Pendulum Trading!!

7.3% TZA profit in less than 3 hours. 50% profits with IWM put trade in less than 3 hours Friday!!

Posted by Gary Dean 10/10/11 @ 2:40 pm

Our system hasn't been wrong yet..PERIOD!! Our short term timing systems were looking to short, we took the trade at resistance and closed the short side trade in a few hours with some fantastic profits. Since I Created these new timing system ratio charts, they have not been wrong once when looking for a direction. I may not have traded the system to its full potential, but it has not been wrong once in the last 2 months.  

What is the system?

The timing system is made up of different ratio charts that are viewed in different time frames. What I have noticed and how we have  traded "the system" is that they give us a heads up about a potential reversal in trend, before your standard technical indicators do. They are the same technical indicators used on regular charts, but when used with our timing system ratio charts, they give us the buy/sell signals before the others. When we get buy/sell divergences on the regular technical indicators as well, it is an added confirmation of the potential reversal in trend.

Putting the pieces together for a trade!

The timing systems give us a heads up as to when to start looking for a reversal. But that is not the only thing I use. I pay attention to short and intermediate term wave counts. This allows me to try and give members a target area for the small and larger moves and put them into a wave count that everyone understands. I am not a squiggle wave counter. I have a good understanding of Elliott Wave, but I focus strictly on the intermediate and short term counts.

Think of the market as a series of pendulums to measure where we are in the cycle.

If you can imagine a pendulum, it swings back and forth freely. But as time goes on, the way that the pendulum is moving loses its velocity and strength. Eventually, the pull from the other side becomes so great, that the pendulum eventually starts moving in the other direction. So if you can imagine 3 separate pendulums, each one represents the pull from the other side. The 3 pendulums are representing a 15 minute chart-60 minute chart and a daily chart. When they are all going in the same direction, that is when you make the easy money and fast returns. But once they are not in line with each other, we start to get choppy moves. Eventually they will all be in line again, but it will be going in the other direction.

So when they are all in line and going in the same direction, the speed and magnitude of the move is fierce, usually catching many rookie traders leaning the wrong way. The 15 minute pendulum or chart will be the first to break line. Meaning it will be the first to give a sell signal if the markets are moving higher. But when you look at the 60 minute pendulum or chart, you can clearly see that it still has room to go before it reaches its gravitational pull side and throws up a sell signal.  So the 15 minute chart will usually cause a pullback that will most likely be bid back up, as the 60 minute pendulum still has room to go. Once the pullback ends from the 15 minute chart, we will have all of the pendulums heading in the same direction again and usually get another strong move to the upside.

But during this move, the 60 minute pendulum or chart will reach its pull zone and once that push higher ends, we will now have 2 of the pendulums heading in the same direction, which in this case would be down. The daily is still showing that is has room to go before the pendulum reaches its reversal pull zone, so this should tell us that the next move lower will be more extreme than just the 15 minute sell, as we now have the 15 and the 60’d heading down at the same time.

Once that move lower ends from the 15/60 minute chart or pendulum, we will have all of the pendulum or charts pointing in the same direction yet again. That is where we would expect yet another sharp move higher. BUT, this would be the move that you want to look to switch hats and move to the short side. As once this move ends, we will have all of the charts 15-60 and daily pointing in the same direction, which would be down.  Now it is a lot easier to explain what happens during the cycles of a move, but it is not that easy to figure out where we are in each cycle. This is where I use the timing systems on each time frame to figure out if we are looking to get into a trade that will last a few hours or a few days or even a few weeks.

The last cycle-our trade-and combining the wave counts for a very fast profitable trade.

Last Thursday, we had an inverted sell signal on our 15 minute timing system. This is when the system’s MACD is below zero and IWM was trading higher.  I share all of our timing charts with members each night, but when this inverted sell signal is seen, it tells me that the current trend (it was higher) was running low on fuel. The 60 minute timing system was throwing out major bearish divergences, which had me looking short on Friday, especially if we saw a higher open.

When looking at the wave count, it appeared that either wave 5 up finished or wave 3 finished, but both counts were pointing for the next move to be lower. But the daily timing system was not giving us a full blown sell signal, so that pendulum was telling me that we were going to see a quick wave 4 down followed by a wave 5 higher to new rally highs.  Once IWM hit a pivot resistance level, we took the short side using TZA and IWM puts. That entry was within minutes of the high and we saw IWM do a complete reversal, just as the 15 minute inverted sell signal was predicting.

The move lower was very sharp with almost no bounces along the way. Because of the strength of the move down, it quickly moved our 60 minute timing system into the buy zone, where I decided to take profits and good profits they were. We made 7.3% on the TZA entry and 50% on the IWM puts, in just 3 hours. Why did I close the trade? Very simple-the daily timing system was NOT ready to give us more than just a quick pull back. As I am typing this piece, IWM is now 30 cents above that entry, which doesn’t sound like much, but it is trading almost 2.80 cents higher than where we exited the short trade.

This is what I do for our members each night!!

I let them know where we stand in the cycle based off of our timing system and wave counts. I let them know where the next pivot support/resistance is sitting and what direction the system is looking.  From there, I give an intermediate term view for the trade as well as the big picture view. Whether they are trading the squiggles or not, you want to know where the next nail biter is going to come from. Our system has been 100% accurate in telling us when we should be looking for the next turn and how big of a turn it should be. The last big turn came when everyone was looking down-our system was telling us to look higher for the bigger picture turn. We were getting long IWM calls when I t was trading at 60.50.

Imagine knowing when you should be looking long or short!!

Imagine knowing from a system that has a perfect track record, whether you should be looking long or short and ask you, can I trade without this information. Some of my new members have told me that they don’t know how they traded without this information. I agree with them-as I don’t know how I traded without it either. I created these timing charts from trial and error. Mixing different ratio charts until I saw them giving me perfect signals each time and time after time. For $89.95 you can now trade knowing where we are in each cycle. That offer will end soon, I can assure you that. I will put out another, but it will not be as good-just like this one is not as big an offer as the 3 month $99.95 special.

The system is too good to give away and I have no intentions of giving it away. So JOIN now and start trading ahead of the next move, with confidence!!