Once again the chart above represents 3-Dimensional movements within the stock market. The numbers above unify price and time into one number and are calculated as per Pythagorean Theorem formula given to you earlier.

While we have already looked at the number of these moves before let’s take a look at one more to cement our knowledge. Let’s take a look at the DE move as an example.  During this bear market decline of 2007-2009, the market moved exactly 7809 points in exactly 2288 trading hours.  When we apply our 3-Dimensional calculation we get a 3-DV of 8,137, which is the number you see on the chart. I highly encourage you to run every number on the chart above to confirm the numbers and to gain a better understanding.      

Now, understand something very important.  While the chart above is a long term chart representing the DOW between 1994-2013, it doesn’t have to be. The chart above could be the stock market chart over the last century or it could be a daily chart representing 2 hours of trading. The time frame doesn’t matter.  The same rules of 3-Dimensional analysis apply to all time frames.

What are the rules?

Rule #1: By identifying 3-DV on the chart you know exactly what the next move will be. It will either be identical to the one preceding it or a derivative of it. Meaning that once you know what the DE on the chart is, you can predict with great accuracy what the EF move will be. To the day and to the point. That’s how accurate this work is. Much more on that later.  

Rule #2: Make sure you know the time frame you are analyzing.  If you are using a long term chart, as above, make sure you do not shift to the short term chart and anticipate the same size movements.  For example, do not take DE 8,137 value and they try to find it on the daily chart. It will not work. You will only be able to find this value or the value of its derivative on the long term chart.

Rule #3: Always square price and time. When calculating your 3-DV make sure your time variable and your price variable are squared(match in size).  In simple terms, at certain times you would have to shift your time variable between minutes, hours, days and month.  Let me illustrate what I mean by showing you the right and the wrong way to do this.

Let’s assume for a second that you are looking at the chart above.  Current market is a high energy, fast moving market.  As such you have to use the hourly time frame to square the chart.  It would be wrong to use any other TIME variable.  Let’s take a look at the move labeled CD. Between 2003 bottom and 2007 top the market moved…

Price Move: 6,838 POINTS

Time Move: 7510 TRADING HOURS OR 1,155 TRADING DAYS -OR- 231 WEEKS -OR- 58 MONTH (there are 6.5 trading hours in 1 trading day)

If you want to generate a proper 3-DV measurement you have to use 7,510 trading hours as your primary TIME input. That input squares  (matches) the price movement. If you were to use trading days or weeks or months, the PRICE portion of the formula would overwhelm the equation and you would end up with a worthless measurement that is not applicable to the stock market analysis. Let me show you what I mean.  

To be continued……

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Let’s take a quick look at a real stock market example to see the amazing precision this technique offers us.

I cannot overstate how amazing this chart is. Just a few points. 

• As we have already discussed, the move between 1994 bottom and 2000 top was 11,832 3-DV UNITS. The Dow topped at exactly 11,866 in January of 2000. Amazing!!! 
• The up move between 1994 bottom and 2000 top was 11,832 3-DV UNITS. The down move between 2000 top and 2002 bottom was 6,483 3-DV UNITS. When you combine both values together you end up with a value of 18,315 3-DV UNITS. The move took 9 years. 
• The up move between 2002 bottom and 2007 top was 10,156 3-DV UNITS. The down move between 2007 top and 2009 bottom was 8,137 3-DV UNITS. When you combine both values together you end up with a value of 18,293 3-DV UNITS.  The move took 7 years. 

So, the combined move took 16 years and there was only 22 3-DV UNITS of variance between the moves.  This variance over the 16 year period of time can be attributed to as little as 2 trading days and a few hundred points on the Dow.  This example alone should put to rest all claims that the stock market is random and unpredictable. Once again, when we identify the exact structure of the stock market through using our 3-Dimensional analysis we can time the market with great precision. 

For example, if we understand the structure above we know that the move between 2002 bottom and 2007 bottom will be identical in 3-DV UNITS to the move between 1994 bottom and 2002 bottom.  Just by having this information alone one should be able to figure out the stock market with great precision.  Further,  once we have hit the  from 2007 top and analyst using this technique knows that the upcoming down move will be exactly 8,127 3-DV UNITS. (18283-10156=8,127)

The only thing left to figure out at that stage is the angle or the velocity of the upcoming decline. Multiple ways will be shown to figure out that inflection point over the next few chapters, but for now let’s assume that this information is already available. That would mean that once the 2007 top is confirmed you would know exactly where the market would bottom.  So, while everyone is freaking out in late 2008 and early 2009 you are either shorting the market and making a lot of money or you are setting yourself up for the upcoming bull market that you know will start in March of 2009.

Either way, I hope this clearly illustrates how powerful this 3-Dimensional analysis can be. Also, please keep in mind that the example above is just a tiny sample of the information available to you once the 3-Dimensional analysis is performed. 

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So, how do we measure the stock market in 3-dimensional space? 

By using simple math.  However, before I go any further I would like to give credit where the credit is due.  The technique below was first developed by a brilliant market analyst by the name of Bradley Cowan. If you are serious about performing stock market analysis I encourage you to seek out his work.

In order to measure the stock market in 3-dimensional space, we must unify price and time values into a one joined value. How do we do that? By using simple geometry and Pythagorean Theorem.  For our purposes here is all you need to know.  We call the outcome 3-Dimensional Value (3DV)

As such and in order to properly calculate the value we need two numbers.  Time and value over a studied period of time.  As a reference point, we typically measure these values between bottom-to-top -OR-  top-to-bottom moves. Let’s take a quick look at the real life examples for a quick reference point.  There was a strong bull market between November 1994 and January of 2000(a 5-year cycle).  

More precisely, the market moved exactly 8,296 points in exactly 8,437 trading hours. The move occurred between BOTTOM on 11/24/1994 and TOP on 1/14/2000. There are 6.5 trading hours each day the market is open. I highly recommend you verify these numbers and perform sample calculations on your accord for better understanding.

Now, to calculate 3DV according to the formula above

SQRT(8296^2+8437^2)= 11,832.75 
*SQRT= Square Root

The 11,832.75 value is the 3-Dimensional Value we are seeking. It is the first step in our Timing financial analysis.  An analyst who is willing to put in the work,  will soon start seeing periodicity and recurring patterns of the same size movements on multiple time frames. Once the sequence of such moves is understood, exact forecasts into the future could be made. For example, let’s take a look at our 3DV of 11,832.72.   Do you know that the stock market topped out on January 14th, 2000 at the price of 11,866.55 or just 33 points away from our 3DV.

Do you believe that is a coincidence?   No, not at all. As I have told you before, there is a mathematically exact structure within the stock market and once that structure is understood, the stock market(and individual stocks) can be timed and predicted with great precision. 

To Be Continued…..

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……continuation

Second, along the same lines, I want you think of a simple pine tree seed.  Before that seed is put into the ground and the tree begins to grow, that seed contains all available information about the tree. The seed is already pre-programmed with what that tree will look like. How tall, how many branches, their direction, their variation, etc… everything. No doubt, the environmental factors will have an impact, but such factors are typically within a certain range of variance.  Should we have the technology, we should be able to know exactly what the tree will look like just by looking at the seed.  Now the scientists can even take seeds that are tens of thousands of years old and set them on a proper growth trajectory. Amazing.

Back to the stock market.  We have to begin thinking about the stock market not as a simple chart of price moving over time(2-dimensional representation),  but as a complex natural system.  If you look at and study nature, nothing in nature is two dimensional.  Our perception could be two dimensional, but the nature itself and everything that exists in nature is 3-dimensional.  Everything from galaxies to the smallest particles are 3 dimensional.  With that said, is it possible that the stock market is not a simple 2 dimensional system, but a more complex 3 or even a  4 dimensional system?

The answer is YES.

With proper understanding now in place we can start looking at the stock market in a completely different way. The stock market is not a simple 2-dimensional structure (up and down over time) but a much more complex 3-dimensional system.  In addition to moving up/down and sideways, it also moves in volume of space.  While it is a little bit difficult to understand at first, please allow me to illustrate. I want you to take a look at the 3-dimensional tunnel above.

Imagine for a second that you are standing at the entrance and looking into the tunnel. Further, imagine that there is a snake in the tunnel that is moving away from you in a screw like fashion while hugging the wall of the tunnel. Got that picture in your mind? Great.  That is a good representation of how the stock market truly works.   Now, if you are to walk to the outside of the tunnel and stand at the half way point (preferably at a good distance from the tunnel) you will only see up and down movements of the snake as it move along the wall in a screw like fashion throughout the length of the tunnel (from left to right).  And indeed, that is exactly what we see on a typical 2-dimensional stock market chart.

Simply put, when we look at any existing stock chart, we see the shadow of the move and not the move itself.  In reality, the market moves up/down, over time and in 3-dimensional volume of space (not to be mistaken with transactional volume).  Once we understand that the stock market is a 3-dimensional phenomena we can begin to apply all scientific and mathematical rules that could be found/applied in nature.  Just as with the human being and the tree seed examples above, the stock market has its own “Genetic/DNA Code” and sequence and once that code/sequence is understood exact forecasts could be made. 

Here is the best part. Once we start seeing the market that way we can begin analyzing and measuring the market in a completely different way.  Instead of using technical analysis, trend lines, etc… it gives us the ability to bring in exact scientific and mathematical models into the analysis part of the equation.  Where typical stock market forecasts are inaccurate at best , this mathematical modeling allows us to bring in precision that was unavailable before. Simply put, it allows us to predict the stock market with astonishing accuracy.

So, how do we measure the stock market in 3-dimensional space?  To be continued….

It is now your time to become a Superhuman. To live the life full of love, happiness, joy, bliss, ecstasy, content and success. 

The Secret Behind How The Stock Market Works (Part 3)

Continuation of The Secret Behind How The Stock Market Works

Let me repeat that one more time.  TIME or TIMING is the most important element when it comes to stock market investing.

So much so that once you understand that fact and once you have a better understanding of how the stock market works you will be perplexed as to why most people and analyst on Wall Street completely ignore the TIME part of the equation.  Going even further I will make two controversial statements that I will prove in this section of the book without a shadow of the doubt.

1. The stock market and/or individual stocks are not random.

Not at all.  Quite the opposite, they are exact. The stock market moves in 3 dimensional space between mathematical points of force while tracing out an exact structure. In more simple terms, the stock market or individual stocks are moving exactly as they should and with mathematical precision.

2. The stock market and/or individual stocks can be predicted into the future  with great accuracy.

Since the stock market moves with mathematical precision while tracing out points of force, once the overall structure is fully understood, exact calculations could be made in order to predict the stock market or individual stocks. Well into the future and on multiple time frames.  From hourly moves to moves spanning centuries. 

God does not play dice with the universe, —Albert Einstein

The quote above is right on the money.  It means that nothing in nature is random.  As Einstein himself said on numerous occasions, the only randomness out there is things we do not yet understand. I tend to agree.  As such, the only reason we believe the stock market is random is because we do not yet understand its exact mathematical composition. To understand why, we must first look at nature, how things work and how all of it applies to the stock market. Let me give you two examples.

First, let’s take a look at the human being at the moment of inception. Not birth, but fertilization. When the genetic material of the sperm and the egg is combined to create a new cell that will rapidly start dividing. I want you to think about that single cell for a second. When genetic material is combined, in that split second an exact forecast could be made about what kind of a human being will be born. If we had the technology,  in that split second we would know all possible information about that person.

For instance, we would know if it would be a boy or a girl. We would know the eye color, height, hair type and color, exact length of fingers and toes, blood type, predisposition to certain diseases, psychological predisposition, character traits, etc…   We would also be able to know exactly what that human will look like at the age of 5, 25, 50, 80, etc…  In addition, we would be able to make a pretty good guess about when that organism will die. All of that at the point of conception and all based on the DNA sequence/genetic composition alone. All of that information is available at the point of conception if we had the technology to decipher it. Maybe one day.

Certainly,  the environmental factors such as accidental death, living conditions, etc… will have an impact on the human being in question, but not as much as you think.  You are probably scratching your head now wondering what any of this has to do with the stock market.  Well, most of us look at human life as random and unpredictable, yet, an exact forecast could be made about your human composition at the moment of conception. Same with the stock market……  To be continued

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How To Use Sex To Predict The Stock Market With 100% Accuracy

For most people the stock market is an enigma.  It is a mystical creature that many have tried to tame, but very few have ever come close to succeeding. When you think you finally have a good understanding of how it works, the markets tends to turn around and slap you in the face. When the news is great it goes down and when the news is bad it surges higher. Only to turn around and repeat the sequence in the opposite direction. Leaving most people frustrated and without any sort of guidance.  

Over the last 200 years hundreds of different approaches and analytical tools have been developed by people from all walks of life to try and predict the market.  Everything from fundamental analysis to studying the planets/astrology, from complex mathematical formulas to technical analysis, from computerized trading  to consulting fortune tellers, witchcraft, etc….  While many have claimed to figure it out, only a few have. Thus far I know of only two people who have been able to break the stock market code.  From what I have seen their work proves it without any doubt.

The most prominent and the most accepted stock market theory today is called “Efficient Market Hypothesis”. The theory basically states that the overall stock market is efficient as it continuously and immediately discounts all available information. Under such circumstances it is impossible to outperform the market over an extended period of time. While loved by academia, this hypothesis is, for the most part, dismissed by true market practitioners.

Even the king of investing Warren Buffett has not only dismissed the theory by making a number of compelling arguments against it, but he has also proved  without a shadow of a doubt that the stock market can be beat over an extended period of time.  His investment returns prove that.  In simple terms, just as the clock is right twice a day, so is the efficient market theory. The market is indeed efficient but only at various points and at various times as the overall stock market continues to oscillate up and down.  

Since there is no real workable theory on how the stock market really works and since so many people have tried to figure it out in the past but have failed, is there any chance for us to understand it?

The answer is  YES.  

Not only to understand it, but predict it with great accuracy. That’s what this section of the book is all about. To take a completely unique look at the stock market from a different vantage point in order to finally understand how the stock market works.  Further, such a view will allow us to understand why the market has behaved as it did in the past and it will allow us to predict what’s coming next.  It goes without saying that having access to such knowledge can be incredibly valuable and profitable.

So, how does the stock market work?

First, you must understand something very important. If you look at any stock market chart you will see price (Y Axis) moving over time (X Axis) in 2 dimensions.  In today’s analyst society all attention is given to the Y Axis or study of the price movements and very little (if any) attention to the study of time. Yet, the TIME is the most important element. .

…….to be continued….

I respectfully disagree.   There are two issues to consider.

First, the opportunity cost of capital is real.  What happens if your perfect value investment (Rocket Ship or Waking Beast) hasn’t moved anywhere over the last 3-5 years even though the market is up 60% over the same period of time? What if another stock that you have considered at the same time has appreciated 150% while your stock has lagged behind or worse, declined?  Well, the impact on your capital in real and opportunity cost is significant. An ill timed move over a certain period of time can end up costing you millions in opportunity cost alone. While diversification can help you mitigate the impact of opportunity cost, it can also reduce your returns should you diversify too much.   

Second, while this might not be an issue for individual investors, this is a significant issue for professional money managers who must present their performance and answer to investors on regular basis. As such, most money managers end up under constant pressure to perform. To generate positive returns for their investors while outperforming the competition.  Should they fail to do so, investors will not hesitate for a second to pull their money and allocate it to a better performing fund.

That is true even if the stock picks the manager has generated are well researched and shall provide the investment fund with outsized returns if given enough time. Unfortunately, most investors have a very short time frames and if they do not see immediate results they express their dissatisfaction by turning their back on the money managers and by walking away. 

That is why TIMING must become  increasingly important issue not only for individual investors but for money managers as well.  Just imagine for a second what would happen if you could identify the exact timing of any anticipated move.

What if you could take a look at any given Rocket Ship or Waking Beast value stock and add another level of analysis that would allow you to identify exactly when that stock is going to start going up and at what point it will stop.  What if you are able to determine the velocity of any such move and establish an exit point with great precision and long before it occurs.  

Well, now you can.

That is what the second part of this book is all about.  TIMING.  We will add a level of timing analysis to your typical and well known value approach to investing.  This quantum jump forward in financial analysis shall help you supercharge your investment returns while further reducing risk. We will take an in depth look at my unique method of timing the stock market (and individual stocks) and how you can apply this same type of analysis towards your own research  and investing.

Further, we will take an in depth  look at the overall stock market so I can show you exactly how it works. Through using modern science and mathematics I will show you how and why the overall stock market truly moves.  For the first time in your life you will have a complete understanding that the stock market is neither volatile nor random, but acts exactly as it should by tracing out mathematical points of force in 3 dimensional space.

By the end of the TIMING section you should be able to use concepts discussed here to time the stock market and/or individual stocks with great accuracy. Leading you to amazing results,  market beating performance and a much lower risk profile.

Let’s get to it. 

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