Meetup_2006!06!22_Illustrated_text Putting the Pieces Together

IBD MeetUp Number Five: Putting the Pieces Together For Building Wealth A Background Paper for IBD MeetUp Tucson

By John T. Hershey

Adobe Llamingos

Meeting Five 22 JUN 2006

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Putting the Pieces Together

Scheduling

OK the ball is changing color. Here we go, but we’re tardy aren’t we, we’re a little late starting tonight, I apologize to everybody for starting a little late tonight (if I had a watch, but I don’t have one.) Liz is going to bring over the scanner, which I forgot, so we can c an plug it in here if anybody has a chart they want to go over. Let me give you the schedule for the next couple of months. First Meeting in August: Spydertrader

August schedule: for the first meeting in August Spydertrader will be here and will be here for quite awhile, so he will be the speaker for the entire en tire meeting of the first Thursday of August, so load up on Spydertrader stuff and by that time you will be collecting a lot of things: from little stuff, like if you’ve been doing 30 minute charts and pro rata volume, you know, like you want to see how its going; we have a software sub routine called the bouncing that actually gives you the answer of the pro rata volume as the bar is forming. We also have a lot of other little things that are kind of nifty for you. And if you recall, not going off topic, but, I don’t know if you all have this, this is the unusual volume correlation table. Do you all have that? that? I'm handing out a color copy of it in full color tonight and the rules are one liners here, and I will explain them to you momentarily, OK, that is, after it gets handed out (See page 15.) If there aren’t enough copies I apologize but I'm operating on who registers and everything, I'm just kidding, I try to make extra copies. I don’t care if you sign up later, that’s that’s just that “MeetUp” stuff which we are immune to by now. So that's the situation.

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Scheduling

OK the ball is changing color. Here we go, but we’re tardy aren’t we, we’re a little late starting tonight, I apologize to everybody for starting a little late tonight (if I had a watch, but I don’t have one.) Liz is going to bring over the scanner, which I forgot, so we can c an plug it in here if anybody has a chart they want to go over. Let me give you the schedule for the next couple of months. First Meeting in August: Spydertrader

August schedule: for the first meeting in August Spydertrader will be here and will be here for quite awhile, so he will be the speaker for the entire en tire meeting of the first Thursday of August, so load up on Spydertrader stuff and by that time you will be collecting a lot of things: from little stuff, like if you’ve been doing 30 minute charts and pro rata volume, you know, like you want to see how its going; we have a software sub routine called the bouncing that actually gives you the answer of the pro rata volume as the bar is forming. We also have a lot of other little things that are kind of nifty for you. And if you recall, not going off topic, but, I don’t know if you all have this, this is the unusual volume correlation table. Do you all have that? that? I'm handing out a color copy of it in full color tonight and the rules are one liners here, and I will explain them to you momentarily, OK, that is, after it gets handed out (See page 15.) If there aren’t enough copies I apologize but I'm operating on who registers and everything, I'm just kidding, I try to make extra copies. I don’t care if you sign up later, that’s that’s just that “MeetUp” stuff which we are immune to by now. So that's the situation.

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Second Meeting in July: Martel Firing, Signal Trading, LLC

In July, the second meeting, Martel, who’s sitting at the table to the left here, will handle the entire two hours….. hours….. in the usual way. We’re projecting stuff up here simply because my conversation can be transcribed then if anybody has anything to show everybody can see it so we don’t have to do the dumb handout thing. So, Martel is a very experienced person and his relationship to the world that we’re in now is this, and this is very important to you for the second week in July, second Thursday in July. (I misspoke here) It goes like this, how many people here have heard of Collective 2? OK, hands are are halfway up. Collective 2 is where all the black boxes live live in the world. Do you know what a black box is for trading? trading? Right, very good. good. A black box for trading is something that you don’t know what's what's in it, but it it works. Data apparently flowing into it and its screaming, “buy this, buy this, sell that” and so on, and you make a lot of money, because the guy who invented the black box knows what he’s doing. Now, take the average really hotshot trader, he can’t program at all, so he’s got to get somebody who can hear him and the words he speaks to get the black box built as a consequence of programming. Now this group here has coding people who are working for it and they were here last month after a month or so of preparation and they're coding up a lot of things and building a website which is more archival of information but it will have some neat little things like the bouncing ball for the volume an PRV and so so on. Martel, who I'm introducing ahead of time because I can’ do this introduction when he comes up to speak, cause it would take so long. Martel has spent many, many years, since living in San Francisco in the 70’s and stuff like that and trading commodities, he is the person that the black box people come to, to get the programming done. Now, the other half of programming, to

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make sure something is really working, is back testing, and maybe some of you have seen my comments on that in ET when I used to be there (I'm no longer there which is causing some kind of hemorrhage, what can I say, at this particular point I hear, I don’t look.)

OK. Back testing doesn’t work if you don’t know what the heck you're back testing. You see that? So for me, a lot of the back testing and some of the things I have suggested here is varied by an order of magnitude. So, we’re just in the ballpark talking right now, oh, where’d she go? (In and Out).

They’ll be a deep expense for that one. Not saying “thank you” is a thing I never want to miss. ( I thanked her for you) OH, Thank God (laughter from audience) So, what we’ll have in July, the second Thursday is some really great conversation about how it is to work with people who are good traders, who are part of Collective 2 and with whom Martel has worked with in terms of getting their program to the place where it is a saleable product that allows people to make money using something that they don’t have the details of and he’s the man who can come up with that in his many buildings on his property, one of which houses the place where he thinks all of this stuff up.

And,

Hershey Pot is something you will never see but it is basically how you are savoring what we do here? (Yes) More or less,(talking in audience)

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So you will actually see Hershey Plot, which is his notes on these meetings translated into code and software about how everything really works. So you will have an entertaining hours of a person who has taken a thorough look at what is going on here and who can answer a lot of your questions and it’s really neat because he’s a third party. Don’t you like that? OK. They're back. Web Site Teams

I am starting a lot of Steno pads, which you can see, and they all have different names and stuff on them. This is the Building the Website. I am currently setting up, we set up the codification on 1440 answers today, (Jack laughs) you’ve got questions, you now can go get: no, not now, but soon you’ll be able to get 1440 answers which have a string attached to them. If it’s the wrong answer for the question it takes you to a place to explain why that’s the wrong answer, and then brings you back to the place where then you can work in 5 different zones around that question which go down two levels of detail. God has spoken. (Jack laughs really loud) Really, 40 days and 40 nights floating in a boat is the same it took me to make this thing up. Anyway, we have that in the works and we do have small teams of people which overlap each other a little bit, all working on different kinds of things, and I'm giving assignments and I'm now working, almost fulltime, on my tasks for the group here. So you probably noticed that, you sent out some e-mails, right, Ron sent out some e-mails, and the associates here, and I know its been confusing, and I apologize, the fact that you don’t get a response to the e-mails you send me is a case of my frustration.

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I spent 7 hours today doing Camtasias, where the machine grabbed the thing away from me each time I completed it and threw it in the garbage can. I'm working on a double screen thing showing the market live and I'm doing drills for you, but the machine has been grabbing them and tomorrow morning we are going to have a shootout with the manufacturer of the software and it will get straightened out. We now work, the group of people you saw here is called the PhD’s, and I think it stand for Pile higher and Deeper, but (laughter) they have another expression for it and I don’t remember what it is, but there are 8 basic divisions on a working site where the tasking is being done for you and we will probably have, within another 3 weeks, 25 writers doing compilation and editing to dump the stuff in through an FTP place, OK. So you’ll begin to see what you’ve always been looking for are the downloads, and because we’re getting the thing organized, as I spoke, through these question and answer things, you will begin to see a hierarchy of an archival thing set up. It will be huge. (See next page).

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Bigmoose’s Efforts

Now, there is a person named Moose, from somewhere, I'm sorry about this folks, are you Moose? No, OK. I don’t know who Moose is, but Moose apparently spent several years doing what we’re trying to do, already. OK, so he took his son’s server; do your children have servers? (laughter)

So this guy is a highly organized person and Moose has volunteered to let us use his sons’ server and we will be able to link you over to it to get all the Moose work. OK, so that will be handy for you as another resource. (It is a rather large and comprehensive file of past postings) And we will start attacking (there are also many Universities that do archives on this). We attack those, probably in September and get their results of those shoved in there. Site passwords

So, I've been watching you guys all day, and I noticed that the first person signed up, John Dorsey, John O’Hare, Ron signed up, Dave signed up and then on my second pass later this evening I saw that Virginia, cool, you made it, and Martel is hooked in now. You are all automatically given passwords. See, everyone who’s ever been to a meeting who put an e-mail down, that was sent to NY and the NY guys are sitting there (whenever you get into the registration process and so on); they automatically give you a password and approve you. Now, you have a friend in Oklahoma, right. No, well I guess I'm screwed up, I lost track of everything. (Virginia: I didn’t get a password. Are they coming from some)

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You have the ability to get into the site where the downloads are now being assembled in a miscellaneous way. (Virginia: Just by registering) You did register. (I know) Yes, you have a name in the sense of, yeah, you’re number 21 (laughter) Yes, we’re numbering people, so don’t give up, and again, with Darrel, I though I was all pre registered, what that meant was you don’t get a phone call to verify that you’re not a……………., and that will be deleted from the tape, of course. What I'm saying is, there is this thing of flaming and scamming and all those things, and we’ve spent a lot of time dealing with that and all the legal relationships and all those crazy things that are going on right now. We’re trying to work this out so it is extremely beneficial to everyone and we have this crossover chart that’s building, just like I told you, 1440 answers. The trading Crossover Chart

We have a crossover chart so that the vocabularies of the 10 or 9 other systems of trading that are most common can be interrelated. It’s like going to Auto Zone and saying. I don’t want this Sunoco Oil any more, I know Sunoco doesn’t exist, but I want to get some new oil, from some new company, like a Russian oil manufacturer and they have a skew in there for those two products, but what they represent by specification, you know like 10-40W, (cross reference), yeah, it’s a cross referencing system, and so we’re building an entire cross referencing system for what we’re doing here plus 9 other most commonly used, in the world, trading systems. We feel that anyone who comes into this

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with their own vocabulary can continue to use it and gradually shift over into the unique and unsophisticated vocabulary that I use (like rockets and all that other corny stuff).

So we’ve got these things going now and there has been a recognition around. I'm just announcing this to you because I think it’s really good news, that the Pascal/Fermat part of trading (you know the probability part in betting): make a bet, enter; set a target for exiting based on that entry; put a stop underneath it in case it goes wrong (you know, risky business); and only put a percentage of money (your total money into that trade); and then do a lot of trades with the same percentage where there is a strongly established “no” relationship among any of the individual trades (lets say 5 percent is the limit, so you have to do 20 concurrent trades, i. e. , transactions, where you make the bet), This is all Pascal/Fermat; go for a target either hit it or miss it based on a protective stop; and then you have a risk reward and sharp ratio that works.

OK, that’s what the other 9 sort ways of trading have as a partial characteristic. So this is where we’re coming from. You may have noticed the tall drink of water that was sitting here by the name of Doug Victor. He will be here in July as well as August and September. September meetings (this has since changed to October)

And then the people coming in, in September, that haven’t been here, they're coming in from the East, and you’ll meet them at that time too. They will take the first meeting. So, I'm not doing first meetings of the month any more, these guys are all doing those. But, about Doug Victor, he is the person who is doing the alternative coding for the alternative

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to Pascal/Fermat. Now what would that be if you imagined the world having two ways of doing things? (Surety) Huh? (Surety) Surety (in other words a deterministic world rather than a probabilistic one.) DING… The alternative to the Pascal/ Fermat Approaches.

What we’re looking for here is trying to get to the place where we’re looking at how the market actually works, so we build a coded system that is of the character of the marke., We’re not placing bets anymore; we’re not hitting targets and we’re not having to use protection. What we’re trying to do is get signals from the market as the market’s responsibility to communicate to us what is cooking. I did the sequence thing last time and it is all transcribed, not illustrated as yet, but it will be on the site, probably in a couple of days. What you will see there is how all of those things that we talked about. Putting the Pieces Together

When you put them together and interrelate them. it makes a rather strong framework of how the price valuation system works in correspondence to the psychological action of the people, the behavior of people. That’s what we were talking about tonight. Those four parts of the annual system (seasons), but one doesn’t work very well, and its called Summer. We’re in that place where things are kinda messy, kind of messy; but we know why. We know that uncertainty is where the major risk occurs and what we have to do then is really buckle down and not let anything go on that has flaws in it or omissions or anything like that. Its got to be pure for us. Now, if you have your universe running,

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your hot list running, your owned list running and you got that unusual volume thing working for you there you are beginning to get into the groove. THE GLUE

So tonight, probably, we will do a lot of these little slide (graphics) things, scanning, and post them up there. The rest of the time, when we’re not doing that this evening, I’m going to be doing GLUE. I'm going to be trying really hard to make sure that I can take you through a day (even if you're and EOD trader who has a job). Just go through the process with me tonight, by letting me show you how all of these things interconnect as a non-probabilistic routine See, what I'm saying to you is: I'm taking you over to that place, you called it surety. Right. What we’re talking about is the partnership that we have with the market where we don’t care about predicting the future to make a bet . What we know is the near term past ; we live in NOW (all the time) and the future moves into NOW for us.

See, we turned it all around. (Conventional Wisdom) OK, so it’s really cool. And we know: “what wasn’t that”; we know what should be there and if it isn’t changing or anything like that. We know how to grasp that mentally because of things that we’re

doing. Drills

Now, I am building, in the next two months 50 drills that will be on Camtasias and transcribed and illustrated and I'm going to try and knock out several a day for the future. And you can’t see it on this web thing now but we literally have a website that isn’t going to be our website to get the tasking done, to get the three parts, the three websites built for

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you. You cannot imagine all the legal time and everything that went into this to come up with this, you won’t see it here immediately. We have all kinds of expressions of why we think this is beneficial and why I'm hanging my neck way out there and stuff, legally, and all those kinds of things. Franco Modigliani Nobel Prize

We will have, on one of the web sites, the financial implications of how to minimize risk with respect to any aspect of your life, your parent’s life or your children’s lives. In other words, its like we’re putting this into the picture here as a replacement for the savings theory and risk analysis of Franco Modigliani who won the 1985 Nobel prize. Modigliani said you better save up money because 70 percent of you are going to have a real serious problem and you’re not going to get over it. So what we are trying to do is put 22 financial instruments into that part of the website. These are financial instruments and tools that people use to make the quality of their lives work, especially when they get in trouble; as you know, when these things happen, you can’t predict them and so on. Like I could stand here tonight, but I'm not going to so just don’t worry about it. I could say: for $188 bucks (a month) you could have a 5-year long term care (LTC) thing which right now is only worth $327,000 to you in terms of spending all that money for the 5 years for long term care.

I'm talking old people, yeah, the old people stuff, think

disability too, if you want. But I'm just saying to you, if you don’t get sick for 20 years what does that have to look like for paying that premium? Do you understand what I'm saying? It has to look like $724,000. I've got to churn today’s present value of $325,000 of care for 5 years for you into $724,000 of care 20 years from now (where you’ve only paid $188 bucks a month during that time, which is approximately 45 grand)

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Have you ever taken $45,000 and turned it into a quarter of a million dollars, tax free?

OK, so there are 20 some instruments there that can be used to solve the kind of problems those different generations of people face. And we’re putting it out there as a very benevolent thing. Apparently there are people out there who are willing to sponsor this kind of thinking. You should see a refreshing kind of thing going on here.

I hope that you can then see that this little piece that we work on every two weeks is the replacement for savings because it’s doing better than a savings account. So,

you can handle these sudden events that come up but also you can take and spin off a little bit of this stuff that’s coming your way and say, alright I’ll divert it over there, I’ll throw 180 bucks at this, like I'm paying for software or something every month, ……. I’ll pay that over there cause that gets me 300,000 bucks now and three quarters of a million 20 years from now. And it’s worth peeling it off of my trading account to make sure that I do have the ability to let my legacy go to where we want it to go.

Now, you can do all the financial planning in the world but if you don’t have all the pieces in the plan, it’s very disruptive when you’re disabled. Oh, my financial plan isn’t working this week. So you need to know the plus and minus of disability insurance and how it could; like if you're an executive of a corporation and you lose a few key people because something happened, and they all got the valley sickness (fever) or something or whatever it’s called, and they have to take off for six months. There are all kinds of

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So we’re building that into the philanthropic part of it where

you can think of how nice you can be to your family by not saddling them with stuff and the positive side, making sure the legacy works for them. So I'm giving you a major context for what we’ve been doing and how it all, the pieces, fit together. And that stuff is more like website stuff. OK, so I said a major piece of GLUE, I've done a lot of gluing here for you. You ought to feel like I can sit back in my chair three more inches.

There is just some other nice stuff that is coming down the pipe here and we’ve got some really super teams of people working on that kind of thing and one of those people is Liz. She is on several of the teams and as you know she is licensed. She is a very good in putter for this kind of stuff, so if you want to see power points on this that and the other thing we can give you links to various corporations of power-point-ness, so you can get some actual, whatever you need to take a more thorough look at things.

So now, does anybody have any charts they want to do as sort of a mental break?

(Virginia: Jack, could I just recap for a minute, please .

(Jack: Sure)

I know it appears to be different from a later statement you made, when is Martel speaking, on the first or the second meeting in July?)

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He’s speaking at the first meeting of July, which is the second Thursday. That’s where the confusion came in. I called the first meeting the second Thursday, a little inaccurate, but it will do. OK, so everybody’s there? Reviewing charts

Alright, here we go, anybody have any charts they want to review? Otherwise I'm going into a real gluing operation here. OK, we are adopting Trade Station. How many are on Trade Station? OK, great, we’re adopting Trade Station and Q charts as our two primary platforms. Who is on other platforms, I just need to know that. (garbled, E Station, Stock Trader) OK, we’ll pick up those three also. Do you understand what I'm saying to you? We will get you fixed in each of those programs. Now you probably notice that when you change fractals on something like Trade Stations it throws away all your lines. Anybody notice that? Yea, so that’s a thing that’s a problem. The unusual volume, though, on Trade Station you can get in there, it’s just called percent volume. It’s not unusual there. So we’ll have that one and we’ll get the E signal version, etc, etc. We’ll get all that to work for you if we have to do special coding to attach it to your thing, it will be an add in, or an add on, whatever they're calling it this week, that will work on that platform for you we’ll just code it up for you. But what I'm going to say now, is it 6:15 yet? Huh, you still don’t have a watch, OK, great. Did it go off, we can leave it off can’t we? You don’t have to look, there's nothing going to go up here for awhile, at all. Oh, what can I do? Do you like the moonscape? There you go, mooning it up for you. See, it takes awhile to think up these things.

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A day in the market

What I want you to do is see the day in the market regardless if you got a job and you do the EOD or not. I'm going to go through a very thorough post indicator assemblage of things tonight. It’s very important, it’s the summertime the markets a little **** and messy, messy is my standard word for it. So, here we start the day. You're at work and you're going to get the results of this day, and in the evening you pull up the results of this day. From now on instead of just looking at the daily charts you can look at the 30 minute charts also. Because I'm really tying this thing together tonight because I do not want anyone in a situation where they're feeling uncomfortable, puzzled, anxious or “gee, I don’t know what to do.” I'm going to, and we will transcribe this, and I’ll think up some real neat illustrations for it by actually putting in the thing I'm talking about as an illustration in the narration. And I thought about making sure I could do it tonight, it’s an impossibility to flash from one illustration to another because I have to talk about this, that and the other thing in rapid succession, but I can illustrate it after its been transcribed for me. Editorial Note: There will be many illustrations inserted and a commentary on them. The commentary will be in bold and the setting is Sunday and Monday th

October 8th and 9 , respectively. The objective is to follow the trading day after the prep before the trading. Here is the prep and the scene for the trader as of Sunday, 08OCT06: Four streams are traded using a rotation of stocks in each stream. The streams are A, B, C, and D. Within each stream, the plan is to rotate through three stocks each in a batting order of 1, 2, 3. There are two pinch hitters.

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Thus above you see 14 stocks are on the rotation list. This is a hand written sheet that is made by doing the DAS (on two pages where stream A and B are on page one and C and D are on page two) and then taking some notes on what the game plan is th

for Monday October 9 . You can see that the 1’s are at bat and the 2’s are “on deck” taking some practice swings in the batter’s circle. Four Batter, one per stream are always at bat and they are taking pitches from the market. They hit and score percentages as the days go by. We will look at the setting as depicted by the Qcharts lists starting with Sunday after the cose of Friday the 6

th

of October. Look for illustrations and bold text

related to the illustrations.

The camtasia continues: So this will be a long piece when you get it because of the illustrations. When the day starts you have three things that you can be looking at on your screen. Lets say you own six stocks that’s how we’ll operate the whole evening. How long is your hot list these days? How many stocks are on it? Anybody else willing to admit how many are on their list? You have a list? How many? No list, OK. So you’re working with a long list and that’s OK.

What I say to people is that when you can’t get down to a small number, I say, OK, you’re going to have to work harder and think harder. You're going to have to work

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Pic 3 The universe as shown by Spydertrader on ET for 06OCT06 close:

IBD MeetUp Number 5 Pic 4 The Universe of our trader:

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Pic 5 Our trader’s “HOT” list

Pic 6 This is the streams and batting list of 14 stocks, some owned and others in the line up to be owned as stated on the handwritten sheet.

To recap: The four batters (owned) who are at the plate are: A-1 FTEK (3.45), B-1 CMED (3.35), C-1 EZPW (0.40), and D-1 TIE (.83). They all have to be above DU (.25) at the end of the day. They all have to be in FRV (.60) or peaking (1.80) during the day (end of the day numbers shown).

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EZPW is not doing well as a batter and he needs to be replaced (see note saying to send him down to pinch hitter status as well.

harder and think harder. OK, so we’ve reached an agreement here. It’s very hard to get down to just a few stocks and then say to yourself later, “Ooh, I missed one.” But why not have a few extras and we will put them in their place as the day goes along automatically. That’s what the unusual volume will do for the lists . This is what you're looking at during the day, when you're trading, and we now call it Position Vector Trading, PVT.

When you're trading that way you are primarily looking at how the stocks are lining up relative to each other for making money. So what do you have on your owned list? You have looked at the graphs , you’ve done your daily analysis sheet . The last part of the sheet is the general view. When you see the piano playing, the music thing, the music drill, you’ll see what I'm asking you to do there is go from a chart, - - - - - - , over to the daily analysis sheet and we’re talking about playing music. The score is the chart and we’re asking you to play by simply recording the score, the volume, and stating whether it’s dry up, first rising or peaking.

Very comfortable! It’s all done, that’s

your owned list and you know where you are. Now the thing called the “dancing the Tango” part of it is where I'm going to ask you to deal with formations , OK, that kind of

stuff where we’ll look at the 5 basic things we have and the channels, and the next column next to that on the daily analysis sheet, I can’t remember what it’s called….. TREND!!!!. Gotcha! The trend part of it is where you put all the indicator stuff.

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In other words, the formation is more the channeling stuff and the trending stuff is where we’re taking a look at indicators and where they are in their sequences . And

that’s why it takes two lines to do each stock. See, you’ve got all of that lined up. Now I'm doing, in commodities, for people a pre flight check which is 32 things I do before the market opens, every day. And if you do them every day you know how the markets gonna go that day. 32 of them! Now, your daily analysis sheet incorporates many, many items and you do it in the evening, and you do it for your owned list. You do your sorting and all that kinda stuff every once in awhile cull a new list and so on and you're looking at things and you have your 10 to 12 stocks, 10 stocks or so on your hot list. Now, when the actual day begins (which I'm taking you through) which if you're working you don’t see it, but you’ll see the results, and I’ll point those out to you later. But let me take you through the day. Your owned list and the hot list and your universe , they're all zeroed out in two of the columns that you're looking at, all these rows and columns, two columns are zeroed out on each of the sheets, or each of the tables.

Which ones are they?

OK, you're not concentrating folks.

Don’t tell me, I won’t ask any more questions

tonight.

The unusual volume is all reading what, just before the market?

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Zero.

Now what's the other one? The net percent increase in price or decrease. The net price change, is what it’s called, is all zero.

Now, if you want to, just for the fun of it, why not make all your tables alphabetical before the day starts? Because its fun. Make them alphabetical, you’ve got your owned list and your hot list and you know they all appear on your universe somewhere. This is Pic 7

All of these columns are zeroed out before the open. You can set your symbols alphabetically and then at open beginning to sort by unusual volume

great! The market opens, the bell rings and what happens? The computer is calculating like crazy, because data is coming in and if you’ve got two charts with yellow spots all over the thing, OK, its spotting us out. Then the stocks start arranging themselves.

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Pic 8 A minute or two after open on Monday and arranged alphabetically. This is how the world sees lists.

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Pic 9 Now we see Tom’s list the same way:

BUT, it is better to make the “unusual volume” sort arrangement after open; it does a job for us that is very important. That is, to use volume, the leading indicator of price, to be the INDICATOR arranges the order of the stock list. We do this with “unusual

volume ”

as expressed as a decimal percentage of the 65 day average.

Ideally, it would be nice to have monitoring platforms have the flexibility for the user to be able to set up columns backed by maths for any personal use. It would be nice to be able to fill in cells with data in columns as well.

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Pic 10a Unusual volume a few minutes into the open.

The list is now arranged by unusual volume and some stocks have a lot of opening volume and there is a beginning relationship between the unusual volume and the percent change in price as measured against the previous closing price.

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Pic 10b Our batting list at the same time (just after open)

We are checking things out. We have four batters at bat (OWNED) and they need to be at the plate getting the job done. A-1 FTEK (.34), is at the top of both lists and is green (the steroids are working) B-1 CMED (11) is near the top and is red. This is the end of “hold”. Done deal. We Say: a flag is up and we need to check out who is going to bat next for CMED (it is GROW) and MAKE THE CHANGE NOW. C-1 EZPW , whom we bought a little early, is green and has a low volume start (.03) so is mid universe on the list. We have two available and we put IAAC into EZPW’s place immediately. D-1 TIE is same as EZPW BUT TIE is up over 1% to start so we know TIE is ahead of the pitcher already. We sit tight with TIE.

Also, we look at the guys in the batter’s circle who are next to bat (a BUY signal triggers them immediately).

ALJ, GROW, RACK, and TWPG. We want these

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guys at the plate as soon s possible (ASAP); this is excepting for TWPG whom we will replace with the other available pinch hitter named SMSI.

WE ARE NOW ONLY A FEW MINUTES INTO THE OPEN AND WE ARE TOTALLY ON THE BALL. EDIT: Return to camtasia manuscript at this point.

Not bad! On your universe the red stocks are going down the table and the green stocks are going up the table, according to the sort of unusual volume, which on Trade Station is called volume percent and on the other three I’ll tell you what its called next week

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Pic 11 Unusual Volume Correlation Table.


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If it doesn’t have a name I will make sure its coded up for you within a month and then you'll have that to attach to your software, your platform, OK. Can you visualize, as the morning goes along that by 10:30 or 11:00 what happened? (garbled from audience)

You’ve got a pretty good picture of what the heck’s going on. Did we hand those out? So now we get out our unusual volume sheets. If you don’t have one, if there's not enough, look on somebody else’s. Can I have yours back? You see at the bottom of the page there's a table that shows you how the various percentages of the whole days volume are divided up. Pic 12

Now if you are building bridges and you're a civil engineer you would call that formation a catenary, like a suspension bridge. Now the tallest cathedral in the world is tall because

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of what? The designer turned the catenaries upside down and he was able to support the architecture in a narrow building. Taller than anybody else, because he made a stiff, upside down catenary that finally pushed the load straight down in the column. Isn't that neat? He had to beat everybody else cause he was the head God man.

OK, here we go. The catenary is there and you see, right after lunch, 7, 8, do you see that? These are 30 minute periods that are numbered. This is the way we operate here, right after lunch you see a little surge that settles back down again, and then the rest of the day it gets higher and higher. What I did was this, I took this distribution ……..and I distributed that volume in relationship to dry up, first rising and peaking by saying to you Pic 13 The decimal percentages part of the chart.

These are the values you see in the UNUSUAL VOLUME column of charts

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that the percent of the 65 day average that DU represents, see, you’ve got a 65 day average in the volume, on a dry up day that represents the average, you see the .25 underneath the DU, that is 25 percent of the 65 day average . Everybody get that? It’s small. 6/10 or more than twice the dry up is the first rising volume and 1.8 is the peaking volume. So then what I did, I took these 13 things, 13 percentages, I took those

percentages of those three things; dry up, first rising and peak and I wrote in the value that you see before you on the screen under unusual volume.

So lets say we are at

11:00 and you see a .22 there. You’ve got first rising volume. Neat, kinda neat, huh? You know, I had to do this three times before I got it right. Let me just reveal to you, I'm looking at the catenary, trying to get it straight, and I'm trying to look at the distribution and get things right in my mind about how this all works and everything and so we finally did get the bottom chart done really well. We really worked on that. We looked a lot of graphs and then what we did was, we got the ratio to the dry up, first rising and peaking to the average cause the computer wouldn’t give us the column to write in those values. See, if I could have written dry up in for all those stocks then at 11:00 it would be reading 1.0, but I can’t. I have to work off the 65 day average on Q charts you have to work off volume percentage which is a percentage of the 65 day average. It’s the same competitive thing, two software programs. So you’ve got a table here that tells you anytime of the day what the value is for any of those conditions, dry up, first rising and peaking. Ah, cool, it’s cool!

Now, if you're going through the day and you want to look at a chart, look at a 30 minute if you're looking all day and this table still applies to your tables that you have showing

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from your software, meaning the universe is all there, your owned stocks are all there and the hot list is there. Three different tables that are driven by the unusual percentage and that’s what raises and lowers the stocks in the table. Now as we go through the day, 9:30 starts it, everything is zeroed out. Can you imagine what happens to every stock that gaps? What happens to it? (garbled) No, you don’t get a huge volume from a gap. That was a trick question, first one tonight. When they're dropping it only affects the percent of price as measured from yesterdays close.

So, you’ve got some high percentages

showing here and you see that in the column of the percent change in net, of price. So, you're looking up and down your sheet saying have I got any gapers here, any high percentages right off?

They’ll be green if they're going up, and that’s what we trade.

And you will probably see, at that point with the gapping that also the unusual volume starts to rise rapidly. So, as your charts unfold for you, and they spread out, in terms of those numbers in the columns you will see that the cream rises to the top right off. Now, isn’t that the damnedest thing. Pic 14 Timing instructions for using the decimal percentage values:

Now your own list is all green and its showing you a high unusual volume percentage that is running on t his chart in the FRV and peaking column. Green and blue: The instructions here are, under blue, when you are peaking you still have another day to get

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out after the peak volume. Why, because a 4 is a 1, 0, 0, scoring, meaning price is up, volume is down and the thing is no longer in accumulation. Pic 15 Scoring chart

Here is the 4 (1, 0 , 0) which is at the top just before the peak

See that’s when you go right over the crest of the peak you’re going into disagreement, see, we’re up at R and people are no longer agreeing on the price, so the volume is going down. So what I'm saying to you is that as you watch those stocks go to the top of the sheet that you own and they're really moving on up there you have to get out your graph, your chart, you're looking at the tables. You get your graph out and you take a look on the 30 minute and we’ll now look at the indicator thing what's cooking, and we look for

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the curl in the indicator. All the indicator lines are changing direction. Remember that vector thing? They're going to be changing direction and where they are is going to be Pic 16 The cycle showing the scores.

changing direction too. They're all going to be reverting to the mean, we’re going home, we’re migrating, does everybody get that? Because you’re getting past the best of everything and you only have one more day to make the money in that stock. Now the guys that are still going up, you remember the rank on the daily analysis sheet, the percentage that you’re seeing in the net change per day, and if you’ve got a 4.8 there that thing is going to hit 4.8, when? Yeah, buy the end of the day actually. But its got to be creeping up there pretty seriously. Now, are you beginning to hone in on this as a person who can watch a drill during the day? That’s really great.

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EDIT: This is another series of insertions to show the day unfolding as seen on the trader’s lists. Just look at the time passing in the successive tabular lists. We started snagging these lists just after 6:30 Tucson time which is 9:30 NYSE time. Thus, I am taking snap shots from open to 11:00 am NYSE time; this is the first 1 ½ hours of the market. We are already very tuned in from the first snap shots and some camtasia intervening text is now under your belt(s). For expert traders the first few minutes give a whole view of the upcoming day in a pro rata manner. The preparation for the game happens before a person comes out of the locker room onto the playing field (Before open). From the time we get on the field, we mostly lean forward on the rail and chew tobacco. Pic 17 About 6:45 at SYNCH

Line up: A –1 owned (batting) B – 2 batter’s circ Pinch for TWPG B – 1 owned (batting) C–3 D – 1 owned (batting) A – 2 batter’s circle B–3 C- 1 Frown owned (batting) A–3 C – 2 batter’s circle Pinch D – 3 hit HR a week ago D – 2 put back on bench Really NVEC Chew mail pouch

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Pic 18 About 6:45 at Synch

Chart of batting order @ open to 6:35 to 6:40: Team

At Bat

Action

Batter’s Circle

A

FTEK

Go (Hold)

ALJ

B

CMED

Done (SELL)

GROW

C

EZPW

Replace (SELL) RACK

BC action Watch BUY NOW Watch

With IAAC (BUY) D

TIE

Go (Hold)

replace TWPG SMSI watch

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We have completed four actions at this point as the market synchronizes.

Pic 19 This is 6:50 twenty minutes into the open and we have pulled TWPG (sold) and put in IAAC (bought). CMED left the plate (took profits) and GROW has stepped up (bought) for the rest of the day. The rest of the 1’s (FTEK and TIE) and 2’s (ALJ, RACK, and SMSI) in the batting orders are doing their jobs.

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Pic 20 This is 6:55am and we glance at the 7:00 entry on the Unusual Volume chart to remind ourselves of the expected values for DU, FRV and peaking. Several actions have been taken and we are doing surveillance to make sure of things.

Pic 21 AM unusual volume values

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Pic 22 7:00 AM. We see that our batters (FTEK, Grow, IAAC and TIE are doing well. the next to bat (ALJ, BTUI, RACK, and SMSI are all at less than .06 on cecimal percent of unusual volume, so they are calm, collected and ready. One 3 batter (GMXR) is breaking out of the line up ahead of time. We note this with a smile. We are 30 minutes into the day with more than 2% net gain over all for our batters so far. We want to have 10% every 3 or four days.

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Pic 23 7:08 AM. Some improvements. TIE is strong (Up in price on low PRV volume). The unusual volume has split into two basic groups: High volume and low volume. Our batters are in thr high volume group and our next to bat are in the low volume group.

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Pic 24 7:15 AM. RACK (batter’s circle) moved up past TIE (Batter). We are taking snapshots twice every 15 minutes; the day is going well.

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Pic 25 7:22 AM. We are looking ahead a little since the market will be hitting one hour open soon. We have “second chances” (old owned stocks) to consider and “lift offs” on the table. FTEK are in the former group and our “new buys”, GROW and pinch hitter IAAC are “lift offs”. IAAC is going up 1% more every 7 to 8 minutes; so is GROW.

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Pic 26 7:30 AM. TIE is strong. FTEK is active and flat in price. Grow is a rocket and IAAC has gotten in the groove. Time to get some cash ready for tomorrow; 11:00AM NYSE time is 30 minutes away.

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Pic 28 7:47 AM. TIE picked up. Sending TWPG back down to the minors even though M and A is in the wings (News of CANSLIM)

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Pic 29 7:52 AM 11:00 AM coming up on the NYSE. This is peaking price time coming up.

IBD MeetUp Number 5 Pic 30 8:00 AM in Tucson.

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It’s 11:oo AM in NYC and “tops” of the “second

chances” are there for us. We go to cash on FTEK and TIE. Two “holds” are GROW and IAAC which are in day “one” of the HOLD. Now, we ride through midday and the PM BO’s.

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Pic 31 10:47 below . This is 1:47 pm NYSE time and we are in the afternoon and the lunch break is over. You can look at the 11:00 entry on the unusual volume for a reference set of values for DU (.17), FRV (.40) and peaking (1.21). Our universe has 7 peaking stocks and we own 3 of them out of our four streams. SMSI has some volume (from DU to FRV).

Pic 32 Midday unusual Volume values NYSE

Tucson

bar %

Cumm %

DU

FRV

peaking

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Pic 33 12:03 PM. An hour to go. In 15 minutes the EOD (End of Day) three effects come into play: last computer big trades; day traders retire; and bottom fishing occurs. SMSI is over FRV and going into peaking.

Pic 34 afternoon unusual volume values

NYSE

Tucson

bar %

Cumm %

DU

FRV

peaking

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Pic 35 End effects going into play (3:15 to 4:00PM). Snapped @ 12:35 (3:35 NYSE)

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Pic 36 End of day charts (1:00pm Tucson ;4:00 NYSE) I took four pic here @ about 1:00 or thereafter. This is the last of the four.

Stocks above .60 are in FRV. Those below didn’t make it.

Edit: the day is over and we return to the camtasia transcript (29:30 or so):

I’m going to skip to the end of the day right now, when everybody comes home and can’t wait to eat dinner. No, I'm not eating until I look at my computer. I'm in there, aren’t you going to play with the kids? NO, I've got to look at my computer.

At the end of the day when it closes you can print out those three charts very quickly, bing, bing, bing. You put those in a three ring binder. Now we take a look at those, and if you’ve been at work all day, you're not worried, you’ve got some neat stuff. Some of the

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hot stocks you decided to buy and you put your order in at 9:45 or whatever, eastern time, right after the opening you can get your order in and everything takes off and is working really well. So, you see at the end of the day what really happened, what's different in my world. Those charts at the end of the day show you what happened all day long in table form, in the form of a table. Everything you owned should be well up there. You should have unusual volumes that are up there near this 1.8. Did it get there? Did it finally get there by the end of the day? Well, it had to, that’s my ratio. Do you see between 1.6 and 1.8, on your chart, you can just go down the chart? It’s all organized. Draw a line at .6 and everything you owned will be above that line. Is this getting easier? Edit: Lets look at the trader’s list and see how his batting order is working out. We started the day with four streams A, B, C, and D and each had a batting order of 1, 2, and 3 where the OWNED stocks are 1’s. these we are holding and getting ready to sell in order that we have cash to buy the next stock in the batting order. We examined the open and determined several things in short order. If you were not looking because you are at work, then you pass on adjusting things until the next morning as a direct consequence of looking at the closing tables and your charts.

We can compare here to see what some of the differences are for traders who watch during the day and those who just do debriefing and prep in the evening after hours. The differences are there and they are not too great. Below we can see the markups on the prep sheet from Sunday . adjustments at open.

This shows actions during the AM

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(Heliotrope arrows) Checks for “steady as we go”. All

marked in Red on copy of original.

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Pic 38 Excel file of Sunday prep.

So lets debrief. We sold CMED to buy GROW at the open. We dumped (sold) EZPW and put it in pinch hitters at the open; and we put IAAC right in there to pinch hit for EZPW. During the day we looks at the lists and the charts on a 30 minute fractal. We look to get max dollars on “owns” and we look to get into the #2 batters when we have a better deal than what our money is in, in that stream. This is trade off thinking.

What would a person who couldn’t watch do here? Nothing until tonight and now (After close) We review our “owned stocks” and fill in the DAS.

The decisions on our batters take place much later than full time

traders. We exit FTEK, CMED and TIE tomorrow morning and we have missed a day on GROW and IAAC. SMSI and GMRX were missed as well but we DO give them consideration since they are strong and strting cycle. We now look over the Universe, recently owned stocks and the 7’s, 0’s and 1’s and set up the Tuesday batting orders by using everything available. All of this goes on DAS sheets.

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With the batting orders set up for tomorrow, including the three SELLS to take profits, we are debriefed and prepped.

Periodically, we do stocktables.com to keep our universe fresh. The weekend is a good time for this and, perhaps, mid-week is too.

Edit: Back to the camtasia. (43:26) Original illustrated transcript page 53

Now, if you see one day it’s way up there and the next day it’s not quite so high you're beginning to see, and cast your attention on the idea, that this thing is getting ready to be the top for me, OK. And all of the indicators and their sequences are going on for you just that way. Remember how the histogram goes positive the day you buy it. Then you have that divergence of the fast and slow line going along for three days. Hey we’re looking good, what's the unusual volume say. Hey it’s up around .8, .9, 1.2, its up there. This thing is being pushed to the left side of the channel that you drew ahead of time for the channel to move into the present from the future where you extended it.

And as that thing gets up to the top of that line you say, hey I think I'm gonna get something off my hot list. So I'm saying, gradually, like six months from now, you're in a situation where you have three lists. Now watch this, watch these lists. You will see that the stocks that are finished for you are at the bottom of your owned list. You see the unusual volume is not up there anymore. See, we’re getting to a four, we’re going from 5 to 4, 1, 0, 0, on your daily analysis sheet, it’s dropping down. If you're using the new, not

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new, but recent stock tables thing called accumulation distribution put it at the very bottom and you will find that the accumulation/distribution volume, which has been very high, begins to fade. See that, cause it’s the end of the deal. People are going out of accumulation, between 5 down to 4. Thank you. You got it.

So, six months down the road, you made a few bucks here and there> You're sitting in a situation where you see my owned list is telling me, by where the stocks are relatively speaking, of what I own, I'm trying to buy the highest ranked ones that are working, and you become sensitive to it. You say “Ooh, I want to get a high ranked one up there because I want my percent nets to be high every day.” Do some of you notice that your percent nets in your universes are running 8, 10, 12, and 14 percent at the end of the day? See, we’re past the 4 to7 percent range.

Pic 39 Examples of the top of the universe: 6OCT06 and 9OCT06

6OCT06

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9OCT06

What’s AKAM today, what was its percentage?

Well, what's that mean?

(You’re holding ) Right. (Garbled, I know, I got greedy ) Because of what? (I don’t like this market)

OK, what's going on here is a guy is saying I've got a better place for my money if that thing is going to stall out in the middle of the channel, is that what you just said to yourself? ( No, I'm going to go with cash (loud laughter) Its okay with me that you, I just have to check and see which way my mouse if facing, where you are is great because you're coming from someplace and its different than it was three months ago. Isn't it? Are you feeling better about the world or not? No he isn’t, you don’t like the summer (laughter )

No one really likes the summer, OK. If

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you're going to cash that is something that has happened to a lot of people in this world, and it happens in June, July and August. Martel, will you confirm that we had that conversation over there today. ( July, August was the range ) June works just as well as July. So, it is summertime and we’re meeting every two weeks and we get to cry in our beer and always have round, because I can take care of that for you. Now, what I want you to do is get used to the idea that these three lists are very workable for you in terms of how you process information and how you think about things. Now, when you take a look at that stock, AKAM, it was red and was very low on the list, wasn’t it, on your universe list? See, it turned red today and started down the list, see, that’s what I'm saying to you. It’s green to a certain point and it’s a high green when it’s coming into the peak. And then it begins to fade off a little bit and turn red and go down to the bottom. See, I'm trying to give you a dynamic view of a universal list that has that has stock moving down in red and up in green in terms of the net percent change because they color all the charts, the stock tables according to whether you’ve got a positive or a negative thing. Like, when we had a picnic for these guys that were here we used cups that were red and green (chuckle) and they caught the note. It was fun, I’ll jiggle my mouse every once in awhile. OK, what I'm saying to you is you can use those three lists very effectively and six months from now you’ll be seeing how your own stocks work their way down the list just before you sell them, on your own list. Now your hot stocks will sort themselves and your best buys, by what time of the day. You see this, every half hour, 9:30, 10:00, 10:30 and 11:00. You will begin to see, and I put the green on there at 11:00, you’ll see that the first rising volume has occurred, .22 by

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11:00 in the morning, and then those guys you will see move up from the .22 place, see, they're way behind all the peaking stocks and so on. See, the .29 was there at 10:00 for a peaking stock, so first rising volume stock doesn’t make it till 11:00, an hour later. You see that, its an hour later.

But the next day you see, it moves into higher gear as it makes its rise from the trough to the peak. So, I'm saying to you, at any time during the day this gives you a reference where everything should be on all of your lists. So, on the hot list, by 10:30 you're looking at a .17 on your hot list and that’s telling you that by 11:00, you’ve got “A GO” here.

If you come home at night after working all day you're just drawing a line on your universe at .6 and looking at everything above that. See, everything above that is in the trough to peak range. Everybody got that? Great! If they're green, what about the 3’s, 2’s, and 1’s? They have high numbers here, but they're red. Does everybody understand that, they're coming down the list? Like the three starts pretty high up there and then works its way down so they come in for a landing. So you will begin to see that the stock tables sort what you do and how the lists of your universe look at the end of the day on the computer are exact replicas. See at the end of the day it winds up in the same place as your stock tables do.

OK, question ( I'm sure everyone already knows the answer to this, but is the 3, 4 and 5 a minor representation of the trend number and then it comes back do those indicating to

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take some profist?) Yea, the 5 is like a 1, 0, 1, and I'm talking about price, the score is 1

if its increasing (its green). The middle score is volume, if its scoring up it’s a 1, if the volume is decreasing, relative to the prior day, it’s a 0. And the last one we do is accumulation/distribution which you can now, on Q charts, you can actually represent that so you don’t have to think it out. And that one (A/D), when you are in accumulation it’s a 1 and it’s a 0 when you are in distribution. ( Alright ) So a 4 is right at the peak ( garbled ), right decreasing and people are getting rid of it.

(So then you move, you might say naturally, from 0 to 7 )

What you naturally do is this; the trough is at 0 when you come in with the dry up, no price increase, and no volume and you are in Distribution. And then a breakout, which starts the cycle, which is the long half of this cycle, is when everything flips. For example: 0, 0, 0 becomes 1, 1, 1, see that big flip there? It’s like on a one armed bandit you’ve got 3 of a kind here, the 1’s came in and before it was sitting there at 0, 0, 0. They all changed. When you go from 4 to 3, which is the peak, notice that all three of them change too. A 4 is a 1, 0, , 0 and a 3 is a 0, 1, 1 and that is just showing you the symmetry of the scoring system.

When the cycle goes through the axis of symmetry, I'm going the other way OK. Periodic function, you can draw it just as easily as triangle, it doesn’t really matter OK, and it’s the exact same thing. When you go through the axis two of the three are changing. At the peak in trough all three values going into the score are changing. When

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you are at the point where the acceleration becomes deceleration, see you’ve been accelerating out of the trough . Then you start decelerating into the peak, two of the variables change when you cross the axis.

It’s just like when our histogram goes

positive, and all those things, you know, convergence, crossover, divergence, you get the maximum separating, then you start back into the convergence on the MACD. All of those cycles, and some of them are below the axis and some are above it. When we’re trading, we’re on the upper half of that thing.

If you go into a stock that’s had a crossover and divergence on the MACD you're in a short trend doing a non-dominant traverse across that trend, meaning that you're in a retrace. See, there's this is a big thing about markets: is this thing reversing or doing a retrace in a given trend? You people sitting in this room know the difference by looking at all these components (and of course I won’t ask you what the difference is). But, if you're in a long trend where you're taking the rising cycle, it’s a long trend like this, you're trading across, from the trend line to the other side of the channel. And then the stock retraces, the retrace ends and it starts up again, you're still in the long trend. I call those volume Gaussians, i. e., where the volume is increasing where you go across that channel to make money the volume peaks and you come back down the other way as the volumes declining and then it repeats again.

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Pic 40 The example of a Gaussian for price and volume cycle

Left channel line

Non-dominant traverse

Right channel trend line.

This is an example from “Channels for Building Wealth”. Where Gaussians are discussed in detail. Here you see a “long” channel for doing trades. The channel did increase in “volatility” as well. See pink additional width. The Gaussian applies to the shape of the volume graph and exhibits the “P, V” relationship. See below. In a “long’ trading channel, the volume increases as price goes from right to left. This is the “dominant” traverse. It is not perfect but it is excellent for making money. Perfect Gaussian is in pink. The actual is in thinner green. The volume goes from DU to FRV as the dominant traverse begins. It is a “rocket” it turns out. And it continues for three more bars to the “peaking” volume of the traverse. We see some “breathers” (lower volume bars) as the trverse is completed. On the return to the right side (God’s will in action), the volume declines (with breathers). When DU is reached, price “rides” the right (TL) side of the channel

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Like the drill that you will be getting on the music I'm using the stock DAS as the example and I have the example set up so that it is in a long trend for you, it goes across a testing of resistance, it drops back down on a short trend and then the long trend resumes. See, I've got the intermediate thing, I've got the short term, I've got the traverses in there for you, and I'm saying to you, read the music, (Jack laughs) Read the score. And, I'm saying to you, mental improvement comes from going over to the daily analysis (DAS) sheet and playing it out, actually reading the music and saying I write these things down here, that’s how I'm playing this. And the last half of the daily analysis sheet you're doing a Tango with me, but I'm using the same stock and there I'm dealing with formations, trends, buy and sell dates and what to watch for. See, that’s the Tango, that’s the pattern. I'm taking you over to what you are going to do to make money. The first part of it, playing the music, is reading the music, OK, and then playing it, then we move over to do the dance, of the patterns and so on, to get us into the timing and the rhythm of making money. So we have six of those and the last one, as you all know, dedicated to Wen, is Ping Pong.

Back to the explanation of these three tables, the universe, the owned and the hot list. You will see, if you have a job and you do EOD, you will see that everything on those lists exactly resembles what you see when you pull Stocktables.com. And your universe, over the months, has been build by gleaning all of these high quality stocks that really perform

reliably

and

repeatably.

Now, we’re in this great time of the year where you get to learn how hard it is to make money in the summer. We started as far away from summer as we could, like in October,

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so we’ve had a long run before we had to hit the boards and really learn how to do it. So, the stuff that will be on the site for your review and also in the form of transcriptions and illustrations, as documents, allow you to, repeatedly, go through this process. Now, I've taken a long time to talk through three lousy charts on your screen which you can print out as you go through this. But, you’ve gotta be moved by the idea that you're watching it all day, you can actually see the dynamics happen and that we’ve built this thing for you as a way of looking at how to quantify the unusual volume. And then you look over in that column of percent change, the net price change, and you can actually see these guys on a chart, not even having to look at a graph because you have gotten them now arranged in a way, a relative way, that shows what's happening to what's cooking. And you will see that your own stocks move in the universe right to the top when you own them. When you're not owning them when they're elsewhere.

Your hot list is breaking through the .22 at 10:30 or 11:00. The hot lists are the stocks that are coming up and breaking out so that the percent nets are high. So your looking down your universe, lets imagine it, and you see around .22 at 11:00 in the morning, several stocks whose percentages are better than the other stocks right there and what you're seeing is those stocks are all on your hot list. When you get that picture that you prepared the hot list the night before and when you look at that time of the day and see those stocks performing very well, relative to the others, you know you got the good deal. You will begin to see that your hot list is when the stocks are bouncing off the trend line, the right side of the channel; you’ll begin to see that. You’ll begin to see that you're beginning to pick this stuff off a day or so ahead of time. Now, we know that its coming

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and one and one reason your stocks make the hot list a day or so ahead of time is because we put the fast stochastic down there for you, the 5, 2, 3 stochastic. We put it down there so the fast line of the fast stochastic is going through the 50, see its 0 to 100, 0 to 50 is short 50 to 100 is long. When that thing comes up through there and is divergent relative to the slow line as a backup indicator you have one more day before it breaks out. Tomorrow’s newspaper today, that’s where that came from. So those stocks can make your hot list. Then when the market opens the next day you’ve got your three tables there and you see that it works. Now I declined to make a Camtasia on Tuesday of this week but I did a 6 hour stint on this coaching one on one with a person. But I am telling you what I described here this evening, in detail, that person actually went through seeing that and I am not kidding you in the first six hours of seeing it for the first time, you know arranged on the screen properly and all that stuff, it was like unbelievable. And the comment was, “I've got to get that contracting job finished up so I can, you know, get rid of my people and everything, so I can do this.”

Is there anyone in this room who feels fogged, right now? Isn't this pretty clear? See what we have done is said to hell with the betting, the hell with having to do with money management, the hell with protective stops as a strategy.

We have said, we are

characterizing how the market works, and we see the rhythm of the market and we see how all of these things fit together. Now all the indicators and so on, we’ve tweaked them by making the defaults work according to the electronic information transmission in this world that we live in. It is really something.

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Now, I need to spend the rest of the evening talking to you about one thing. What problems are you willing to admit you're having? I'm saying to you, all of this stuff is easy for me to talk to you about.

Can you really begin to implement this without fail?

I don’t care if you trade or anything, but can you just get down where you can start mentally processing this stuff over and over again? Because if you do, you will move out of where you are because you will have surrounded your historical myths and background and all that stuff; see once you’ve surrounded that with new pathways of consideration, it gets more reasonable. I have to tell you that a lot of people have irrational reasoning processes go on when I first meet them.

Does anybody notice this is different than what you’ve been hearing about?

I mean this would drive your broker nuts if you had a real broker that you talk to on the phone. But after 6 months he’s telling all the other brokers what the hell you're doing, and you're getting invited to all these “chicken” lunches. casually talk about anything you want to talk about.

( I have trouble getting a reliable hot list )

( Laughter )

So let’s just

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Oh, well, you're not skilled. Is it okay if I say those things to you? (Sure) OK, its just a skill problem, so let me give you some skills. I have trouble getting a hot list. See when I sat there for those 6 hours the hot list I was working with wasn’t hot. But what did we do? We were able to observe by bringing up chart, after chart, after chart as to what's cooking. So he has raised the key question to get you in gear . Before a stock breaks out we have to know very thoroughly what its doing, did you just get that?

See, we want to see it break out so we’ve got to study, understand and be able to use the information of what a stock looks like before it breaks out. Now that’s where DU came from. So, when you're looking at everything and you're doing stocktables.com, that’s what we call it right? I have been on the phone and all these guys are saying, “Hershey, we want to get it done tomorrow.” It’s like we have this huge crew of people working and then you’ve got, well you all met Spyder right and how great he is. Spyder has a lot of buddies, (Jack laughing) and its quite amazing, the camaraderie that’s going on in terms of: my email looks like a roller on a player piano; I mean it is constantly doing things, and I do apologize to you about not getting you in the groove registration wise.

You have to just do what they tell you, there will not be a phone call to you and once you do the typing you'll be there and then you can start going places. See, you're actually going into the site that these guys have, you know that name is not name of the real site. It takes you to a special place that’s under test like the people who signed up before you in the last two days were called ring a ding, or something like that, it was all test at the time. But you are the first people to come into this.

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Oh, Spyder is arranging a meeting, a three day meeting; he used to be in the pharmaceutical business. He's calling in some chips where he will arrange a three day meeting and invite 100 people to kick off the website, and it will be free, you know, its like a three day conference, no charge for it, it’s a free thing and you people will be part of that, of course, if you wish. You know, take off a couple days from work; we’ll let you know ahead of time. But we’re just going to do three days of how you would launch Viagra or something, I don’t know, a pill. Oh, can I interrupt for one minute? I've had all my medications changed and I got too tired at that time when the guys were here, so my doctor has figured out, this is really incredible for me, how to get my oxygen level to work, he thinks. (chuckle) My heart will get better pumping so that the oxygen will be picked up. It will stop leaking because he has figured out by putting me in various positions that if I do the sidestroke, with a fishing pole attached to me, and a bungee, (laughter ) where I don’t have to do turns. If I do sidestroke for so many minutes in so many hours for the next six months he thinks that by getting my heart to lay in the right position, so it doesn’t leak very much, that if I can get super muscle tone in my heart we may get me back to the place where it isn’t regurgitating.

( Loud clapping )

I regard it as a miracle. But the guy really did a job on me. I mean, can you imagine how a Dr. can be so thorough when he's got all the sonograms and all that crap and he’s got all the lung things, and he's got all the charts and tables and all those things, but he's got me laying there in all these various positions, you know, listening to all the noises

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that I make and figuring that he's got these valves just about closed if I'm in a sidestroke position, and Hershey, we don’t want you doing laps. We’ll put a fishing pole on you and so on and the recent **** that manufactures those things and you screw them into the side of your swimming pool and he feels that in six months, at my age of 73, I probably can get enough muscle tone, you know, just regular old muscle tone in my heart so it won’t leak so much. OK, so we’ll go back to the three hour routine (laugh). I just feel so comfortable that I'm surrounded by all these great people helping out on this thing, and my doctor is really just on my case. I mean, he's got me scheduled for everything, everywhere. I probably already told you this, I'm getting implants in early July so that my glandular balance in my system is primed as well. So we’re going for broke on this thing to reverse the former path that I was on. OK, so I'm going through my trough, and I'm gonna head for the peaks. Oh, there it is. I knew it was here somewhere.

Now, let me do the other 90 percent of developing the skills for getting the hot list done, OK. What I'm saying to you is, when that thing is coming down into DU you're headed for the trend line which you’ve drawn in advance. Now, one of the things that people hate is that one they finally get a stock set up it reaches the end of the long trend that its been traveling in. You're saying to yourself all the time, why don’t I pick these up when they start. OK, we’ve got the answer for you.

If you’ve been doing this for a few months, like 3 or 4 months you are going to get to the place where you’ve tested the resistance you’ve have an intermediate term where it

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comes back down, in the long term channels, and you’ll get to the place where you will have the most unusual experience in your life. It’s called, “hitting “hitting home runs.” You’ve heard about that, right? When you get that turn out of that that intermediate term short, when when you're traveling in this long term with these high quality stocks, its tipped up, you start back across that intermediate term long where you are trading, the up part of that watching it retrace retrace and then go up again. And you have that very steep money making thing that doesn’t take very long. OK, so here’s here’s what we’re we’re looking for. We’re looking for, on your universe, that you’ve assembled over many months, but if you haven’t been here you got a problem, problem, right? Except for the fact that we will put on the website a universe that’s well established. See, you did all your sweat, you’ve already been through it so why don’t we just get that universe in there there for you that’s really super and excellent. Because then you can see those places. So that’s one of the greatest handicaps that people have in the beginning. Because they're building their universe, they're building their stock tables thing and so on and as you go along with all these hot stocks and stuff like that, they come to the end where they meet this. This is resistance where you're at a place where the PE ratio of that stock relative to that sector is as high as PE ratios ratios in that sector. sector. That’s fundamental analysis talk. OK, so that’s not exactly where you want to be. I mean its mulch; we had a stock last time that we talked about, that’s up there doing that. And DRIV is a stock that hit the resistance and it did about 5 trades trades for you up there. It came back down and now its in its cycle of starting another long again and to head back to the resistance level which will probably be higher next time. So there's a hot one for you you but its not, its just about finished hitting the left side of the channel, ch annel, so in 5 or 6 days put it on your hot list.

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Now, we are probably not going to post, except in the chat room, see we set up a chat room, which is a fake one right now, where we’re talking every day. But in a couple of months on our websites there will be this daily chat on an international basis where there is a commonality of the people who will be there and be part of that they will be telling you their hot list every day. But we’re not saying to you you that you should skip the work, we’re saying to you we want you to post your stuff too. An so at that time it will be like the Spyder thing on ET right now where there are some good stocks posted.

Now, we will have stepped into the picture a little bit and cleaned up the messiness of picking a hot list, OK, cause some of them are flaky. We’ll take the flaky ness out of that for you. So, what I'm saying to you, what I want you to do is to try to build that universe assiduously. Just work like hell to get that thing build and we’ll be supplying along side that some really good universe stocks, OK, so so you’ll have those. those. That changes the problem from “I don’t have any raw material”, to t o “how can I get the raw material to be working for me at just the right time?” So that brings the focus focus down to this; if you you have patterns and stuff that are ar e showing up on the indicators that are crummy, not regular, not repeatable that stock can’t make the hot list.

So that brings up a fourth fourth list. Within your universe you you will have stocks that have traded repeatedly. OK, has anyone traded BTUI more than once? OK, I just mentioned one, suppose I mentioned 25 more?

That means that you have been able to see the

repeatability and reliability of that stock stock and it will be put on your hot list frequently. frequently. Do

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you see how you're you're developing the skill now? I said, a stock named, hands went up immediately. These people did not lose money on those trades. By the second or third or 4th time you’ve traded this stock stock its nice, I mean you really feel feel pretty comfortable. And it has been going along on the long term, we’re talking years now, where the long term trend on these stocks is going through a phase maybe maybe every two years. You will see that the intermediate term traverses, long and short, long and short, OK, you will favor those on the long traverse of the long term, when the intermediate term is going across there.

That’s another skill thing. To be able to pick those guys off when they start that long traverse across the long term, which is the intermediate term channel, and that is what we actually trade are the traverses on the intermediate term channel and the short term stuff that wiggles through there. So, what I'm saying to you is, you're you're zooming in on this and I have given you the major clues of when things are favorable and what to look for in being able to do 5 or 6 trades in those things in a matter of 5 or 6 months, right? We’re back to the initial analysis anal ysis sheet. Now we’re just saying those guys who make the initial analysis sheet are in the long movement that you you see on your charts. You’ve got the biggest zone there, the Columbus Story, S tory, falling off the edge of o f the earth, and in that you have these nice things that are going on and we’re tending to trade just the long part of those, when they're there, in the long, and we are looking closely at when they are hitting the trend line and coming off of those. Now when you go through that, it came down and now its going going this way, you’ve you’ve hit that first first home run. I mean that’s that’s a four bagger. Because that first shot, the beginning of the long intermediate term trend makes a lot of money and those are the guys you are looking at that are doing that 10, 12 percent a day.

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It is nothing, when you’ve got your universe set and when you're using the universe that will cooperatively be generated here to not see 8 percenters and better at the top of that list. Lets say you go down the first 12 that are green, 2/3 of those will be more than 8 percent every day of the week, except sometimes in the summer when it is really rotten. (laughter ) So what you did get to do, you actually did get to go through it, a two week period when it was just totally rotten and discouraging and everything and being in cash is not a problem. Cause what we’re going to do is nail this thing down so that the number of doublings per year that you're doing is quite a few. We’re shooting probably for 4, 5 or 6 doublings per year when we get in the groove here.

( Jack, can you spend a minute or two on decision making. Lets say it’ 11:00, looking good ***** FRV volume is great. Its up$2.85 ****** channels and I get gun shy because… )

It’s a go, no go thing. (garbled) I'm trading commodities with these guys twice a week, we’re going along, I'm holding for four bars come hell or high water, four or five minute bars. I'm holding in the commodities market 20 minutes with these guys just to mak e sure they know what 10 points look like. And they're saying those bars are overlapped, you know, that thing is jumping, we’re talking jumping, and my voice hasn’t changed. But when it comes time and all those channels have been projected in and all that stuffs going on, when they're typing FTT, (Failure to Traverse), whoooo, we’re making the curve.

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I'm saying to them, in two bars we’re gonna trade this when that price comes down to that FTT line that we, well we’ve hit three FTT’s today. When we hit that we’re going go and we hit a 10 pointer right after that.

(What is FTT again? ) Failure to Traverse. When you're in a situation, watch this, and you come to resistance you’ve got that long channel going up, you hit this horizontal level called resistance where the stock is performing as well as it possibly can. Make me quit, OK

(Garbled and laughter )

I have to not go over the edge, OK, as Columbus would say. So you’ve got this resistance here, now you’ve got the channel. What you're going to see is the next time it came off the trend line going up on high volume it can’t get any higher than it was the previous time it was at that price. You're hitting the R again. Now, it can’t get all the way across to the left side. That’s a failure to traverse. Now when you're going in the direction of the slope of the channel that’s called a dominant traverse and coming back is a non-dominant traverse which is called a V trade.

Meetup_2006!06!22_Illustrated_text Putting the Pieces Together

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