In a recent significant move in the September stock index, we pulled this action from our files as a tool to show just how Universal the system is, and just how effective it can be in the stock market as well as commodities. We have chosen the small contract of the S&P simply because this is the one more usually adaptable to the small trader. You may wonder if the small contract has sufficient volume to follow our rules. We invite your scrutiny. We have found it to be just as accurate and nearly as dependable as the larger-volume big brother. The unit is the
ESU of 1988.
We have made one other variation so that you may learn as much as possible about the flexibility expressed herein. We have used a TIME frame of 120 minutes. A couple of reasons could be presented for your consideration in our choice of 120 minutes. One is the fact that so long as you use the Pythagorean scales of PRICE and TIME, you may be very flexible since the only problem which will be evident will be that of being able to easily recognize the angles and the points of action. This will happen only because the square is not “square enough” for you to easily discern what is taking place at a given time. For instance, the square is too flat or it may be too high in comparison to the TIME frame selected. Again, as we pointed out earlier, it does not make your work inaccurate; it is just difficult to adjust for your mind’s interpretation. Solution: simply make a comfortable-appearing square on your chart that you can read. Your flexibility in scale and in TIME frames will always manage this for you. Trust the system! It will not be a problem for you as you learn to use the program.
The second reason for the 120-minute TIME frame is that it works out well in the division of minutes of the 24-hour day, which we are recording. Since there are 1440 minutes in our 24 hour day, and since Gann and Company used the number 12 rather often as their “culmination” number (in squares, in PRICE, and even in overlays) our day divides into 120 minute TIME frames nicely. It gives us 12.
Hopefully, this example will breathe a different cycle of life into your charting, adding to that which you have experienced thus far.
Granted, this was a significant move, but it does seem significant in results, as well. During the ensuing 30 hours of trading since the first sell signal was given on June 6, note the four genuine sell signals were given as each objective was reached. Also one buy point was reached (we are telling you not to take those signals which are developed against the trend). Each objective, including the last sell from the top of the second square, was nearly picture perfect.
A quick review will reveal that the 45’s gave a perfect highway for the trip downward. Remember your earlier chart of December Corn? When you get on one of these highways, you do need to follow the fence lines (rules) and take advantage of the wonderful opportunities as they unfold.
As we have mentioned, pyramiding is definitely your decision -- but you do have the
tool to tell you when NOT to pyramid, and again, when TO do so with a minimum of risk. We hope that these examples are clear enough for you to actually feel the wonderful phenomena which is unfolding in front of all of us each day -- and actually in all of life if we can interpret it, we feel.
Incidentally, in some 30 hours of trading, we saw nearly 60 points unfold. And this was without pyramiding, and without taking a trade against the trend. Not a bad hourly rate of earning!
While we are in this mode of charting, let’s take a quick look at a similar-looking chart. It is one of a very different product from the stock index above. It is a recent trade of July
Soybean Oil.
At first glance, one will discern that the charts have a similar profile; however, here the similarity stops. The results are just as thrilling and just as accurate. Note that we tracked “oil” up approximately 180 degrees on an up wave until we took the sell at nearly 30.00. We then recorded an objective and a sell at the support 45 in this square, an objective and a sell at the bottom of the first square, an objective and a sell at the 45 support in the second square, an objective and a sell at the bottom of the second square, and a new sell again generated at the top of the third square. Note, too, that you had a perfect pivot for a resell at the end of the third square, near the top again.
We are showing you an example here of one square of TIME, yielding nearly 270 degrees of profit. We will be more cautious now, however, for the next move. Why? And what is the recommended move? Remember that we stated at the beginning that a trading system should give signals for any given TIME, and a recommendation to go along with the indicated judgment. We also said that PYRAPOINT does a good job of providing this. So as to “why” -- we note that we are getting our momentum indicators (which are used as “back-up”) into an oversold status. We can, therefore, afford to be cautious with further shorting while we await our momentum lines to confirm what we like to call a “gathering”. Actually, this is a signal to watch for a “setup” for a possible trend change for at least a temporary countermove. The system will tell us this -- and it will tell us when as we watch for EOS and other data. Gann was often quoted as saying that money is made with patience, and this may well be good advice while we are awaiting data to fall into place toward a setup. Setups are always developing. It is our job to find the good ones, and then to stay with them until they leave the familiar “profit highway” as we have discussed.