was made near the .618 division of theinitial vibration. If the initial high is made near the 50% or 62% divisionof the initial vibration, there is a greater chance that the trend willprogress in dynamic proportion to the initial vibration and the trend willterminate on a dynamic proportion.
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Dynamic Time Analysis
Trend Vibration
The initial vibration set up the rhythm of the trend into the Jan, 5 high.A high was made at the 162% TCR of the initial vibration and the tow ofNov. 29 was made one day prior to the 262% TCR. The final top on Jan. 5was made one day prior to the 424% TCR of the initial vibration.
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Dynamic Trader - Chapter 5
Trend Vibration
Wouldn't it be nice if every trend vibrated to the initial rhythm andcompleted deaden a dynamic TCR of the initial vibration? If this were thecase, we wouldn't need any other analysis techniques or trading strategics.Unfortunately, it's not that simple. Fortunately, the market will let usknow in advance if a trend is "vibrating" and if it should make the finaltop at a projected TCR of the initial vibration.I've shown a dynamic Trend Vibration for the SPX using two differentinitial vibrations. The Trend Vibrations are projected forward from boththe April 4,1994 to Dec. 8, 1994 low-to-law vibration and the June 24,1994 to Dec. 8, 1994 low-to-low vibration. None of the minor highs andlows during the consistent bull trend were made at the TCRs from eitherof these two potential initial vibrations.Since the S&P bull trend does not appear to be consistently vibratingto the initial vibration, we cannot have a high degree of confidence that thefinal top of the bull trend begun in April 1994 will be made on aTCR ofthe initial vibration,
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Trend Vibration
All of the minor highs and lows of the bear trend in the yen were madewithin one or two trading days of a Trend Vibration of either the initialvibration (April 18 high to May 26 high) or the subsequent vibration(May 26 high to June 27 high) just prior to the beginning of the consistentbear trend.The Sept. 15 low was made just two trading days prior to the 262% TCRof the second high-to-high while the double bottom of Nov. 2 was made justone day prior to the 424% TCR of the initial vibration.
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Trend Vibration
The final wave 5 low was made just three trading days ate the162% Trend Vibration. While wave 3 and 4 did not hit dead on the otherTCRs, the rhythm was definitely evident as copper declined.A timing decision should never be made solely on the basis of a TVprojection. Trend Vibration projections must be considered within thecontext of the other timing factors. However, considerable weight shouldbe given to TV projections for lime projections of the termination of atrend if the market has been trending in rhythm to the initial vibration.Note that the Wave-1 low was made near the .618 division of theinitial high-to-high vibration. This signaled early on that the trend wouldhave a high probability of vibrating to the initial vibration.
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Dynamic Time AnalysisTime CountsTime counts are calendar day or trading day counts from prior swingpivots. The counts that most traders are familiar with are the Fibonaccinumber series (3, 5, 8, 13, 21, 34, 89, 144, etc.) and some of Gann's timecounts such as the squares of 90, 144, 360, etc.What do we mean by the "square" of a number? A square of a numberis simply the series of divisions and multiples of that number. For instance, the series of numbers of the "Square of 144" include 36, 72, 108,144, 180, etc. Each of these numbers are multiples of 36 which is 1/4 of144.Some markets make trend changes at a particular series of numbersmore frequently than others. For instance, gold often makes trendschanges at calendar day counts of the Fibonacci number series. Currenciesoften make trend changes on calendar day counts from the ''squares of 90and 144" or at divisions and multiples of 90 and 144 such as 30, 60, 72,90, 144. It is a simple matter to research past trend change dates for anymarket and discover if particular calendar day or trading day counts arefrequently repealed. If they are, those time counts should be consideredfor that particular market,Anniversary DatesMarkets often make a trend change at or very near the date of prior trendchanges. Sometimes it is uncanny. Anyone who will look at a long historyof any market will find how often trend changes unfold exactly on orwithin one or two days of trend changes in past years.By keeping the swing file for each market up-to-date, traders will havea complete record of the anniversary dates of past years. Sort the dates bymonth and date to put the file in the proper order for an anniversary datefile.
The following page includes a table with the most useful time countsand anniversary date periods.
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Fib581321345588 210144233377610967
Sq. 90306090120150180
240270300330360
Sq. 144 AnniversaryDates36365727301081096144146118018262162191252255728829223243287360365239640134324383
Time Counts andAnniversary Dates TableThese counts could be carried outindefinitely, but the longer termcounts are less effective than thoserelative to intermediate degreetrends. The counts in hold tend to bethe most important for that series.The anniversary dates are throughyear twelve.
Almost every intermediate high and low shown above was made at or verynear one or more Fib calendar day counts from a prior high or low. Timecounts are supplementary time factors to the TCR projections.
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Time CountsThe following two daily charts of the Deutsche Mark show how almostevery pivot high and low was made within two calendar days of either aFib or Square-of-90 count. Currency traders who do not remain aware ofthe dates of these counts are missing out on the value of a very reliabletime projection technique.
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Time CountsBonds usually make at least an intermediate degree trend change within1-3 calendar and trading days of a Fib count. The two charts below showseveral intermediate and major trend changes that fell on or near the 55,144 and 233 counts. Bond traders; should always have the Fib CD and TDprojections up to date.
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Time Counts
Each of the significant highs and lows during this consolidationperiod for the S&P were made on or within a couple days of a 72 or144 calendar or trading day count. This is no: coincidence. The S&P isnot a random market. Every trend change in the S&P will not be madeon a 144 or Fib time count but many, if not most, will be. If you are astock market investor or trader do you think It is worth your while tokeep these counts up-to-date?Trading decisions should not be made by time counts alone. Timecounts are considered in relation to the Time Cycle Ratio projections.W. D. Gann has taught us to "use all of the tools, all of the time." Bykeeping all time analysis factors up-to-date, the periods with a highcoincidence of several time factors will stand out.
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The DJIA began a consistent, record breaking bull trend fromthe Nov. 1994 low. Minor reactions were made at the 55 and 89calendar day counts from the low. The trend made a lopfollowed by the largest thru Sept, 1995 just one trading dayfollowing the 233 calendar day count from the low.
The stock market often completes sharp declines on or near a55 calendar day count. Do you know the date of the most famous55-CD panic decline?
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Dynamic Time AnalysisTime Counts
Who can forget the Aug. 25,1987 to Oct. 20, 1987 panic decline?The Oct. 20 low was made 56 calendar days from the Aug. 25 top. Theclosing low on Oct. 19 was 55 calendar days from the closing high ofAug. 25. Note how the second leg of the decline was the panic leg.Take another look at the May - July 1996 decline on the previous pagefor the similarity.Individual markets and securities will often have their own peculiartiming factors that will only be revealed to the dedicated analyst thattakes the time to become thoroughly familiar with each market he orshe intends to trade or invest. Let the system junkies continue theirillusive and fruitless quest for the holy grail of system trading. It's upto you to learn the business of speculation if you desire to besuccessful. Part of that learning curve is to become thoroughly familiarwith the details of market history. Take the time to gain the knowledge,and your efforts will be rewarded.
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Anniversary Dates
At the beginning of every month, the anniversary date file shouldbe reviewed for potential dales of trend change during the month- Theabove swing file includes all pivot reversals that were followed by aminimum ofa 5% price reversal that lasted at least 21 days.The graph above the table totals the swing pivots for the 15 yearperiod from June 1981 through Sept, 1996. Note that Aug. is by far themost frequent month for bond trend change. In the 15 year period, onlyone trend reversal of 5% or more in price has been made in Dec, Theodds favor a continuation of a bond trend through Dec. each year withonly minor (less than 5%) price reversals. During this 15 year period,all trend changes made in Jan. have been highs. If bonds are declininginto Jan,, the odds strongly favor a continuation of the decline withouta 5% or greater price reversal.Simple statistical record keeping such as anniversary dates willprovide a wealth of information and is critical timing information tocomplement the Time Cycle Ratios and Time Counts,
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Short-Term, Fixed-Length Time CyclesHaving spent a good amount of time at the beginning of this time analysischapter warning against the use of traditional fixed-length cycle analysis, Iwill now describe the limited conditions when fixed-length cycles areevident in market activity and how they may be used to understand theposition of the market and contribute to the trading decision.Occasionally, a market will fall into a rhythm of relatively short-term,fixed-length cycles. We will not know in advance if a relatively consistentrhythm will be established. The rhythm will only be evident after it hasmade several complete cycles or repetitions. If a rhythm is established,how do we use it to aid in our trading decision?The time targets for trend changes will complement the dynamictime factors. If a trend change target of an established short-term rhythmcoincides with a Projected Turning Point Period of dynamic timeprojections, the probabilities increase for trend change.When the rhythm is broken, it is a signal That the market condition ischanging. If the rhythm was established in a trading range, the market isprobably breaking away from the trading range and in the initial stages ofa trend when the rhythm is broken. If the rhythm was established hi atrending market, the trend is probably at or near completion when therhythm is broken.Markets do not often establish relatively short-term rhythms of fixedlength periodicity, but, when they do, they provide an additional signalof when to prepare for minor highs and lows as well as a signal of trendchange.
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Short-Term Fixed-Length Cycles
The Deutsche mark fell into a very regular pattern of making highseach 9 trading days and lows 3-5 trading days after the highs. When aregular short-term rhythm is exceeded, it is a signal that a new trend isdeveloping.If the mark rallied beyond a nine trading day count from hjgh-to-high,the market is signaling that a new bull trend breakout of the trading rangeis probably developing. If the mark declined beyond five trading days, themarket is signaling a bear trend breakout is probably developing. In thesituation above, the mark made a new low seven trading days after theAug. 1 high signaling a breakout into a hear trend should be unfolding.That is exactly what took place.All of the timing factors we have discussed so far are leading indicators that project potential trend change in advance. The break-away froman established short-term cycle rhythm is a lagging indicator in thatit is only after the established rhythm is violated that the signal is made.However, it is still a valuable piece of information. The new trend swingshould be of the same degree or greater as the trend swing just prior to theestablished rhythm.Traders may also use an established time rhythm to help provideparameters for trade entry and Stop placement.
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Short-Term Fixed-Length Cycles
From Sept. 1995 through early Sept. 1996, the Japanese Yen had beenin one of the longest non-trending periods in the history of yen futurestrading. This period also developed a very regular time rhythm. The minorbear swings were made every 42-44 calendar days from the prior highwith only one exception. The July 12 low was made just 24 CDs from theprior high which is the first signal the yen may be making a bottom.A 43 CD count from the most recent high that was made July 31 fallson Sept. 12. The period of Sept. 10-14 (Sept. 12+/- 2 CDs) is a time targetfor a low if the rhythm continues. If the yen makes a low prior to Sept. 10and subsequently exceeds the July 31 high, it is a strong signal the beartrend is complete. If the yen makes new lows from the July 31 high afterSept. 14, it is a strong signal that the major bear trend will continue andprobably accelerate the decline.Established short-term cycle rhythms not only provide & target forwhen a trend change is likely, hut, more importantly, provide the timingconditions that will help signal a new trend direction,
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Time OverbalanceA time overbalance is the same as a price overbalance except a time rangeis used instead of a price range. A Time overbalance is when the time of acorrection exceeds the time of the prior corrections, A time overbalance isan alert that the larger degree trend change may be underway. Timeoverbalance is similar to the short-term cycle rhythm just discussed in thatit compares the time of prior similar cycles or swings to the current swing.As with price overbalance, a time overbalance is not a definitiveindication that the larger degree change in trend is underway. But, it is analert signal that there is more buying or selling pressure against the trendthan has previously occurred. If a counter-trend swing exceeds the time ofall previous counter-trend swings since the larger degree trend began, it isa signal to be alert to the price and pattern position of the market for cluesto the trend position.Time overbalance is a lagging indicator. It is only signaled after thefact. While it is not a trade signal, it is an important reference point to alertthe trader to the position of the market.
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Time Overbalance
Gold began a basing or accumulation period in early Aug. that ranthrough Oct. The minor rallies lasted 6-10 trading days. A rally thatexceeded 10 trading days would be a signal that the larger degree trendshould be turning bullish. From the Oct. 19 low, gold made a 16 tradingday rally that exceeded the prior minor highs. The new price high andtime overbalance signaled an important low may have been made andgold may in the initial stages of a bull trend which is exactly whathappened.When a time overbalance signal is considered in relationship to theposition of the market, it may be a critical factor to signal a new trend isin the early stages.
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Time Overbalance
The mark made 12-15 trading day reactions against the bear trend.From the May 28 low, the mark has rallied greater than 15 trading dayssignaling a larger degree low may be in place. However, the rally fromthe May low is composed of two minor rallies of 15 and 18 TDs and nota consistent new trend. This is not a strong signal as the recent minorrallies would fir in nicely with an ABC correction of larger degree.Keep in mind that a time overbalance signal must be consideredwithin the context of rhe position of the market.
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Time Overbalance
Has the S&P made a major top in May 1996? A decline greater than 42trading days will be a strong time overbalance signal that a major change intrend has been made. A bullish trend signal will be made if the S&P ralliesto new highs without having made a decline greater than 42 trading day.
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The Dynamic Trader Software program that is used to make theillustrative charts for this book includes several routines that automate thetime projection analysis process. One of the routines, the Dynamic TimeProjection Report, makes all of the most important TCR projectionsincluding the Time Retracements and Alternate Time Projections as wellas the Calendar Day and Trading Day counts. Those dates with thegreatest cluster of time projections are shown as a histogram in theindicator window below the bar chart.Below are the Dynamic Time Projections from the Aug. 15,1995 lowin T-bonds. One of two Projected Turning Point Periods (PTPP) had acluster of Dynamic Time Projections and the greatest probability ofmaking a top. These two PTPPs were Dec. 1-3 or Jan. 2-6. Some of thetime projections are shown on the chart below.
The final top was made Jan. 4, 1996, right in the Jan. 2-6 projectionfor a high. The Dynamic Trader Software allows the user to customize theDynamic Time Projection routine to include any chosen ratio and swingcomparison in order to provide maximum flexibility of time analysis.While a properly programmed software program should make anyroutine quicker, easier and more accurate, keep in mind I originally didall of these time projections with a calculator and then graduated to aspreadsheet for several years- While it required more time and thought
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Dynamic Time Analysiscalculating the time projections that way than completing them with aspecially designed software program, the output was just as useful. Thereis no excuse not to have the necessary decision making information athand
Dynamic Trader - Chapter 5
Dynamic Time Projections™As you can now see, these Dynamic Time Projection targets are projectedin the same manner as the price projection targets. Instead of price ranges,we are proportioning and projecting time ranges. Instead of looking forthose narrow price zones that include several price projections, we arelooking for those narrow time zones that include several time projections.I have been doing these time projections, which I call ProjectedTurning Point Periods, since I first began publishing a newsletter advisoryservice in 1986. Needless to say, the methodology has been refined andthe accuracy of the projections has gotten better and better over the years.I once look a three year period of published projections and found that89% of the intermediate term trend changes in the markets I followed inthe advisory service came within one trading day of a Projected TurningPoint Period. The Projected Turning Point Periods were generally l-3trading days each.Do not have doubts as to the effectiveness of these time projections.Projecting periods of change by this Dynamic Time Projection methodology out-performs any other time or cycle analysis, method, period! I'llbe glad to retract that statement if proven wrong, but I've followed everypublished financial cycle analysis publication for the past ten years andnone has come close to the accuracy and practical application of DynamicTime Projections. If you keep your time analysis up-to-date, you too willhave a great edge over the rest of the trading and investing pack!There are four important factors to keep in mind when projectingDynamic Time Targets:1. These Dynamic Time Projections are not forecasting that a market willmake a trend change at one particular time projection period. Thesefuture periods, are simply periods where several past cycles will be inproportion in the future. These are periods that have a high probabilityof trend change if a market trends into the period and if the otherdimensions of market activity, price and pattern indicate change at thesame time. The Projected Turning Point Periods should be consideredin the same manner as price support and resistance zone, except theyare time support and resistance.The next section in this chapter w i l l describe a simple timeanalysis method called Time Rhythm Zones that w i l l project theprobable minimum and maximum periods of trend and counter-trendswings.
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2. If a market trends beyond a Projected Turning Point Period, more thanlikely it will continue to trend at least into the next PTPP. This followsthe assumption which has been proven out by historical studies of pastmarket activity that trend changes will almost always be made within aPTPP.3. Time projections must not be taken out of the context of the other twodimensions of market activity, price and pattern analysis. Time is justone of the three important analysis factors. As a market approaches atime period, the other two factors will qualify each time projection asto how important that time projection is likely to be. Traders must becareful not to focus on just one dimension of market activity. Thevalue of the type of market analysis and trading strategies taught inthis book is that we look at the whole of the market activity.4. All analysis and trading concerns probability, not certainty. We wantthe probabilities on our side. If most trend changes occur on or verynear the Projected Turning Point Periods, traders and investors whokeep this information up-to-date have a significant edge. The PTPPsprovide a definite piece of Information from where to make a decision.
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A Summary Of The Most Important Time Ratios andTime Counts By MethodTime Retracements (TR)
38% 50% 62% 100% 162% 200% 262%Alternate Time Projections (ATP)
38% 50% 62% 100% 162% 200% 262% 424%Trend Vibration (TV)62% 100% 162% 200% 262% 424%Time Counts (TC)Fib: 21, 34, 55, 89, 144, 233Also see Time Count section for a table of the complete Fib. list plusSquares of 90 and 144 and anniversary dates.
Short-Term Fixed Length Time CyclesMarket defined.Time Overbalance100% Alternate Time Projection of prior counter-trend swings ofsimilar degree.
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More Dynamic Time, Price and Pattern Examples
Dynamic Time Projections Target July 20 High Weeks In AdvanceThe chart below shows some of the time projections for a high that fellnear July 20, 1998. How valuable is this timing approach?This is not an after-the-fact example. Shortly after the June 16 low. Iplaced the time and price targets for a Wave-5 top on our web site. Thetime target for the top was the relatively broad zone of July 16-24. Thefinal top was made July 20 and was followed by the largest decline in overten years!The Dynamic Trader Weekly Report used the very short-term swingsfrom the intraday data to project the top would be complete by mid-day onJuly 20. The extreme high was made just before noon on July 20!The bar-histogram below the chart is the relative scores of theDynamic Time Projection report in the Dynamic Trader program. Thesetime projections are made from the June 16 low. The highest score is madeon July 20 which was the exact date of the high,
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Dynamic Trader - Chapter 5Time RetracementsAs the S&P declined from the July 20 high, the minor corrective highswere made on the time and price retracements.The first correction was complete on the 38.2% time retracement andthe second was complete one day before the 50% time retracement.
"When time and price coincide, change is inevitable!" A very low-risk,high profit potential trade opportunity is when a market makes a time andprice retracement or projection of the same ratio. Both of the correctionsshown above were made at the same time and price retracernent ratios.
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Silver Top At Time and PriceSilver made the July 24, 1998 high at projected time and price zones.July 24 High at 585.5July 22-23: 100% Time Retracement and 100% High-to-High Projection573-583: 100% Alternate Price Projection and 50% Retracement
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Time and Price Projections Are Always Made In AdvanceEvery high and low is not made on a exact, direct hit of projected time andprice. However, the vast majority of highs and lows of every degree aremade at or very near lime and price projections that are made well inadvance. The following pages show you many more examples of the time,price and pattern position at some important highs and lows for severalmarkets.The next chapters in the hook will show how we integrate the time,price and pattern projections into a low-risk trading plan.
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Time Rhythm Zones™Earlier in this Dynamic Time Analysis chapter, it was described that therearc no cycles of fixed-length periodicity in market activity and how theidea that market activity can be represented by a summation cycle is littlemore man a myth not backed up by actual market activity. However,market structure often displays a "time rhythm." What do I mean by a"time rhythm." and how is it different than what is commonly considereda "cycle?"A time rhythm represents a fairly regular ebb and flow of priceactivity. For instance, a market may tend to make alow on a fairlyregular basis within a relatively broad lime period. That certainly soundslite a hedged statement if there ever was one. An example might be thatgold usually makes an intermediate term low 16-22 weeks from the priorintermediate term low. The variables in this statement are what do wemean by "usually" and "intermediate.""Usually" should be a high percentage of occurrences such as 80%."Intermediate" must be defined by a minimum percentage change of pricefor the new trend such as a 10% price change. A more accurate statementmight be; "Eighty percent of the time since 1975, gold has made a low inthe broad period of 16-22 weeks from the prior 10%-low followed by arally of 10% or more in price. A "10%-low" is a low mat is preceded andfollowed by a minimum 10% change in price against the preceding trend.This information is not hedged but specific and objective. It providesus with a significant, statistical edge of the high probability time to anticipate and prepare for a trend change low that should be followed by a rallyof at least a ten percent price advance, A seven week (16-22 weeks) timeperiod is too broad to make a specific trading decision, but provides aframework from where to focus in on the more specific and/or short-termtime factors.Whenever we apply historic, statistical output to present conditions,we arc operating under the assumption that the same conditions of the pastare relevant today. A market will only continue to make a low in the 16-22week period if the same forces that have acted upon the market during thepast continue to do so in the future. We never know if this will be the case,but must assume it will be so unless ttere is some indication to thecontrary.Some traders and analysts would call this statistical information a 19week gold cycle because 19 weeks may be the average length of time ofthe low-to-low period. An average may be very misleading. Unfortunately,an average does not provide any information on how Tightly grouped arethe events. If the events are tightly grouped around the average, it is a
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valuable figure. If they are widely dispersed from the average, the averageis not only useless, but very misleading.To call an average period of time a cycle is not only a misnomer butmisleading TO the trader. Calling a general tendency for a market tomake a low within a broad period of time a cycle misleads the trader intobelieving the so-called cycle period is more precise and more reliablethan it is.Low-to-Low Time Rhythm ExampleBonds began a bear market Oct. 15, 1993. On Aug. 2. 1994, bonds made acounter-trend top followed by a continued decline to new lows. Whatwould be the time range with the greatest probability of making the nextlow? We must first decide what degree of trend change we are concernedwith. Swings of 5% or greater generally represent Intermediate degreetrend change for bonds. The 5% swing file also has a minimum time filterof 21 calendar days. A swing must have made a minimum of a 5% pricechange for at least 21 CDs to be included.
Bonds began a bear market in Oct. 1993. The swings shown on thechart above are a minimum of 5% price change and 21 calendar days. Thedashed vertical line is placed at the Aug. 2, 1994 high.
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The historical period to accumulate the timing data begins with theApril 1986 bull market top. From that period through Aug. 1994. therewere two complete bull and bear markets with an adequate number of5%+ swings for our purposes. The chart below shows this period with the5%/2l CD swings overlaid on the daily, close-only data.During this period there were 15 low-to-low cycles. They were madein a very wide range of time from 61 to 302 calendar days. As you can see,once an objective criteria is applied To identify cycle pivots, the idea ofcycles of fixed-length periodicity goes out the window with the flat-earththeory. If we eliminate the shortest and longest 10% of the cycles, the timerange is reduced to 119 to 278 calendar days. In other words, 80% of thelow-to-low cycles were made in the broad period between 119-278calendar days from the prior low during the period from April 1986 toAug. 1994. This is still too long of a period to be of much use to tradersand investors, but we will see in a moment how additional data willprovide a much shorter time-range target for a low.
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The table below shows the time ranges and equivalent dates of thelow-to-low cycles since the April 1986 high.
There were a total of 15 low-to-low swings in this data group. If theshortest and longest 10% of the swings are eliminated, there remains 11swings. Ten percent of 