advanced momentum. world dominance catalogue of cycles

ADVANCED MOMENTUM

WORLD DOMINANCE

CATALOGUE OF CYCLES

COMMODITY PRICES

40 MONTH CYCLE

DIVIDEND YIELDS

ZIPF’S LAW

ONEBASE CYCLE

TWOTREND CYCLE

THREETERMINAL CYCLE

TRIADS

THE WEB IS A BOW TIE

1

0 2

3

A

B

C

0%

17%

33%

50%

67%

83%

100%

1/6

2/6

3/6

4/6

5/6

WHERE ARE WE?

RESEARCHER PERIOD (YEARS) AVERAGE RELATIONSHIPS

KITCHEN 3 T0 5 3.33

JUGLAR 7 TO 11 10 3*KITCHEN

KUZNETS 20 TO 25

BERRY 25 TO 35 30 3*JUGLAR/9*KITCHEN

KONDRATYEV 45 TO 60

STRAUSS AND HOWE 85 TO 99 90 3*BERRY/9*JUGLAR

RELATIONSHIP - ECONOMIC CYCLES

3 YEARS

MINIMUM

EXCITABILITY

Fear

Tolerance

Passiveness

Lack of unity

2 YEARS

EXCITABILITY

GROWS

3 YEARS

MAXIMUM

EXCITABILITY

RIOTS

4 YEARS

DECREASE

IN

EXCITABILITY

INERT

APATHETIC

CRY FOR PEACE

HUMAN EXCITABILITY CYCLE – A J TCHIJEVSKY

FAITH

DEPOSITS9 YRS 9 YRS 9 YRS

FAITH AND BANK DEPOSIT CYCLES

VOLATILITY - VIX

MUTUAL FUNDS CASH/ASSET RATIO

EARLYECONOMICCYCLE

MIDDLE ECONOMICCYCLE

LATEECONOMICCYCLE

REDEFINING SECTOR ROTATION

REDEFINING SECTOR ROTATION

THE 9.6 YEAR CYCLENumber of Atlantic Salmon

Abundance of snowshoe rabbits in Canada

Heart Diseases in Northwestern US

Grasshopper outbreak

Pine cones are plentiful in cycle

People join churches in cycles

Women are amorous in cycles

Sunspots erupt in greater numbers in cycles

Poets are more creative in cycles

Weather fluctuates in cycles

International battles fluctuation in cycles

Stocks and indices fluctuate in cycles

REGULARITY IMPLIES PREDICTABILITYSpeculation and War - ERD

Murder, 6PM-6AM, High Jul and Aug

Burglary, 6PM-2AM, Saturday night, Dec/Jan/Feb

The most uncriminal month of all – May

But more dog bites

Jun is peak month for suicides

Admission to mental hospitals

Also peak month for marriages

The number of earthquakes fluctuate in cycles

Real estate activities fluctuate in cycles

Male emotion

Industrial accidents

Advertising effectiveness fluctuates in cycles

Even political landslide and number of infants born per day

SCIENCE WITHOUT CYCLES IS INCOMPLETE- ERD

MOMENTUMCONVENTIONAL AND NON CONVENTIONAL TECHNICQUES OF FORECASTING

CONCEPT - THE BASIC PREMISE

MOMENTUM – DEFINITION

BASIC MOMENTUM RULES

CHARACTERISTICS – VOLATILITIES/ EXTREMES/DIVERGENCES

INTERPRETATION - SIGNALS

CLASSIFICATION - BANDED/NON BANDED

CONSTRUCTION - SPECIFICATIONS

MISCONCEPTIONS - 0 TO 100

CYCLICALITY - OSCILLATOR

PERIODICITY - DEFAULT/GENERATED

SETUPS - MAC2/STOCH2/R3/COMPOSITE

PRICE PROJECTIONS USING RSI - POSITIVE N NEGATIVE REVERSALS/RE-ENGINEERING

SUMMARY- MOMENTUM GRID

CONCEPT - THE BASIC PREMISE

CONVENTIONALISM

TREND DETERMINATION CONCERNS PRICE/TRENDLINES/PRICE PATTERNS AND MOVING AVERAGES

THOUGH USEFUL, TREND IDENTIFICATION HAPPENS AFTER THE TREND CHANGE TAKES PLACE

MOMENTUM ON THE OTHER HAND WARNS OF LATENT STRENGTH/WEAKNESS OFTEN WELL AHEAD OF THE TURN

RULE – MOMENTUM ANALYSIS SHOULD BE USED IN CONJUNCTION WITH TREND REVERSAL SIGNAL FROM PRICE

OSCILLATOR USAGE IN CONJUNCTION OF TREND

“SKILL OF JUGEMENT AND INTEPRETATION MARK THE LINE IN THE SAND THAT SEPERATES THE RETAIL TRADER FROM THE PROFESSIONAL” – CONSTANCE BROWN

NON CONVENTIONAL

VOLATILITY COMES FROM INDEPENDENT MASS OF RETAIL TRADERS

LONG LIST OF INDICATORS AVAILABLE OVERWHELM

THIS LEADS TO INDICATOR FAILURE AND CAPITAL EROSION

HOW TO AVOID THIS AND USE FOR ADVANTAGE?

INDICATORS FOR TRENDING MARKETS LIKE MOVING AVERAGES

AND THEN INDICATORS FOR NON TRENDING MARKETS SUCH AS OSCILLATORS ARE NOW OUTDATED

MOMENTUM – DEFINITION

VELOCITY OF A PRICE TREND

ACCELERATION OR DEACCELERATION

MOMENTUM A MISNOMER, AS IT’S A GENERIC TERM

A FLUCTUATING LINE THAT IS CONTINUALLY OSCILLATING FROM ONE EXTREME TO ANOTHER

ALL MOMENTUM INDICATORS OSCILLATE SO WE CAN CALL THEM OSCILLATORS

OSCILLATION OF EMOTIONS AND PSYCHOLOGY – GREED TO FEAR, HOPE TO DESPAIR

JUXTAPOSE SENTIMENT INDICATOR WITH MOMENTUM SHOWS SIMILARITY

MOMENTUM ANOTHER WAY TO LOOK AT MARKET SENTIMENT

TECHNICAL ANALYSIS IS THE ART OF IDENTIFYING TREND REVERSALS AT A RELATIVELY EARLY STAGE

AND RIDING THAT REVERSE TREND UNTIL THE WEIGHT OF EVIDENCE PROVES OTHERWISE

CONSENSUS INDEX OF BULLISH MARKET OPINION

Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun2000 2001 2002 2003 2004 2005 2006 2007

PriceRON

10000

20000

30000

40000

50000

60000

0

RSIRON

55

65

75

85

50

60

70

80

90

Q.BETFI, Last Trade, HiLoCl Bar4/30/2007 66,593.19 57,740.36 66,395.27

Q.BETFI, Close(Last Trade), RSI 144/30/2007 74.557


1: THE OSCILLATOR IS MOST USEFUL WHEN IT REACHES AN EXTREME READING –

OVERBOUGHT/OVERSOLD


PriceRON

10000

20000

30000

40000

50000

60000

0

RSIRON

55

65

75

85

50

60

70

80

90




PriceRON

10000

20000

30000

40000

50000

60000

0

RSIRON

55

65

75

85

50

60

70

80

90



-29% 512% -31%

145% -31% 73%

Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun2001 2002 2003 2004 2005 2006 2007

PriceRON

0.05

0.15

0.25

0.35

0.45

0.55

0.1

0.2

0.3

0.4

0.5

RSIRON

52

56

64

68

72

76

84

88

60

80

QSNPP.BX, Last Trade, HiLoCl Bar4/30/2007 0.5750 0.4950 0.5550

QSNPP.BX, Close(Last Trade), RSI 144/30/2007 49.788


2: DIVERGENCE BETWEEN OSCILLATOR AND PRICE WHEN OSCILLATOR IS AN EXTREME – IMPORTANT

WARNING

Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

PriceRON

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

0

1

RSIRON

55

65

75

85

60

70

80

90

QBATR.BX, Last Trade, HiLoCl Bar4/30/2007 1.1100 1.0400 1.1000

QBATR.BX, Close(Last Trade), RSI 144/30/2007 67.668

25 04 14 24 03 13 23 03 13 23 02 12 22 02 12 22 01 11 21 31 10 20 02 12 22 01 11 21 01 11 21Jul 06 Aug 06 Sep 06 Oct 06 Nov 06 Dec 06 Jan 07 Feb 07 Mar 07 Apr 07 May 07

PriceRON

1.6

1.7

1.8

1.9

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.1

3.2

3.3

3.4

3.5

3.6

2

3

RSIRON

5

15

25

35

45

55

65

75

85

95

10

20

30

40

50

60

70

80

90

100

QSIF2.BX, Close(Last Trade), Line4/29/2007 3.2000QSIF2.BX, Close(Last Trade), RSI 144/29/2007 63.692

-26%

Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul2000 2001 2002 2003 2004 2005 2006 2007

PriceRON

5000

15000

25000

35000

45000

55000

0

10000

20000

30000

40000

50000

60000

MACDRON

-2000

-1000

1000

2000

3000

4000

5000

0


3.THE CROSSING OF THE ZERO LINE (MID POINT) CAN GIVE IMPORTANT TRADING SIGNALS IN TREND

DIRECTION +52%

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May1999 2000 2001 2002 2003 2004 2005 2006 2007

PriceRON

0.3

0.6

0.9

1.2

1.5

1.8

2.1

2.4

2.7

3.3

0

3

MACDRON

-0.05

0.05

0.15

0.25

-0.1

0

0.1

0.2

0.3

+32%

19 20 21 22 23 26 27 28 29 30 02 03 04 05 06 10 11 12 13 16 17 18 19 20 23 24Mar 07 Apr 07

PriceRONLog

2.85

2.95

3.05

2.56

2.642.682.722.76

2.84

2.9

3

3.1

2.6

2.8

ROCRON

92

94

96

98

102

104

100

QSIF2.BX, Last Trade, HiLoCl Bar4/23/2007 12:00:00 PM 3.2000 3.1900 3.2000

QSIF2.BX, Close(Last Trade), Rate of Change 124/23/2007 12:00:00 PM 107.38

+19%

Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul2004 2005 2006 2007

PriceRON

0.2

0.4

0.6

0.8

RSIRON

40

60

80

Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr2004 2005 2006 2007

PriceRON

0.2

0.4

0.6

0.8

RSIRON

70

80

90

CHARACTERISTICS

KEEP IN MIND THE TYPE OF TREND YOU ARE ANALYSING

OIL TANKER VS SPORTS CAR

LONGER TERM MOMENTUM HAS MORE SIGNIFICANCE

THAN SHORT TERM MOMENTUM

INTERMEDIATE TREND REMAINS KEY FOR TRADING/ INVESTMENT

UNDERSTANDING TREND DURATION REMAINS KEY

SHORT TERM MOMENTUM OVER LONG TERM MOMENTUM

MARK EXTREMES

TLV.SAPTAMANAL

TLV.ZILNIC

CHARACTERISTICS AND MAGNITUDE OF AN OSCILLATOR SWING DEPENDS ON

A: NATURE OF THE FORMULA

B: THE VOLATILITY OF THE SECURITY BEING MONITORED

C: THE TIME SPAND BEING USED

EXAMPLE: NOT POSSIBLE TO COMPARE OSCILLATOR OF A DOCILE UTILITY STOCK WITH A MINING STOCK

EARNINGS OF MINING COMPANY MORE TOUGH TO PREDICT

UNDERLYING VOLATILITY HIGHER IN MINING COMPANIES

INVESTOR PROFILE MORE STABLE FOR UTILITY COMPANY THAN FOR MINING COMPANY

Sep Oct Nov Dec Jan Feb Mar Apr2006 2007

PriceRONLog

24

28

VoltyRON

20

40

0

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan2002 2003 2004 2005 2006 2007

PriceRON

2

4

6

VoltyRON

50

150

100

TEL.ZILNIC

ALRO.ZILNIC

CHARACTERISTICS

OSCILLATORS MOVING IN THE DIRECTION OF THE TRENDS TEND TO COVER LONGER DISTANCE THAN

OTHERWISE

MEGAOVERBOUGHT CONDITIONS EARLY SIGN OF A BULLISH TREND

ONLY TIME TO OPEN LONG POSITION DESPITE OVERBOUGHT CONDITION AND VICE VERSA

97 98 99 2000 01 02 03 04 05 06 07

PriceRONLog

0.05

RSIRON

40

60

98 99 2000 01 02 03 04 05 06 07

PriceRONLog

0.3

RSIRON

20

40

60

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul2001 2002 2003 2004 2005 2006 2007

PriceRONLog

0.05

0.1

RSIRON

40

60

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul2001 2002 2003 2004 2005 2006 2007

RSIRON

20

40

60

PriceRON

20000

40000

0

OLT.LUNARPOLICOLOR.LUNAR

PETROM.WEEKLY

BETFI.WEEKLY

96 97 98 99 2000 01 02 03 04 05 06 07

PriceRON

0.2

0.4

0

RSIRON

40

60

CHARACTERISTICS

PRICE AND INDICATOR - IN GEAR AND OUT OF GEAR DEFINES DIVERGENCE

MARKETS SPEND MOST OF THEIR TIME ADVANCING RATHER THAN DECLINING

LEAD CHARACTERSTICS MORE PRONOUNCES AT MARKET PEAKS THAN TROUGHS

“MARKETS ARE LIKE HOUSES, THEY TAKE LONGER TO BUILD THAN THEY DO TO TEAR DOWN” – MARTIN PRING

AZO.LUNAR

+130%

[Delayed]Jul Jan Jul Jan Jul Jan Jul Jan2003 2004 2005 2006 20

PriceRON

0.2

0.3

0.4

RSIRON

20

40

60

0

CHARACTERISTICS

DIVERGENCE WITHOUT PRICE CONFIRMATION DOES NOT MEAN ANYTHING

PRICE AND MOMENTUM DYNAMICS. UP/DOWN, DOWN/UP

SOCP.WEEKLY

[Delayed]98 99 2000 01 02 03 04 05 06 07

PriceRON

0.3

0.6

0

RSIRON

60

70

80

CHARACTERISTICS

GREATER THE NUMBER OF DIVERGENCES THE MORE SERIOUS THE CONSEQUENCES OF A REVERSAL

TLV.WEEKLY

[Delayed]Dec Mar Jun Sep Dec Mar Jun Sep Dec Ma2005 2006 200

PriceRON

0.6

0.9

1.2

1.5

1.8

2.1

2.4

2.7

3

ROCRON

120

160

240

280

320

360

200

400

[Delayed]Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec A2003 2004 2005 2006 200

PriceRON

0.3

0.6

RSIRON

70

80

90

CHARACTERISTICS

DIVERGENCE SIGNIFICANCE. NUMBER

TIME SPAN BETWEEN THEM

CLOSENESS TO EQUILIBRIUM LEVEL

EXAMPLE OF A CAR OR A SICK PERSON

GREATER THE SEPERATION TIME, GREATER THE SIGNIFICANCETLV.MONTHLY

[Delayed]JanApr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr2004 2005 2006 200

PriceRON

0.3

0.6

RSIRON

40

60

80

TLV.WEEKLY

?

[Delayed]09 16 23 30 08 15 05 12 19 26 02 09 16 23Nov 06 Dec 06 Jan 07 Feb 07

PriceRON

0.08

0.09

0.1

ROCRON

90

110

100

CHARACTERISTICS

THE DIVERGENCE TRAP

FINAL BURST UP WITH UNANTICIPATED NEWS

THAT EVEN CAUSES SHORT COVERING

RRC.DAILY

[Delayed]Apr Jul Oct Jan Apr Jul Oct Jan Apr2005 2006 2007

PriceRON

1

2

3

MACDRON

-0.1

0

INTERPRETATION – SIGNALS

TRENDLINES WORK ON MOMENTUM TOO

SIMULTANEOUS BREAKOUTS ARE VERY EFFECTIVE, GENERALLY SEPERATE

LENGTH/NUMBER OF TIMES/ANGLE

EXTENDED TRENDLINE RETEST

-36%

42% -18%

SIF5.WEEKLY

[Delayed]Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr2004 2005 2006 200

PriceRON

0.2

0.4

0.6

0.8

MACDRON

-0.02

0.02

0

-11% 24%

TLV.WEEKLY

Aug Sep Oct Nov DecJan Feb Mar Apr May2006 2007

PriceRON

40000

50000

60000

RSIRON

20

40

60


TRENDLINE PRICE OBJECTIVES

BETFI.DAILY

[Delayed]21 02 09 16 23 30 06 13 20 27 04 11 18 25Apr 06 May 06 Jun 06 Jul 06

RSIRON

20

40

60

PriceRON

1.8

2.2

2.4

2


PRICE PATTERNS RARE BUT EFFECTIVE

MORE IN ROC AND LESS IN RSI

PRINCIPLE OF COMMONALITY

HEAD AND SHOULDER

S

S

H

+106%

SIF5.DAILY

[Delayed]Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan A2004 2005 2006 200

RSIRON

20

40

60

PriceRON

0.06

0.08

0.1


PRICE PATTERNS – DOUBLE BOTTOM

B1B2 +31%

RRC.DAILY

[Delayed]Sep Nov Jan Mar May Jul Sep Nov Jan2004 2005 20

RSIRON

40

60

PriceRON

0.2

0.3

0.4

0.5

INTERPRETATION – SIGNALS PRICE PATTERNS – HEAD AND SHOULDER

S S

HISTORICAL TOPSNP.WEEKLY

H


PriceRON

0.06

0.08

0.1

MACDRON

-0.008

-0.004

0.004

0


PEAK AND TROUGH ANALYSIS

ADVANCE BREAKDOWNS

AND BREAKOUTS

PNT SELLAND ADVANCED BREAKDOWN

RRC.DAILY

[Delayed]Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan A2004 2005 2006 200

PriceRONLog

2

0.6

0.8

1.2

1.4

1

MARSIRON

35

45

55

65

75

40

50

60

70

80


MOVING AVERAGE/ CROSSOVER/ DIRECTIONAL CHANGE/ OVERBOUGHT/OVERSOLD/ EQUILBRIUM

CROSSOVERSIF5.WEEKLY


PriceRON

0.06

0.08

0.1

ROCRON

90

120

150

94% -30% 29% -43% 37%

[Delayed]Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May2006 2007

PriceRON

2.5

2

3

MACDRON

-0.1

0

SIF5.DAILY

[Delayed]Jul Oct Jan Apr Jul Oct Jan Apr2005 2006 2007

RSIRON

20

40

60

PriceRON

1

2

3

CLASSIFICATION - BANDED

RELATIVE STRENGTH INDEX

FAILURE SWING

TIME SPANS

Oct Nov Dec Jan Feb Mar Apr May2006 2007

PriceUSD

3.2

3

RSIUSD

40

60


COFFEE.ETC

10 17 24 31 07 14 21 28 07 14 21 28 04 12 19 26Jan 07 Feb 07 Mar 07 Apr 07

PriceRON

2.6

2.8

3.2

3

RSIRON

20

40

60


SIF2.30MIN

Apr Jul Oct Jan Apr Jul Oct Jan Apr2005 2006 2007

PriceRONLog

0.4

0.25

0.35

0.3

RSIRON

20

40

60


SNP

Apr Jul Oct Jan Apr Jul Oct Jan Apr2005 2006 2007

PriceRONLog

0.4

0.5

0.6

RSIRON

20

40

60

0

CYCLICALITY - OSCILLATORTLV

Sep Oct Nov Dec Jan Feb Mar Apr May2006 2007

PriceRONLog

24

2730

RSIRON

40

60


TEL

Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr2004 2005 2006 2007

PriceRON

0.06

0.08

0.1

RSIRON

20

40

60


RRC

2000 01 02 03 04 05 06 07

PriceRONLog

0.1

0.2

PERIODICITY - DEFAULT/GENERATEDSIF2

2000 01 02 03 04 05 06 07

PriceRONLog

0.2

StochRON

20

40

60

0

PERIODICITY – DEFAULT (5)SIF2

2000 01 02 03 04 05 06 07

PriceRONLog

0.1

0.2

PERIODICITY - DEFAULT/GENERATEDSIF2

2000 01 02 03 04 05 06 07

PriceRONLog

0.2

StochRON

20

40

60

0

PERIODICITY – GENERATED (100)SIF2

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CYCLES.N.MOMENTUM 2010

Prepared by Mukul Pal

advanced momentum. world dominance catalogue of cycles

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