vestment Model (GIM) gave you the basicapproach to how your plan for financial independencecan be implemented.

The Setup-Trigger-Follow-Through (STF) approach showedyou how an expectation turns into an investment.

The dollar cost averaging, or DCA, method in its severalforms showed you how to fund your investments.

The momentum method (MOM) of stock selectionshowed you how to time your market entry.

My portfolio recommendations showed you how to putyour ideas and money to work in the markets.
KEEP IN TOUCHJake Bernstein and MBH Commodity Advisors, Inc.P.O. Box 353Winnetka, IL 60093Phone: 847-446-0800Fax: 847-446-3111E-mail: Jake@trade-futures.comWeb sites: www.trade-futures.comwww.2chimps.com
A P P E N D I X
PRACTICE CHARTSAND ANALYSES
If you are truly interested in learning my MOM method for selecting stocks that have the potential to make large moves, youwill want to take the following practice charts and lessons seriously. I suggest following these three steps for each chart:1. Make several copies of the practice charts that follow.2. Read the assignment that accompanies each chart andfollow the instructions.3. Consult the answer chart and check your work.The key to effective stock selection using the MOM methodis practice.
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APPENDIX
PRACTICE CHARTS
Practice Chart 1 There is a MOM buy signal on this chart.Can you find it? What happened after the buy signal? Wherewould you have bought this stock based on the buy signal?
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Practice Chart 2 Can you spot the signal or signals on thischart? Were they buy or sell signals? Was there more than onesignal? What happened after the signal or signals? What is thecurrent condition of this stock? Is it about to give a new signal?
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APPENDIX
Practice Chart 3 Can you spot the signal or signals on thischart? Were they buy or sell signals? Was there more than onesignal? What happened after the signal or signals? Is trading volume an issue? What is the current condition of this stock? Is itabout to give a new signal? Is there something about this stockthat might have prevented you from investing in it?
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Practice Chart 4 Can you spot the signal or signals on thischart? Were they buy or sell signals? Was there more than onesignal? What happened after the signal or signals? What is thecurrent condition of this stock? Is it about to give a new signal?
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Practice Chart 5 Can you spot the signal or signals on thischart? Was there a good indication that this stock was destinedto top? Can you find the sell signal? Were there other signals?What happened after the signal or signals? What is the currentcondition of this stock? Is it about to give a new signal?
ANSWERS TO PRACTICE CHARTSHere are the answers to the practice charts. Take your timeand carefully read my commentary and analysis.
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Practice Chart 1: Analysis The chart shows price making anew low in October, while MOM did not make a new low. Thereafter, the BUY POINT was penetrated and the stock would havebeen bought. The result was higher prices. Although MOM hasnot moved appreciably higher, there has been no MOM sell signal and, assuming you followed the rules, you would still be inthis stock with a stop loss to manage your profit.
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Practice Chart 2: Analysis The chart shows price making anew low, while momentum was moving higher. This was a setupfor the buy point, which was triggered in October. A move tohigher prices followed, as you can see by my notes on the chart.As of the end of this chart, prices were making new highs, whilemomentum was moving lower, setting up a sell signal.
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Practice Chart 3: Analysis The chart shows price movinglower, while momentum is moving higher. This has set up a potential buy signal. However, there is a problem. As you can see,the trading volume (number of shares traded daily) is very low.And this could be problematic. The low volume would cause meto stay out of this stock.
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Practice Chart 4: Analysis The chart shows price moving lowerfor a lengthy period of time, while momentum was moving higher.This set up a buy point, which was penetrated and yielded a buysignal. The result was higher prices. Currently, price and MOMare moving lower, which is a normal situation. Based on the signals, the investor who owns this stock would be using a stop lossto lock in a profit in the event that the stock declines.
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Practice Chart 5: Analysis The chart shows price making anew high, while MOM was moving lower. This was a setup for asell signal at the indicated sell point. As you can see from thechart, the stock declined sharply and currently remains in a declining trend with no indication of a bottom as yet.
O N L I N E
R E S O U R C E S
A considerable amount of investment information is available online and at no charge via the Internet. Here are some places you canvisit to get valuable information on investing, as well as price quotations and the momentum indicator. Some of these sites are not free,so be careful what you sign up for.
Price Quotations and Timing Indicators (Including Momentum)www.barchart.comwww.futuresource.comwww.gfds.comwww.stockcharts.com
General Investment Information on Stocks and Futureswww.bonds-online.com (an excellent resource for bond investing)www.cnbc.com (for news, interviews, and price updates)www.dripcentral.com (for information on dividend reinvestmentprograms)www.invest-faq.com (for general investment information)http://investorsleague.com/index.html (for practice and informationon trading)
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ONLINE RESOURCES
www.ipmi.org (for news and inflation on precious metals)www.maketocracy.com (become a mutual fund manager with playmoney)www.morningstar.com (for mutual fund information)http://networth.quicken.com (for mutual fund information)http://quote.yahoo.com (for news, information, and resources)www.stocksmart.com (for general information on stocks)www.trade-futures.com (for futures trading information)www.2chimps.com (for short-term and day trading information)www.yardeni.com (sometimes a little radical but a good informationsource on stocks and economic forecasts, trends, etc.)
I N D E X
AAction, 49, 87–89, 91, 92momentum and, 114premature, 93–94Alternative energy, 178–79Analysis paralysis, 49Analysts, 28, 68–70Analytical thinking, 184Artificial intelligence, 178Art of the Deal, The (Trump), 91Attitude, realistic, 52BBearish divergence, 113, 114–17Beat the Millennium Crash (Bernstein),160Bernstein, Elliott, 10, 101Bernstein, Jake, 4–10, 101, 106, 121,136, 137, 160, 194Biased expert, 104Blind trust, 41Brokerage analysts, 68–70Brokerage scandals, 28, 63, 104Bullion coins, 163–72Bullish divergence, 113, 114–17Business publications, 72–73Buying orders, 47Buy signal, 117CCapital, starting, 24, 58–59, 90–91,183Charts, practice, 121–28, 195–205Children, 25–26financial issues and, 38–40, 76–77
investment research and, 43whole life insurance and, 37CNBC analysts, 69–70Coins and precious metals, 159–72gold and silver bullion, 164–65investment programs, 168–70,168–72liquidity of, 164, 171platinum and palladium bullion,165–66protecting yourself with, 162–63shopping for price, 167–68storing, 166, 172strategy, 161when to buy, 166–67College expenses, 39–40, 76–77Commitment, 23, 25–26Commodity trading, 8, 190–91Communications technology, 179Computer(s)investment and, 29–30neural networks, 178technology, 178Confirmation, 87see also Timing methodmomentum and, 114Consistency, 26–27Contrary opinion, 14–15Covered option writing, 158
DDay trading, 119, 138, 159, 174Defense stocks/companies, 179Detachment, 52Determinism, 186–87Discipline, 46, 51, 54, 65, 184
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INDEX
Disposable income, 77Divergence, 109, 113–17Diversification, 17, 31, 182–83Dividend reinvestment programs(DRIPs), 151Dollar cost averaging, 60, 146–51, 154bullion coins and, 167, 172mutual funds and, 146by price, 147–49by time, 149–51Dollar risk stops, 121Dow Jones Industrial stocks, 148EEconomic cycles, 11, 187–91boom and bust cycles, 190government and, 189origin of trends, 185–86stock/commodity price history and,190–91Economic determinism, 185–86Education expenses, 39–40, 76–77Emerging markets, 177–80Emotion, investment and, 60, 184detachment, 52fear and greed, 185self-knowledge, 45–54Energy, alternative, 178Expectation, 13, 84–87, 114FFear, 46, 185Financial advisors/planners, 74–75,159Financial goals, 24–25, 55–79financial freedom, 135–37losses and, 58setting realistic/attainable, 77–78skills and, 64–66starting rules, 64–73Ford Motor Company, 150Forecasts, 47Foreign exchange (FOREX) trading,174Foreign stock markets, 174Forrester, Jay, 179
Franchises, 70Fund of funds, 175Futures/futures options, 8, 137,140–41, 159, 173–74Futures traders, 182Futurists, 180GGambling, 129–30, 131–32, 137–38General Electric, 150General Investment Model (GIM),81–100action, 87–89, 114confirmation, 87, 101, 114expectation, 85–87, 114flow chart, 83historical pattern, 84–85, 113–14management, 89–90, 114method. See Timing methodplanning for the future using,90–92setup, trigger, and follow-through,92–99, 116summary, 99–100Genetic engineering, 178Gold, 86, 97–99, 164–65Granville, Joe, 60Great Depression, 189Greed, 46, 61, 185HHedge fund investing, 174–75Historical patterns, 11–12, 84–85momentum and, 113–14How to Trade the New Single StockFutures (Bernstein), 106, 136IImpulse, 46Income, disposable, 77Inflation, 160Insiders, 47–48Instant gratification, 132, 186–87Internal Revenue Service, 42International stock markets, 174
INDEX
Internetbusinesses, 56references/resources, 30, 75–76,120, 153, 155, 180, 207–8security, 179Intraday charts, 119Investing in Metals (Bernstein), 160Investmentadvisors, 67–70asset protection, 40–42children and, 38–40computers and, 30investor types, 129management, 89–90marriage issues, 33–38, 42–43methods/accuracy/risk, 108outdated ideas for, 27–29partnerships, 22–23plan/strategy, 183preparation checklist, 23–31pressure and, 30–31real estate as, 139–40selection/timing of, 102–5shoestring budget. See Shoestringbudget investmentssignificant capital and, 157–75stock market and, 138success factors, 51–53vehicles, 136–37Investor psychology/behavior, 45–54,181–87economic determinism, 185–86economic trends and, 186emotions and, 184instant gratification and, 186–87profit/loss variables, 182–83successful investment factors, 51–53J–KJackson, Michael, 143–44KISS, 16
Living trust, 41Losses, 13, 48–49, 50, 58–63, 59, 134riding, 60variables that exacerbate, 182–83MMcKay’s Extraordinary Popular Delusionsand the Madness of Crowds, 15Marketdivergence/changes in trend,113–17life cycles, 191–93momentum and, 112timer, 104–5Markets and Market Logic(Steidlmayer), 184Marriage, and investment, 33–40,42–43children and, 38–40life insurance considerations,35–37tax considerations, 37–38two-income families, 34–35MBH Commodity Advisors Inc., 194Mechanical methods, 51Momentum, 109–12calculating, 111–12divergence/changes in trend,112–17market indications and, 112normal conditions for, 110–11Momentum Stock Selection (Bernstein),106, 121, 158morningstar.com, 155Moving average, 149Mutual funds, 28, 136, 146, 183children and, 38dividend reinvestment programsand, 151, 152, 154load vs. no-load funds, 154–55N–O
LLeverage, 136, 140Life insurance, 35–37Livermore, Jesse, 8
211
Neural networks, computer, 178Numismatics, 163, 168–70. See alsoCoins and precious metalsOffshore trust, 41
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INDEX
Online businesses, 56Online references/resources, 30,75–76, 120, 153, 155, 180, 207–8Organization, 26–27, 62Overtrading, 51PPalladium bullion coins, 165–66Partnerships, 22–23, 27Patterns, historical, 11–12, 84–85Persistence, 52, 64–65Platinum bullion coins, 165–66Practice timing charts, 195–205analysis of, 200–205Precious metals. See Coins andprecious metalsPrice, buy/sell behavior and, 48Profit in the Futures Markets!(Bernstein), 137Profits, 134, 182–83Pro forma earnings projections, 72–73Publications, 72–73Pure trust, 41RRate of Change (ROC), 112Real estate, 13, 139–40References/resources online, 30,74–75, 120, 153, 155, 180, 207–8Reminiscences of a Stock Operator(Lefèvre), 8Revocable trust, 41Risk/risk management, 19–21, 121Rumors, 60–61, 70–71, 95–96SScale investing/scale trading, 147Sector expert, 105Security stocks/companies, 179Self-control, 65–66Self-discipline, 65Self-employment, 56Self-knowledge, 45–54Selling orders, 47
Sell signal, 118Setup, 93–94Setup, trigger, and follow-through(STF), 92–99, 116examples, 93–96gold and, 97–99model of, 97Shoestring-budget investments, 143–55dividend reinvestment programs,151, 154dollar cost averaging, 146–51, 154portfolio suggestions, 154–55Short-term trading, 158Simple trust, 40Simplicity, 16Single stock futures, 136, 157–58Space travel, 178Standard and Poor’s500 index, 148futures cycle chart, 4-year, 85Starting capital, 24, 58–59, 90–91, 183Steidlmayer, J. Peter, 184Stock(s), 136bargain, 59covered option writing, 158foreign stock market, 174price history, 190–91single stock futures, 157–58Stock Market Strategies That Work(Bernstein and Bernstein), 10, 101,106Stock options, 136, 159, 174Stock picker, 105Stone, W. Clement, 144Stop loss, 121, 153Strategy, 183TTax considerations, 37–38, 75Technical analysis, 158Technology, 177–79Term insurance, 36–37Timing method, 12–13, 68, 101–28analysis, 200–205divergence/changes in trend,113–17
INDEX
introducing, 106–8momentum, 109–12, 120practice, 120–28, 195–205selection/timing of investments,102–5signal, 117–19Tips, 60–61, 70–71Trend follower, 104Trump, Donald, 91Trusts, 40–42
W–ZWEBS, 174Whole life insurance, 35–36World equity benchmark shares(WEBS), 174World Future Society, 180Wright-Hargreaves, 7Y2K hysteria, 14, 86–87zacks.com, 155
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