RC is nearly flat, suggesting that another change may be ahead. As can be
seen, an 8 point rally did develo p. These cycles are generally too s mall to trade, but they illustrate thepoints of"failure and success."
33
J.R. STEVENSON
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07/ 1 5/03 started with small cycles and rather "choppy" market action. These small cycles are nottradable but going to a one minute chart can be helpful! See next chart.
34
PRECISION TRADING WITH STEVENSON PRICE AND TIME TARGETS
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CHART 12The regular cycle A-B-C gave a near perfect PTT on this 1 minute chart. A-B-C-D is a good example
of a regular unit [ RU ] in a down trend. Soon after the printing of point D, a small regular cycle [RC] wasfonned with an uptrend, suggesting higher prices.
This RU was tradable as 2-3 points were possible ifyou had a timely entry near point C.
35
J.R. STEVENSON
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CHART 13REAL TIME ANALYSIS FOR A PTT
At 1 3 : 1 5 ET this cha rt would be available to analyze. A quick glance would show the t rend on theregular cycle [RC] [A-C] was up and the re was a high point B between the two low points. Since all the RCsince 1 0 1 5 had been up and the last cycle was a RC, we would expect that an inve rted cycle [ IC] wouldfollow with about the same length cycle as the RC.A t rendline was d rawn from Ato C, moved and then cloned to point B. The end ofthis cloned line isthe PTT.Befo re looking at the next cha rt, caution is advised to use stops because of the small double top [DT]that existed between 1 2 :30 and 1 3 :00. You might also note that the re were 1 3 ba rs between A and C. [thefi rst ba r A is counted as 1 ] .
36
PRECISION TRADING WIlli STEVENSON PRICE AND TIME TARGETS
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CHART 14RESULTS FROM PREVIOUS CHART
The fIrst PIT [# 1 ] fell short in price but did form a "time" point. After the fIrst cycle ended, anothersmall cycle formed by an IMPLIED POINT [IP] forming on the 1 3 : 1 5 time bar. This resulted in a large trendline [TL] fram A to the 1 3 : 1 5 bar and another PIT for 1 3 :30. This also was short but then the trend line TLfrom A to the 1 4:04 bar resulted in a PTT that only missed by about 2 tics.The falling short of several PIT's soon resulted in a large decline until the close. Note the fIrst smallinverted cycle [IC] after the 3rd PIT had a downtrend, as did all the other cycles that followed.
37
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CHART 1 5CYCLES IN THE PRE-MARKET CHART
There has not been enough volume in the night trading to produce good cycles or entry points. How­ever, from time to time, I do check the "all sessions" chart as was done on 811 2/03 and a couple ofgood PIT'swere available. The one marked 1 was made first and then CLONED. The target fell a tic short as did the 2PTT when the chart was printed.NOTE: The volume and liquidity in the night trading seems to be increasing, so it may develop some
good PIT's in the pre-market trading. However, the data from night trading cannot be used to developa PTT for the day session.
38
PRECISION TRADING Willi STEVENSON PRICE AND TIME TARGETS
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CHART 1 6CONCEPT 2
A basic trend line is drawn from the highest point at point B to the lowest point at point C. This showswhere the uptrend stopped at point B and where it stopped going down at point C. This basic trend line [BTL]is cloned and shifted to the right until it just touches one point on the 1 1 :3 5 bar. The high point ofthis bar putsthe cloned line the farthest from the basic line. When a close develops above this CTL, the chances are goodthat a new cycle has begun.The same procedure is performed from point C and point D to tell when a down move might develop.The move did not continue far on the last CTL but with stops the trader would not have lost. The CTL's arefound to be more effective on the larger cycles.
39
J.R. STEVENSON
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CHART 17REAL TIME TRADINGThis PIT was made in a chat room about 1 4: 1 5 ET and was witnessed by 8- 1 0 traders. The PIT wasfor the price to be at 994.25 by 1 440, about 1 hour 25 minutes in advance. On 1 440 the price was hit to thevery tic and then rallied over 9 points.Another call was made soon after the PIT for a close near 1 002.50. This is another good example ofhow the I C is connected to the RC as the price action from C to D is the last half ofthe I C and also the fIrst halfof the RC from C to D.This CONNECTION is the KEY as to why the PTT concept works so accurately.
40
PRECISION TRADING WITH STEVENSON PRICE AND TIME TARGETS
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This call was also witnessed i n a chat room. The measured target from the small double top [DT] was994.50. After the small Ie formed, a PTT was made at 994.50, the exact same price target from the DT. ThePIT confirmed the DT objective ! There were many other PTT's available during the day.
41
PRECISION TRADING WITH STEVENSON PRICE AND TIME TARGETS
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As THE DAY PROGRESSEDThe TL's marked with a number and C are CLONED trendlines in sequence as the day progressed.Note that the slopes ofthe TL's are up except for #2, which is sideways.Note also that a PIT made from a regular unit [RU], will have an expected high and ifdrawn from aninverted unit [IU], the expected PIT will be a low. There are four PIT's in about 3 hours time. Could you haveprofited with this advance information?Can you fmd the longer cycles that would give you more time to enter and to reach the PTT?H INT: Draw a line from the 1 0:20 low to the 1 3 :45 low and clone it from the high at 1 1 :05.
43
J.R. STEVENSON
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Point A has 3 bars with equal lows. Point C has two bars of equal lows. In a situation like this, the TLA-C is drawn to include all the bars, to make the line as long as possible. When the PTT is drawn the PTT
should fall within the maximum length ofthe cloned TL. In this example the PIT fell one bar short ofthe TL.In this example, the A starting point could have been on the 1 1 :45 bar and the cloned line would havegiven a perfect PIT on the last bar ofthe day. It is impossible to determine which ofthe 4 bars at point A is theexact cycle low. By enclosing all ofthe bars, a PIT should fall within the cloned TL !
44
PRECISION TRADING WITH STEVENSON PRICE AND TIME TARGETS
ABOUT CYCLESWhat are cycles? Where do they come from? What causes them to work in the market? What is thecycle theory? Many questions like these have been asked. lt is beyond the scope ofthis manual to discuss theconventional theory of cycles but I will try and explain a few points that may help you in using the PTTconcepts.As a starting point, some have stated a cycle is an event that repeats in a somewhat regular interval oftime. For use in this manual, an event is when the price stops going up and forms a high PT or stops going downand forms a low PT. (See glossary for explanation ofPT.)Understanding the PIT concept does not require knowing the reason behind this change in EVENT.Cycles are caused by people putting in orders to buy or sell for a thousand different reasons so you wouldimagine that the market place would be completely random (some think it is) but careful observation suggeststhat habits are formed and patterns are established.Conventional cycle theory suggests, for example, that ifthere is a price low [pt] every two hours, thereshould be another low in two more hours, which may be a larger low since it is also a four hour low. Not allcycles will have harmonics but many do.lt is also assumed that the longer a cycle is in length, that the number ofpoints from the low to the topwill be greater. This is true most often, but many small cycles can have very large amplitude, if fueled byemotion.Cycles are not always symmetrical, that is the high does not always come half way between the twolows. Depending on the interaction oflarger or smaller cycles, forming a trend, the highs may come very earlyor very late in the cycle. This is called "Translation." The PTT concept handles this complicated characteristicby analyzing the failure to reach the target or by the fact ofreaching the target sooner then expected. [see page29 about "WHAT IF THE PTT MISSES?"]45
J R STEVENSON.
.
For further reading and study on cycles the following sources are suggested:
Cycles: Selected Writings, Edward R. Dewey2. How To Make Money in Commodities, W.D . Gann3 . The Magic a/Stock Transaction Timing, 1.M. Hurst1.
4.
Explore the many web sites containing information about cycles.
These and other books on cycles are available at http://www.traderspress.com.
46
PRECISION TRADING WITH STEVENSON PRICE AND TIME TARGETS
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