREND!
What matters most about price is its TREND! Trend is price repetition over a given time period (minute, hourly, daily, weekly etc.). Trend can be precisely calculated.
If what matters most about markets is PRICE and what matters most about PRICE is TREND then what matters most about
TREND?........ SYMMETRY! SYMMETRY of course! To be more
precise exact price/time squared which leads to perfect trend symmetry. Trend symmetry is a price/trend that is repeating in exact price/time flow within an exact price and time pattern that is as equalized as possible. It would be like the market looking into a mirror reflecting itself back onto itself in a never-ending flow of price and time. More about this in a moment in relation to price/time squared.
Ok, so if what matters most about markets is PRICE and what matters most about price is TREND and what matters most about trend is SYMMETRY what matters most about market symmetry?......
VELOCITY! It is of course VELOCITY of the price/
trend.Velocity of a trend is related to the
directional price movement and velocity is equal to price divided by time. Velocity of trend increases when price is accelerating faster than time (large range price movements). Velocity is decreasing when time is increasing faster than price (small range price movements).
Price “Flows” in direction, duration, and amplitude as the square root of time with the open, high, low and close charted in exact proportion to each other relative to space and time in perfect symmetry!
(2) There is SYMMETRY between price and time and….
(3) Price and Time are SQUARED creating symmetry which
Creates maximum buying/selling pressure within a
small space of price/time then…. (1) + (2) + (3) = High Price Velocity =
Trend = PROFIT! As price approaches and enters this
point of singularity price, time, velocity, volatility, and volume become compressed. When the market/price moves out of this “compressed” point of singularity price, time, volume, volatility, and velocity expand rapidly.
There is a law in physics which says that water will reach its own level by its own weight. There is a corresponding law of market price action which states that price (ticks; smallest units of price movement) will reach its own level by its own buying/selling pressure.
According to the laws of physics, when enough electrons line up within an atom to form a position, then all the rest automatically line up in a similar fashion. In physics this is called ‘Phase Transition’. A similar situation happens in markets when the smallest unit of price (ticks) form a cluster and when enough of these price ticks line up (in time) then a “tipping point” or critical mass occurs and a phase transition (change in trend) will occur.
This ‘Point of Singularity’ (as described in my book The Art of The Trade I (Cracking The Code & Unlocking the Secrets of Trend/Profit) page 70 is the holy of holies as far as trading is concerned. ‘The Point
of Singularity’ is the Alpha/Omega point in a market, or the end of one trend and the beginning of a new trend.
I have been searching for this since 1982 and in great detail since 1998 and NOW I have discovered the mechanism that causes this effect (you cannot have an effect without a cause!). IT Is the MAGIC (Price) TICK. The MAGIC (Price) TICK operates on a Quantum physics property called ‘Entanglement’ where one tiny packet of energy (in the case of trading a cluster of price ticks) influences another. How this relates to trading is the MAGIC (Price) TICK will influence the next tick until you hit the “tipping point” (price clusters that equal those tiny packets of energy) and a major reversal in price will occur. This is a remarkable discovery about the markets.
These principles combined make up what I call the Market Syntax Code (a Triangulation of price, time, and symmetry).
The most important thing about MARKET’S is PRICE.
The most important thing about TRADING is PROFIT.
So, how do you MONETIZE PRICE into PROFIT?
Proper alignment of price and time with
Symmetry in conjunction with Velocity.
For more information please read my two books: The Art of The Trade I (Cracking The Code & Unlocking the Secrets to Trend/Profit) click here and The Art of The Trade II (The Art & Science of Trading Profits)” click here
W. D. Gann in 1948 charted the May 1949 Soybean contract in the chart
at the bottom of this page. This chart is one of Gann’s most famous charts. It is on the internet on dozens of sites and is one of the most talked about charts from this legendary trader. Perhaps why this chart is talked about so much is the fact that
there are some planetary longitude lines plotted on this chart.
The question that I have and many ask, did Gann really use astrology to trade the markets? Some say he did and even that he hired expert astrologers to help him in
this area. Even in Gann’s reading list of books, there were many astrology books recommended.
In Gann’s time, astrology was not mentioned by professional traders, as it was considered almost witchcraft. So it is understandable that Gann did not write about it in any of his courses, however, in some of the personal trading letters to of his customers there were many comments about astrology.
This second chart with the highlighted blue, green and red lines is from the new book “The Law of Cause and Effect: Creating a Planetary Price-Time Map of Market Action”, by Italian market researcher and trader Daniele Prandelli. In his book Parandelli unravels the mystery
of how to use these planetary lines on charts.
There have been many traders who have experimented with using planetary lines and in fact several programs now available that use these lines. The Gann Trader by Peter Pich and the Market Analyst by Mathew Verdouw are the two most popular programs. Very few have been
The Law of Cause and Effect: Creating a Planetary Price-Time
intermediate and even long term trading.The author also presents a number of
new cyclic trading tools to help traders pin point timing along with these planetary lines. They give the trader a high probability correlation of price and time and when to take action on entries and exits of the market.
The book is recommended to those traders and researchers who are interested in finding out what is really about behind those mysterious planetary lines Gann used on his chart and how they can be applied to today’s markets. As an added benefit purchases of the book will be granted access to an online research and education forum providing direct interaction with Prandelli. They can actually exchange charts, ask questions and get guidance directly from Prandelli.
For more information go to: http://www.sacredscience.com/Prandelli/LawOfCauseAndEffect.htm
able to document any successful use of these planetary lines.
Now for the first time Prandelli has introduced the proper conversion factors that he felt W.D. Gann used in his trading. With the unveiling of this information the author gives traders the price-time projections that they can use to plot on the available trading programs just mentioned. Traders can now have a functional tool for entry points, projections and exit points. Using these planetary methods the author believes that it is no longer necessary to use and be overwhelmed with the indecipherable and inconsistent other computer oscillator tools that traders have attempted to use over the last few years such as stochastics, RSI, CCI, etc. As you have probably found out computer oscillators are after the fact tools and don’t really help traders to successfully trade the markets and may even hinder them. The author believes that planetary projection lines, on the other hand, offer the trader before the event tools to trade with.
In his book Prandelli illustrated how he uses planetary lines with over 160 charts and diagrams. Most of the charts are on the S&P 500 index. He also tells the reader how to use planetary lines on other times frames. So planetary timing can be used for d a y - t r a d i n g ,
H.M. Gartley was a technical analyst who published his book “Profits in the Stock Market” in 1935. He
is best known for his Gartley Patterns in the markets. Ross Beck is the author of the new book – Gartley Patterns. He is the recognized authority on the subject of
Gartley Patterns. In this book Mr. Beck explains how to utilize the methods of H.M. Gartley to capture the maximum profits in the financial markets.
The book is divided into three parts
1) The first part examines how to identify and profit from the pattern formations in the markets.
2) The second part explains the how the Gartley patterns are much superior to classical chart patterns and even Elliott Wave Theory.
3) The third part shows how to apply Gartley pattern filters to improve the profitability in entry and exit points.
Mr. Beck basically describes how to setup your charts so to make sure the basics are covered. He explains the different types of charts, computer oscillators and indicators and where to get your data. He clearly explains exactly how Gartley and Elliott Wave are related. How the AB = CD label and the Elliott Wave ABC correction
are basically the same thing and how to use the Quadrilateral to calculate price extensions.
He also explains why the Gartley Pattern is the most powerful pattern in the financial market and he convinces you of that. You’ll see the Gartley patterns in your chart trading and how easy they are to recognize. You have actually been trading Gartley and you did not know it.
In the chapter titled, The Gartley Pattern Revealed, the author goes into great detail with many illustrations. He feels that it is very important that the trader be patient until the desired move is developed, all conditions laid down are present, watch for the minor reaction, which tests the market and have the courage to get out with a fair profit or protect the profit with stops.
In the next section the author compares the Gartley methods with traditional pattern methods such as double bottoms, head and shoulders. He explains one of the best opportunities in trading with several chart illustrations. He details the exact Fibonacci ratios to use in the Gartly pattern and how it fits into the Gann box.
Finanally now that you know the Gartley pattern he explains entry and exit strategies and how they depend on your particular style. He gives several types of entries such as Fibonacci, 1-Bar Reversal, Candlestick, and the Technical Indicator Entry method. He explains his exit strategies such as the 3-bar trailing stop and how to trade multiple contracts, scaling in and out, calculating targets, etc.
that explains some of the strategies in the book. In these cases he shows examples of volume, quadrilateral price extensions, quadrilateral clustering, 78.6 percent Fib entry method and profit stop levels set, profit targets, trailing stops. Finally he discusses the importance of the trading plan and how you can stick to it.
At the end of the book the author explains Gann’s Mysterious Emblem. After uses angles, circles, squares and triangles relating to Gartley he felt that the Gann Emblem fit perfectly into his XABCD Gartley pattern. He explains how to use the Gann Emblem with several chart illustrations. Finally he gives you one more filter for Gartly Trades, the Wolfe Wave. It is used to identify the D point of a Gartley pattern. There are many illustrations to explain this pattern. For an video display click this link.http://www.youtube.com/watch?v=98CVJQrcH2I
This book is designed and trader or researcher interested in geometric trading.
The author does an excellent job explaining the geometry of Gartley and combine that with his complete trading strategy and a book written with simplicity and clarity, and you have a winning book. So if you want a complete package with details about the Gartley pattern this is the book for you.
Ross Beck, FCSI can be reached at www.geometrictrading.com The Market-Analyst has a Beck plug-in for many of the tool the author uses in his trading. It includes:
Figure 1 Beck’s Emblem TRADERSWORLD.COM Late Fall 2008 / Early Winter 2009 61
Since early-2007, I have discussed the 17-Year Cycle and its impact on everything from earthquakes &
volcanoes to stock market crashes & real estate debacles to currency meltdowns & commodity cycles. Many of the projections made in 2007 have already reached fruition…
The Stock Market did drop 35--50% in 1-2 years (similar to what it did 34 years prior… and 34 years before that… and 34 years before that… and 34 years before that).
Real estate did turn out to be a bubble that is still losing air.
17-Year Cycle & Interest RatesNovember 2010 Ushers in Major Transition Period
Commodities did see another surge from late-2008/early-2009 into the present (though late-2010 into early-2011 pinpoints diverse cycle highs in many of these markets, including Gold & Silver).
Major earthquakes did strike targeted areas like Chile and/or South America (as they did 17 years ago… and 17 years before that… and 17 years before that… and 17 years before that… all the way back to before the mid-1800’s).
However, there are some markets that have a similar 17-Year Cycle… but on a delayed basis.
‘action’ - like the stock market meltdown of 2007--2009 - creates a ‘reaction’ in other markets, like interest rate futures. The plummeting price of stocks forces a mass stampede - more euphemistically recognized as a ‘flight to quality’ - into Treasury Bills, Notes & Bonds. The result is a type of mania in these markets, which is often the final 10-20% of a much larger move or trend.
This manic rally could be the final blow-off or could be the first major warning sign of an impending top. This is where cycles again come into play.
A Trio of 17-Year CyclesThe first phase of this analysis begins with - and ends with - the ubiquitous, 17-Year Cycle. In the case of short-term interest rates, the year 2010 is the culmination of a trio of 17-Year Cycles - dating back to 1959 - and was expected to usher in a major bottom in interest rates. See Chart 1
The Fed Funds Rates chart (first published in November 2009) highlights the major bottom in 1959, the subsequent low in 1976 (17 years later; the low that preceded the 1976--1981 ‘mania’ in actual interest rates, in response to a ‘mania’ in inflation), and an important bottom in 1993 (17 & 34 years later).
Each one of these projected a major, 17-Year Cycle bottom for 2010, ideally for late-2010.
Narrowing The Focus…Also reinforcing this focus is the corresponding futures peak (interest rate low) in late-1993 - exactly 17 years ago. The 4th Quarter of 2010 is exactly 17 years from one of the most important peaks in 10-Year Notes & 30-Year Bonds of the past 30 years. In the case of Notes, the 4th Quarter 1993 peak ushered in the largest correction of the past 20 years (a peak that came 7 years from the previous
one - in 1986 - and a drop in which prices plummeted for 13 months).
A futures peak in late-2010 would also come 7 years from the previous one (2003) and could set the stage for a sharp decline to follow - perhaps a 13-month decline - beginning in November/December 2010. And, it would come at a time when an interesting 14-Quarter (approximately 3.5 year) cycle comes into play (the following chart is of the treasury yields, so the turning points are the inverse of what is taking place in Bonds & Notes futures; all of these charts represent an anticipated bottom in interest rates and peak in Bonds & Notes). See Chart 2
Narrowing The Focus A Bit More…The most likely time for this expected peak - in Notes & Bonds futures - is in November 2010. That is also when a
very consistent 26-month (2 years and 2 months) cycle comes back into play. This cycle has governed the entire advance of the past decade.
This 26-Month Cycle created lows in January 2000, March 2002, May 2004, July 2006 & October 2008 (1 month margin of error) and projects a major top for November 2010. This also resulted in a corresponding 52-month low-low-(high) Cycle Progression - March 2002 low to July 2006 low to a projected November 2010 high - that has been in focus for the past 18 months (the accompanying chart is actually a copy of a chart that was originally included in the January 2009 INSIIDE Track). See Chart 3
At the very least, a peak in November 2010 should hold for 6-12 months. Its validity - and holding power - will be strongly influenced by an important
indicator - the monthly trend pattern. The earliest that this indicator could confirm a major (1-2 year or longer) reversal would be on January 31, 2011. So, the action of December & January needs to corroborate this expectation.
But What About QE2 (and QE3… QE4…)?The most frequent question I have received in recent months - with respect to this analysis - is something on the lines of ‘How would this jive with Quantitative Easing?’ There are multiple responses to that question (although I do not place primary focus on fundamentals and do not expect the fundamental rationale to be obvious at the point of reversal)…
1 - The markets almost always discount fundamental events in advance (often 6 months or more before the fact). So, the Bonds & Notes futures markets should have already priced in the latest round of quantitative easing. By the time the Fed
announced this, the futures markets are already looking ahead and posturing for ‘what’s next?’
2 - Sooner or later, the impact of commodity price inflation is going to take its toll. Commodities have been heading higher for over a decade. Even in the midst of collapsing real estate, employment rates, etc., commodity prices have headed higher. This means that they are nearer to the point when and where a parabolic rally will take hold. THAT is when the Fed and the markets will be forced to sit up and take notice.
On a 6-12 month basis, commodities are expected to see culminating surges in December and initial (3-6 month) peaks in January 2011… the topic of a separate discussion. A new bull market is not likely to take hold until after mid-2011, although the intervening lows are likely before then (some as soon as March 2011). So, this correlation between interest rates and price inflation will not likely take hold until
late-2011 or 2012, when the next surge in commodity prices is more likely.
3 - Dollar weakness is only beneficial to a certain extent. The Dollar’s demise has had some redeeming aspects but is ultimately a bad thing. It has contributed to the inflationary surge in commodity prices… but has also helped to support stocks. However, all my long-term Dollar cycles point to 2013 as a momentous year that could see a decisive change in the US Dollar (and possibly other currencies).
Leading into that year, I expect to see another Dollar decline - most likely beginning in July 2011 - that could force the Fed or Treasury to ultimately defend the value of the Dollar. Interest rates are one of the weapons in the arsenal of Dollar-defending tactics. (On a 6-12 month basis, the Dollar was projected to drop into November 2010 and then rebound into May/June 2011. This is still the case, so do not mix oranges with apples - or longer-term analysis with intermediate analysis - when assessing this outlook.)
There is actually a lot more to these interest rate cycles and the outlook for the coming months and years. My objective for this discussion is to again highlight the 17-Year Cycle - that has been the focus of at least 4 or 5 Trader’s World articles since mid-2007 (and the focus of dozens of newsletters and special reports, most of which can be found on our website - www.insiidetrack.
com) - and to highlight the important transitional period in November 2010--January 2011.
While the Dollar & Interest Rates were/are projected to bottom in November, many other markets are not expected to complete their 6-12 month trends until January 2011…
The January Shift!While November & December are expected to subtly usher in this transition, January 2011 could provide more obvious extremes and reversals. Multi-year, multi-month & multi-week cycles in Gold & Silver peak in January 2011. A 3-6 month (potentially a 6-12 month) top is expected at that time.
Stock Index cycles peak in late-December and are expected to usher in an important top IF the Indices have reached specific, upside price targets. The ‘January Cycle’ - a technique that helps identify intra-year extremes and intra-year trends - will be the ultimate filter for this.
Grains are expected to top in late-December or early-January & pull back into March 2011. This is part of ongoing projections for a Major bottom in early-June 2010 followed by a new, multi-year bull market (see http://www.insiidetrack.
com/grain_cycles.html for a more detailed explanation of the cycles and indicators that forecast this, beginning in late-2009).
Several commodities are entering decisive periods in December & January. One that comes to mind is Coffee. Coffee was projected to set a major low in early-2009 and then surge into 2011 (see http://www.insiidetrack.com/coffee_cycles.
html for details). In recent months, it was expected to rally into November, set an intermediate peak and pull back, and then surge to new highs into late-December/early-January.
Price action in early-December is validating this and Coffee is poised to surge into January 5--7, 2011, when a myriad of short and intermediate cycles come into play. Its 2-3 year (minimum) upside target - from the 2009 lows - is at 259.0/KC, a level that could be tested in
December or early-January. However, the most synergistic convergence of cycles comes into play in May/June 2011 and could have a much greater - and farther reaching - impact on the price of Coffee.
Cocoa is another market that was forecast to bottom in mid-September, set a secondary low during the week of November 15--19th, and then rally into January (possibly February) 2011. The evolving analysis - with corresponding cycles - is available at http://www.insiidetrack.com/cocoa_cycles.html.
Phase IIThe point of this is that late-2010/early-2011 is a momentous period, when an important shift could take place in many markets. Some of these ‘shifts’ should only last for 3-6 months. However, others - like that in interest rates - should last for many years to come.
See Chart 4Looking ahead a little farther, June 2011 is
one of the most critical - and potentially decisive - interest rate cycles of the next 2-3 years. It is the culmination of many diverse cycles and could help corroborate the outlook for a new paradigm in the financial markets. The accompanying chart from August 2010 (also a ‘yield’ chart that is the inverse of the Bonds & Notes futures charts) gives a small taste of the cycles that come into play at that time. More specific and detailed analysis and trading strategies will be available in our publications. IT
Eric S. Hadik is President of INSIIDE Track Trading and can be e-mailed at [email protected]. Their website is at www.insiidetrack.com.
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To be a successful trader you need to sync yourself into the market. What that means is you need to do the
necessary research before you trade. How does this work. First go back on the long term monthly and weekly charts. Get the big picture. Then go down to the daily and intra charts to get the near-term picture. Never go against the long term charts using the short term charts.
Master Traders of the past did not have computers. They had to plot charts out on chart paper by hand. This actually gave them an advantage. They could see the big picture and the near term picture all at the same time. W.D. Gann used charts that were actually on a roll. They were 30 inches tall and continuously on a roll. So he could plot the long term and short term trend lines all on the same chart.
Today you can do what the Master Traders did on their long term paper charts
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What size of monitors should you get? I would recommend 23 or 24 inch size. I would also recommend a monitor stand as you can see above in this
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Most software like eSignal will expand charts across all three monitors. So therefore you can view long term charts expanded across three monitors. This gives you the big and the short term picture. Three big monitors give you a 60-inch horizontal view.
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Understanding Gaps Price by Scott Andrews $24.95 Buy NowUnderstanding Gaps is part of an ongoing series of publications of Traders Press Inc®. Each book in
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Stock Patterns for Day Trading by Barry Rudd $93.00 Buy Now This book describes the trading strategies used by a professional stock trader in his own trading.
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The Opening Price Principle by Larry Pesavento $28.95 Buy NowThere is an amazingly reliable relationship between the opening price and the high/low range for the entire day. Find out
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Winning Chart Patterns: 7 Patterns That Really Work by Edward Downs $99.00 Buy NowPinpoint high probability trades over and over again, using 7 chart patterns that are
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Intra-Day Trading Tactics Course Book by Greg Capra $28.95 Buy NowShort-term traders have used intra-day tactics to build wealth for years. Now Greg Capra shares his secrets in this book/
online video course package designed to energize your trading and arm you with the critical elements you need to make more money. You’ll see how Capra pools an array of indicators creating a single -- profitable -- trading protocol that will be used to make winning trades over and over. See him guide you through his methodical approach, then study his method thoroughly point by point in this carefully crafted set of instructional material. Watch and read as Capra drives home the following critical points: -- The three foundational forms of intra-day trading -- The psychological demands you’ll need to know to win big -- The need to define your financial plan; building wealth or gaining income -- The importance of mastering charts- 5 and 15 minute patterns -- The all-critical “tick indicator”— how to master it as a key timing tool These are but a few of the points that Capra outlines in this comprehensive learning set. Use the book and online video to develop a working, hands-on knowledge of moving averages, risk limits through relative strength
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Seven Set-ups that Consistently Make Money by Jeff Cooper $129.00 Buy NowA reliable trading set-up can be worth a fortune in winning trades. In this new DVD course,
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Finding Profits in Forex: Combining Elliott Wave and Fibonacci to Pinpoint Winning Trades by Gordon Todd $98.00 Buy NowTraders in the know realize that there is a
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Pyrapoint Price: $150.00 Buy NowBy Don Hall Mr. Hall discovered a secret from one of Gann’s associates “Reno” who shared a desk with him on the floor
of the Chicago Board of Trade. Apparently Gann carried a piece of paper with him to the floor every time he made a successful recorded trade. Mr. Hall found out what that paper was and developed the Pyrapoint trading method around this. An easy to understand trading software program was fully developed. It creates a natural trend channel and areas of both support and resistance. It’s clearly tells you when the trend changes. 300 pages.
The Structure of Stock Prices Using Geometrical Angles Price: $49.95 Buy NowBy Russell M. Sedlar “This chart based book shows how the Geometrical
Angles described by W.D. Gann, when used is this newly discovered way, literally become the controlling force of stock price fluctuation, causing tops and bottoms to form and trend lines to be determined.”
Gann Master Charts Unveiled Price: $49.95 Buy NowBy Larry Jacobs Complete 100 page book explaining
Patterns of Gann by Price: $159.00 Buy NowBy Granville Cooley This set of books [included within this bound volume] is not about pulling the trigger. It is not a system on how to make a million dollars in the market in the morning. It is about certain mathematical and astronomical relationships between numbers and their possible application to the number of W. D. Gann.
W.D. Gann in Real-Time Trading by Larry JacobsPrice: $69.00 Buy NowBy Larry Jacobs If you feel that you would like to do short term scalping or swing trading in the
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Patterns & Ellipses Price: $49.95 Buy NowBy Larry Jacobs Stocks and futures move in elliptical paths. When a market makes a gap, its price action usually passes into a
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how to use Gann’s Master Square of Nine Chart, The Gann Hexagon Chart and the Gann Circle Chart. Many articles on the square of nine are also included from past issues of Trades World Magazine
The Secret Science of the Stock Market Price: $149.95 Buy NowBy Michael Jenkins In this book Mr. Jenkins gives a start to finish ‘scientific’ examination of time and
price forecasting techniques starting with basic line vectors and advances the concepts to circles, squares, triangles, logarithms, music structure and ratio analysis. These concepts are developed into a comprehensive method that allows you to forecast any market with great accuracy. Mr. Jenkins demonstrates how a few simple calculations would have predicted many of the greatest stock market swings of the past seven years with accuracy down to the day and price targets within one point on the market averages. This new book advances the work started in his other books and course but goes much further revealing little known secret methods only a very small handful of professionals know and in many cases he reveals proprietary techniques never before revealed to the public at any price. The chapter on the Gann Square of Nine is much more complete than 90% of courses available selling for hundreds to thousands of dollars more. This chapter alone is worth several times the cost of the book but the secret ratio analysis at the end of the book will truly change your trading habits forever. When you finish this book
there is little left to learn about advanced trading and forecasting techniques with the rare exception of astrological methods, which are not covered in this work. This book goes from beginning concepts to the most advanced so anyone can greatly benefit from reading it. All concepts are demonstrated with actual chart histories. It is not, however, for the casual investor who does not want to take the time to calculate a simple square root on a hand held calculator. If you liked Mr. Jenkins’ previous books and/or his trading course, then this one will easily surpass your expectations.
Simple Secrets of the Trading Master Price: $90.00 Buy NowBy Jack Winkleman In the ebb and flow of the markets over a longer time such as one year or more, it is important to
know what the market has done in the past. Certain years seem to follow the patterns of previous years with uncanny likeness. This is a book put together by Mr. Winkleman and is a very valuable tool. This book tells a trader how to used past harmonic cycles for forecasting future trends. This book is a picture of the markets since 1920 in Soybeans. As an added bonus, it has a track record of the Dow Jones Cash Index from 1900 - 2006. Cycles are nothing more than repeating patterns. Trends follow cycles. This book gives you the key cycles in the market. All you need to know is what those repeating patterns are. That is why the historical charts become so valuable and this is why this book is so important.
