20.69 (+2.43)
Momentum (C,28)
57
26
24
22
20.6920
18
16
14
12
10
8
2512.430
-25
-50
-75
-100
-125
-150
2002
2003
2004
2005
2006
FIGURE 6.8 A monthly bullish MOM pattern in the stock of Motorola. As you cansee, the stock moved higher after the pattern developed. Using the trigger methodyou will see that this one triggered very near the low.Source: Courtesy of www.GenesisFT.com.
5. You still need a trigger in order to take action.6. We always use the 28-period MOM for the PMF method.
PRACTICE, PRACTICE, PRACTICE
The most important thing you can do after having learned the MOM methodis to practice. Learning to spot these patterns is like learning a new language.I strongly suggest that you practice on at least 50 charts or until you caneasily identify MOM divergence.
The quiz for this lesson is visual. In other words, I ask you to draw inany divergence patterns that you see based on the rules given to you in thischapter.
REVIEW
Congratulations! You have now completed the ﬁrst lesson in your PMFmethod. You learned how to spot bullish and bearish MOM setups using themomentum indicator.
In Lesson 7 we look at a very simple method for ﬁnding MOM divergence
setups and triggers.
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30 DAYS TO MARKET MASTERY
LESSON 6 QUIZ
Instructions: Using the following charts and a ruler, draw any divergencepatterns as shown in the ﬁgures in this lesson.
1.
GC-055: Gold Comex (Pit) Cont 1st (60 minute bars)
www.GenesisFT.com
7/27/05 06:25 = 423.9 (+0.3)
Momentum (C,28)
07/14/05
07/15/05
07/18/05
07/19/05
07/20/05
07/21/05
07/22/05
07/25/05
07/26/05
07/27/05
07/28/05
07/29/05
Source: Courtesy of www.GenesisFT.com.
2.
EU-055: Euro FX (Pit) Cont 1st (30 minute bars)
www.GenesisFT.com
7/27/05 06:27 = 1.2065 (+0.0016)
Momentum (C,28)
427
426
425
423.9
423
422
421
420
419
4188
6
4
1.9000
0
-2
-4
-6
-8
1.226
1.224
1.222
1.22
1.218
1.216
1.214
1.212
1.21
1.208
1.20651.200
1.204
1.202
1.2
1.198
0.02
0.01
0-0.003000
-0.01
07/22/05
07/25/05
07/26/05
07/27/05
07/28/05
Source: Courtesy of www.GenesisFT.com.
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February 9, 2007
20:32
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Trading the Power Momentum Formula (PMF)
59
3.
MOT: Motorola (Daily bars)
www.GenesisFT.com
07/26/2005 = 20.69 (+0.15)
2120.6920.5
20
19.5
19
18.5
18
17.5
17
16.5
16
15.5
 3
2.59002.5
2
1.5
1
0.5
76
75
74
73
72
71
70
6968.675
68
67
66
65
0.0750
-2
-4
-6
-8
-10
Momentum (C,28)
05/04/05
05/18/05
06/02/05
06/16/05
06/30/05
07/15/05
07/29/05
Source: Courtesy of www.GenesisFT.com.
4.
LH-200507: Lean Hogs (Pit) Jul 2005 (Daily bars)
www.GenesisFT.com
07/15/2005 = 68.675 (+0.150)
Momentum (C,28)
05/23/05
06/07/05
06/21/05
07/06/05
07/20/05
Source: Courtesy of www.GenesisFT.com.
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February 9, 2007
20:32
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60
5.
30 DAYS TO MARKET MASTERY
LC-200508: Live Cattle (Pit) Aug 2005 (Daily bars)
www.GenesisFT.com
07/26/2005 = 79.150 (+0.400)
Momentum (C,28)
06/02/05
06/16/05
06/30/05
07/15/05
07/29/05
Source: Courtesy of www.GenesisFT.com.
85
84.5
84
83.5
83
82.5
82
81.5
81
80.5
80
79.579.150
78.5
78
0
-1.0500
-2
-4
-6
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February 8, 2007
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L E S S O N 7, D A Y 7
PowerMomentumFormula (PMF)Trigger
I n Lesson 1, you learned that there can be no trade without a setup and
a trigger. In fact, there can be no trade without a setup, a trigger, anda follow-through. This lesson will teach you the PMF trigger. The next
lesson will teach you the follow-through.
The PMF trigger (PMFT) provides the following information when used
according to my suggestions:
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
A speciﬁc method for timing market entry once there has been a setup.The exact point at which to enter a position.The best time at which to enter a position.A general idea of whether the coming move will be large or small.A speciﬁc point at which to exit the trade at a proﬁt (next lesson).A point at which to exit the trade at loss if necessary (next lesson).An initial and trailing proﬁt target.An idea of when the trade could trigger (soon or not so soon).
SELL TRIGGER
As you know from the previous lesson, the ability to establish a valid setupis critical to the correct use of the PMF method. Here is a simple “cookbook”method for ﬁnding the sell setup and trigger.
1. Look at the last 60 price bars.2. Find the highest intraday price high.
61
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30 DAYS TO MARKET MASTERY
3. Look at the 28 MOM.4. Was the highest intraday high accompanied by a new high in MOM +/−
ﬁve days on either side of the date of the price high?
5. If YES then there is no sell setup.
6. If NO then there is a sell setup (SSU).
7. If there is a SSU, then mark your chart as follows:
A = the new intraday price highB = the MOM for the same date as AC = the highest MOM previous to BD = the intraday price high for the same date as point C
8. Examine your chart. Is the high at A higher than the high at D, while
the MOM at B is lower than the MOM at C?
9. If this is true, then ﬁnd the lowest MOM between points B and C inclusive
(i.e., including these two points) and mark it with the letter E.
10. If MOM penetrates E at the end of any bar, then you have a sell trigger.
Figure 7.1 shows one example. You will recognize the chart from Lesson
6. I have added the E point.
Figure 7.2 shows another example of a trade that triggered.
QQQQ:  NASDAQ-100 Index Tracking Stk (Daily bars)
www.GenesisFT.com07/26/2005 = 39.42 (+0.15) 40
D
C
A
Note that high at A ishigher than D while MOMat B is lower than MOM atC. Therefore E is the selltrigger point.
Momentum (C,28)
B
39.42
39
38.5
38
37.5
37
36.5
36
35.5
43.5
3
2.5
21.72001.5
1
0.5
0−0.5−1
E
05/18/05
06/02/05
06/16/05
06/30/05
07/15/05
07/29/05
FIGURE 7.1 Bearish MOM divergence pattern is clear here. Note that as price wasmaking a high at point A, MOM was not making a new high at B. The sell triggerpoint at E is clear.Source: Courtesy of www.GenesisFT.com.
JWPR004-07
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February 8, 2007
12:47
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Power Momentum Formula (PMF) Trigger
C-200512:  Corn CBT (Pit) Dec 2005 (30 minute bars)
www.GenesisFT.com
07/26/5 11:24 = 245∧0 (+3∧4)
D
A
C
B
E
Selltrigger
Momentum (C,28)
63
275∧0
270∧0
265∧0
260∧0
255∧0
250∧0
245∧0
240∧0
235∧025
20
15
10
5
0.7500
−5
−10
−15
−20
−25
07/14/05
07/15/05
07/18/05
07/19/05
07/20/05
07/21/05
07/22/05
07/25/05
07/26/05
07/27/05
07/28/05
FIGURE 7.2 This bearish MOM divergence pattern developed on the 30-minuteintraday corn chart. Note that after the sell trigger at E occurred, the price declinedsharply and persistently for ﬁve days.Source: Courtesy of www.GenesisFT.com.
BUY TRIGGER
Here is a simple “cookbook” method for ﬁnding the buy setup and trigger:
1. Look at the last 60 price bars.
2. Find the lowest intraday price.
3. Look at the 28 MOM.4. Was the lowest intraday low accompanied by a new low in MOM +/−
ﬁve days on either side of the date of the price low?
5. If YES then there is no buy setup.
6. If no, then there is a buy setup (BSU).
7. If there is a BSU then mark your chart as follows:
A = the new intraday price lowB = the MOM for the same date as AC = the lowest MOM previous to BD = the intraday price low for the same date as point C
8. Examine your chart. Is the low at A lower than the low at D while the
MOM at B is higher than the MOM at C?
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February 8, 2007
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30 DAYS TO MARKET MASTERY
SF-055: Swiss Franc (Pit) Cont 1st (Daily bars)
www.GenesisFT.com
07/26/2005 = 0.7734 (-0.0020)
This trade setup a bullish pattern and triggered abuy at point E.
D
C
E
Momentum (C,28)
A
B
05/18/05
06/02/05
06/16/05
06/30/05
07/15/05
07/29/05
FIGURE 7.3 Here is a bullish MOM setup that has triggered a buy at point E.Source: Courtesy of www.GenesisFT.com.
0.84
0.83
0.82
0.81
0.8
0.79
0.78
0.77340.77
0
-0.005
-0.01
-0.015-0.0191
-0.025
-0.03
-0.035
-0.04
-0.045
-0.05
-0.055
9. If this is true, then ﬁnd the highest MOM between points B and C in-clusive (for example, including these two points) and mark it with theletter E.
10. If MOM penetrates E at the end of any bar then you have a buy trigger.
Figure 7.3 shows an examples of PMF setup and buy trigger.
Rule-Based Method
The PMF method is 100 percent rule based and it is, therefore, purely ob-jective. A rule-based method is a method that is purely objective. In otherwords, it requires no interpretation. There are computer software ﬁltersthat can be used to identify bullish and bearish momentum divergence pat-terns. These are relatively easy to write. I currently have such a programfor GenesisTM clients. It is available to you at no charge. If you would liketo download this program and you have Genesis Gold or higher, simplydownload the special ﬁle entitled JBTOOLS. If you do not know how todo this, Genesis technical support can assist you. If you do not have theGenesisTM software you can get a trial version at http://www.genesisft.com.Because the ability to spot the MD bullish and bearish patterns is crit-ically important to the success of PMF, you must practice as much as pos-sible. The quiz for this lesson includes several more examples and uses thecharts from the last lesson.
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February 8, 2007
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Power Momentum Formula (PMF) Trigger
65
GC-055: Gold Comex (Pit) Cont 1st (60 minute bars)
www.GenesisFT.com
7/27/05 06:25 = 423.9 (+0.3)
427
426
425
423.9
423
422
421
420
419
4188
6
4
1.9000
0
-2
-4
-6
-8
Momentum (C,28)
07/14/05
07/15/05
07/18/05
07/19/05
07/20/05
07/21/05
07/22/05
07/25/05
07/26/05
07/27/05
07/28/05
07/29/05
FIGURE 7.4 This chart shows a 60-minute MOM sell setup and trigger in goldfutures.Source: Courtesy of www.GenesisFT.com.
PRACTICE, PRACTICE, PRACTICE
The most important thing you can do after having learned the MOM triggermethod is to practice. Learning to spot these patterns is like learning a newlanguage. I strongly suggest you practice on at least 50 charts in order toﬁnd the setup and the trigger until you can easily identify MOM divergenceand the trigger point visually. If you are uncertain about your work, pleasefeel free to e-mail me a chart with your work and I will examine it for you.Be sure to include your e-mail address.
The quiz for this lesson is visual. I will ask you to draw in any divergencepatterns and triggers you see based on the rules given to you here and inthe previous lesson.
REVIEW
Congratulations. You have now completed the ﬁrst lesson in your PMFmethod. You learned how to identify the trigger point (E point) for bullishand bearish MOM setups using the MOM indicator. The lesson outlines astep-by-step or “cookbook” procedure for ﬁnding and identifying the triggerpoint.
In Lesson 8, we look at a very simple but comprehensive method for
adding follow-through to the MOM divergence setups and triggers.
JWPR004-07
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February 8, 2007
12:47
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66
30 DAYS TO MARKET MASTERY
LESSON 7 QUIZ
Instructions: Using the following charts and a ruler, mark the bullish orbearish divergence patterns using the A, B, C, D, and E points as shown inthe ﬁgures in this lesson. Mark the buy and sell signals (if any). Rememberthat there must be at least six price bars between your A and D pointsinclusive for a setup to be valid.
1.
GC-055: Gold Comex (Pit) Cont 1st (60 minute bars)
www.GenesisFT.com
7/27/05 06:25 = 423.9 (+0.3)
Momentum (C,28)
07/14/05
07/15/05
07/18/05
07/19/05
07/20/05
07/21/05
07/22/05
07/25/05
07/26/05
07/27/05
07/28/05
07/29/05
Source: Courtesy of www.GenesisFT.com.
2.
EU-055: Euro FX (Pit) Cont 1st (30 minute bars)
www.GenesisFT.com
7/27/05 06:27 = 1.2065 (+0.0016)
Momentum (C,28)
427
426
425
423.9
423
422
421
420
419
4188
6
4
1.9000
0
-2
-4
-6
-8
1.226
1.224
1.222
1.22
1.218
1.216
1.214
1.212
1.21
1.2081.2065
1.204
1.202
1.2
1.198
0.02
0.01
0-0.003000
-0.01
07/22/05
07/25/05
07/26/05
07/27/05
07/28/05
Source: Courtesy of www.GenesisFT.com.
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February 8, 2007
12:47
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Power Momentum Formula (PMF) Trigger
3.
MOT:  Motorola (Daily bars)
www.GenesisFT.com
07/26/2005 = 20.69 (+0.15)
Momentum (C,28)
05/04/05
05/18/05
06/02/05
06/16/05
06/30/05
07/15/05
07/29/05
Source: Courtesy of www.GenesisFT.com.
4.
LH-200507: Lean Hogs (Pit) Jul 2005 (Daily bars)
www.GenesisFT.com
07/15/2005 = 68.675 (+0.150)
67
2120.6920.5
20
19.5
19
18.5
18
17.5
17
16.5
16
15.5
3
2.5900
2
1.5
1
0.5
76
75
74
73
72
71
70
6968.675
68
67
66
65
05/23/05
06/07/05
06/21/05
07/06/05
07/20/05
Source: Courtesy of www.GenesisFT.com.
Momentum (C,28)
0.0750
-2
-4
-6
-8
-10
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5.
30 DAYS TO MARKET MASTERY
LC-200508: Live Cattle (Pit) Aug 2005 (Daily bars)
www.GenesisFT.com
07/26/2005 = 79.150 (+0.400)
Momentum (C,28)
06/02/05
06/16/05
06/30/05
07/15/05
07/29/05
Source: Courtesy of www.GenesisFT.com.
85
84.5
84
83.5
83
82.5
82
81.5
81
80.5
80
79.579.150
78.5
78
0
-1.0500
-2
-4
-6
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February 9, 2007
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L E S S O N 8, D A Y 8
PMF:Follow-through:Part I
A s you know from my explanation of the STF method, there can be
no trade for us without a setup, a trigger, and follow-through. In theprevious lesson, you learned how to ﬁnd the setup as well as the
trigger. This lesson teaches you the PMF follow-through.
As you recall every valid trading approach involves three parts, thesetup, the trigger, and follow-through. This lesson shows you how we follow-through on the PMF method. The next lesson shows you how the follow-through method can be used in various proﬁt-maximizing strategies.
The PMF follow-through method provides the following information
when used according to my suggestions:
(cid:2)
(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2)
A speciﬁc method for follow-through of a trade once there has been asetup and a trigger.The exact initial proﬁt target after a trigger has occurred.How and when to trail stop losses.A general idea of whether the move will be large or small.A speciﬁc point at which to exit the trade at the full proﬁt target.A point at which to exit the trade at loss if necessary.The number of contracts (or shares) to trade.
CALCULATING THE PROFIT TARGET
In Lesson 7, you learned that the ability to establish a valid setup and triggerare critically important to the correct use of the PMF method. Once this has
69
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30 DAYS TO MARKET MASTERY
been done, the next step is to use correct and effective follow-through.Here is the step-by-step method for determining follow-through on PMFtrades:
1. After the trigger has been hit and you have entered a trade, ﬁnd thehighest intraday high and the lowest intraday low between points A andD.
2. Calculate the difference between these two prices.
3. Calculate 50 percent of the difference. You now have the ﬁrst proﬁt target
(PT1).
4. If you have a long position, add the price of the market on the trigger
date to PT1 to get your exact proﬁt target.
5. If you have a short position, subtract the price of the market on the
trigger date from PT1 to get your exact proﬁt target.
6. The full proﬁt target (PT2) is the full range of the difference you calcu-
lated.
7. Depending on the number of contracts or shares you have entered, the
exit strategy will vary.
Figures 8.1 through 8.4 show several examples with explanations ofthis procedure using charts that you should already be familiar with fromprevious PMF lessons. Carefully study my notations on the charts. Figures8.3 and 8.4 show the complete procedure from setup through initial follow-through.
D
A
C-200512: Corn CBT (Pit) Dec 2005 (30 minute bars)
www.GenesisFT.com
7/26/05 11:24 = 245^0 (+3^4)A short was triggered as shown. Price on entry of short position was262. High at A was 273. Lowest low between A and D (point X) was263. One-half the difference between 273 and 263 is 5 cents. PT1 is5 cents. Full profit target (PT2) is 10 cents. Note that I have markedthese 2 points. The market dropped much lower than PT2. The nextlesson shows you how to ride profits for bigger moves.
X
Shortat262
PT1
PT2
C
B
E
Selltrigger
Momentum (C,28)
275^0
270^0
265^0
260^0
255^0
250^0
245^0
240^0
235^025
20
15
10
5
0.7500
-5
-10
-15
-20
-25
07/14/05
07/15/05
07/18/05
07/19/05
07/20/05
07/21/05
07/22/05
07/25/05
07/26/05
07/27/05
07/28/05
FIGURE 8.1 Here is a PMF trade with setup, trigger, and follow-through.Source: Courtesy of www.GenesisFT.com.
JWPR004-08
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February 9, 2007
17:8
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PMF: Follow-through: Part I
C - 0 5 5 :
  C o m   C B T   ( P i
t )   C o n t
  1 s t
  ( W e e k l y   b a r s )
www.GenesisFT.com
0 7 / 2 9 / 2 0 0 5   =   2 3 4 ^ 2   ( + 0 ^ 6 )
P T 2
P T 1
D
C
A
B u y  
t r i g g e r
EB
M o m e n t u m   ( C , 2 8 )
i s   a   w e e k l y   c o r n   c h a r t
T h i s  t r i g g e r e d   a s   s h o w n   a t  2 0 4 . 5 .H i g h   b e t w e e n   A   a n d   D   ( p o i n t  P T 1   w a s   5 0 %   o fw a s   1 7 . 2 5 .
  −  P M F   b u y   s i g n a l
  A   w a s   1 9 2 . 2 5 .
  L o w   a t  X )   w a s   2 0 9 . 5 .  1 7 . 2 5   o r   8 . 6 2 5 .
  P T 2
71
2 6 0 ^ 0
2 5 0 ^ 0
2 4 0 ^ 0
2 3 4 ^ 22 3 0 ^ 0
2 2 0 ^ 0
2 1 0 ^ 0
2 0 0 ^ 0
1 9 0 ^ 0
5 03 72 5
0
- 2 5
- 5 0
- 7 5
- 1 0 0
- 1 2 5
A u g - 0 4
S e p - 0 4
O c t - 0 4
N o v