June 2001

Don Hall's Pyrapoint is used with Ensign Windows.  This plots Gann's Square of 9.  The starting point was the market high.  Everything else is projected into the future without manipulation.

The blue horizontal lines are major support / resistance for 45 degree squares from the high.  The vertical lines are time periods.  Notice that the major turning points occur near these cyan vertical lines.  I created this within minutes of ordering the Pyrapoint tool.  I have not even read the 300 page manual that is currently being shipped.

360 degrees of the Square of 9 is the bottom of the market on 03-22-2001, at a one year cycle from the market high on 03-24-2000.

On 05-22-2001 we hit the 180 degree Square of 9 from the market high on 03-24-2000.  The turning point also occurred at an exact vertical time point.  This gave a very strong sell signal along with others.

Phi = 1.618.   05-22-2001 is 424 calendar days from 03-24-2000 all-time S&P 500 high.  Phi cubed times 100 = 424.  05-22-2001 is 263 calendar days from 09-01-2000 the S&P double top.  Phi squared times 100 = 262.  05-22-2001 is 61 calendar days from 03-22-2001 low.  1 / Phi = 61.8

Helio cycles:  Synodic:  JU 15 from 11-06-2000 S&P high.  JS 15 from 07-31-2000 low.

Sidereal:  Mars 120 from 09-04-2000 Labor Day.  240 from 01-17-2000 holiday (01-14-2000 Dow high).

Geo:  Moon-Sun-Saturn conjunction with Mercury-Uranus trine.

The helio cycles come from Brad Cowan.  The geo marker from Myles Walker.  Reference:  Someone smarter than I at the GannGhost group.

(For more information on Pyrapoint, read the January 2001 and April 2001 issues of this newsletter on Ensign's web site)

I am often asked which tool or study is the best, as if there exists a simple answer to such a question.  Instead of answering that question, perhaps I can help direct your attention to tools that should be given a higher priority.  Let's start our discussion on priority by asking this question:  

How would you rank order the importance of Price, Volume and Time?

I suspect that most traders, particularly new traders, would answer that Price is the most important market factor, followed by Volume, with Time being the least important.  I suspect that this answer is given most often because Price is the easiest to comprehend, and Time is the hardest to understand.  I have come to believe that Time is the most important factor, yes even ahead of Price, and if you would spend more effort analyzing Time, your trading success would improve.  Too often analysis focuses on Price and ignores Time altogether.  So, this month's trading tip is: Learn to use Time related tools.

Hank Dean wrote, 'One of the most critical aspects of successful trading is not what the direction is or why it's happening.  It is the mostly overlooked when.  The when can often be forecasted just like phases of the moon or the tides or waves or rhythms of any kind.  Using one very simple tool, time cycles, and some common sense, you can win consistently.'  December 2000  Trading Tips newsletter: 'Cycles Tool'

Let's take inventory of Time related tools:

1. Cycles:  Short Term and Seasonal
2. Fibonacci Numbers
3. Fibonacci Ruler
4. Pyrapoint 
5. Gann Square
6. Gann Fan
7. Elliott Wave Theory
8. Trend Lines, particularly Parallel Lines
9. Astronomical clocks and relationships
10. Time of Day and Day of Week

I do not have space or time to give each of these tools new treatment in this article.  The tools on my list have been discussed in prior articles in the Trading Tips newsletter, and a reference to the material on Ensign's web site will suffice.  Of the above, my favorite tools are Pyrapoint, Trend Lines and Fibonacci Numbers in that order.   I am not discounting the value of any of the others.  It is just that when tools are more complex, such as Astronomical relationships, I tend not to use them as much as I should and I find myself seeing the correlation 'after the fact'.

Now, here are the references for additional reading on these Time related tools.

1. Cycles:  Short Term and Seasonal
   January 2000  Trading Tips newsletter: 'January Effect'
   February 2000  Trading Tips newsletter: 'Cycle Calendar'
   December 2000  Trading Tips newsletter: 'Cycles Tool'
   
2. Fibonacci Numbers
   Main page on Ensign's web site, topic:  The Power of Counting Bars
   February 2000  Trading Tips newsletter: 'Fibonacci Numbers'
   
3. Fibonacci Ruler
   January 2000  Trading Tips newsletter: 'Fibonacci Time Projections'
   
4. Pyrapoint 
   January 2001  Trading Tips newsletter: 'Time and Price' and 'Pyrapoint Tool'
   April 2001  Trading Tips newsletter: 'Pyrapoint Update'
   This month: Trading Tips newsletter: '$SPX Cash Index'
   
5. Gann Square
   December 2000  Trading Tips newsletter: 'Using Gann Squares'
   February 2001  Trading Tips newsletter: 'Gann Square'
   
6. Gann Fan
   July 2000  Trading Tips newsletter: 'Timing with Gann Angles'
   March 2001 Trading Tips newsletter: '45 Degree Lines'
   
7. Elliott Wave Theory
   September 2000  Trading Tips newsletter: 'A-B-C Wave Forecast'
   
8. Trend Lines, particularly Parallel Lines
   Main page on Ensign's web site, topic:  The Power of Trend Lines
   Main page on Ensign's web site, topic:  The Power of Parallel Lines
   
9. Astronomical clocks and relationships
   February 2001  Trading Tips newsletter: 'Moon Phases' and 'Moon Phase Calculator'
   This month: Trading Tips newsletter: '$SPX Cash Index'
   
10. Time of Day and Day of Week

I see I do not have a reference for Time of Day and Day of Week, so I will finish this article with a discussion on this subject.  This is fresh on my mind because this morning I was in the Ensign Chat Room and a trader made the statement that August Live Cattle was nearing the time for the high of the day, and would be down the rest of the day.  This analysis shared with those in the chat room around 10:10 a.m. was exactly right.  Here is the 5-minute cattle chart showing June 20th, and today, June 21st.

Now, how did this trader know that?  How could he speak so confidently about what the cattle market would do?  His analysis uses two mathematical techniques:  Neural nets and Pyrapoint.  Neural nets are beyond the scope of this article, but can be briefly explained as follows.  A neural net learns the characteristics of a market by examining hundreds of training patterns and refines its forecasting ability by comparing forecast output against actual data.  This trader's neural net forecast a pattern for today's cattle market, and had the time for today's high a little after 10 a.m.

Now a person cannot mentally perform the hundreds of thousands of considerations that a neural net can perform, yet you can still benefit by keeping track of the time of significant market turns over several days.   For example, on a 5-minute cattle chart a significant bottom occurred on June 18th at 10:05 a.m.  On June 19th the high of the day occurred at 9:50 a.m.  The high of the day on June 20th also occurred at 9:50 a.m..  This high is the anchor point for the Pyrapoint tool shown on the cattle chart.  And, the high of the day on June 21st was at 10:25 a.m. as marked by the vertical blue line labeled with 54.  Tip:  Keep track of the Time of Day when tops and bottoms occur.

This trader also uses Pyrapoint.  The highest high of the past two weeks occurred June 20th at 9:50 a.m. as shown in the illustration.  So, that significant point becomes the anchor point for the Pyrapoint construction.  The 2nd end-of-square vertical line was already drawn on the chart prior to 10:25 a.m. and labeled with the bar count of 54.  (Tip:  55 is a Fibonacci number.)  This trader commented that his neural net forecast for the time of today's high correlated with the upcoming Pyrapoint end-of-square.  Tip:  The Pyrapoint principle involved here is that 'when price meets time, a change is imminent.'  And that is exactly what happened.  The price crept upward from the gap down open until it met end-of-square at 10:25 a.m., and then was down the rest of the day.

I and others have followed the correlation of market behavior against the Pyrapoint calculations and continue to be impressed with the insight and accuracy of this tool.   That is why it has become my favorite tool for chart analysis.  Now go back and really study the $SPX Cash Index chart in the previous article, and note the high correlation of change in direction occurring on Pyrapoint's vertical blue lines.  These vertical lines are a measurement of Time and known in advance.

Ensign Software has negotiated an agreement with Don Hall so that the Pyrapoint tool can be included in Ensign Windows.  In the past, Pyrapoint was an extension to Ensign Windows implemented in the ESPL programming language and available only to those who bought Don Hall's Pyrapoint Book or Pyrapoint CD.  Pyrapoint is now a draw tool built in to Ensign Windows and available to every Ensign Windows user.  

Display a chart in Ensign Windows and click the Draw Tools button to show the Draw Tools panel.  Pyrapoint is selected by clicking the button with a square box and diagonal lines connecting the opposite corners.

Move to a trend top or bottom on the chart and click the left mouse button.  Pyrapoint will appear using an appropriate degree of rotation parameter selected by Ensign's proprietary artificial intelligence algorithm.   

While the tool is still selected, its anchor point can be dragged to another bar's high or low.  Or, right mouse click to display the Pyrapoint Properties Window.  Or, click elsewhere on the chart to finish the tool and the cursor will change from a pencil back to an arrow.

Click the up or down spinner arrow to double or halve the Degree of Rotation parameter.   180 degrees is shown in the example.  Clicking the up arrow will change it to 90 degrees.  Clicking the down arrow will change it to 22.5 degrees.  Also, you can enter any degree in the edit box.   Entering a value greater than or equal to 1 will be treated as degrees.  Any value between 0 and 1 will be treated as a percent of 180 degrees.  A value of 0.5 is the same as 90 degrees.  After selecting your preferred colors, Line Thickness and Line Style, check the Use as Default box to save the parameters as the default.    

To fully understand Pyrapoint, its mathematics, implementation, design, use and how to trade with Pyrapoint, you need to buy Don Hall's Pyrapoint Book or Pyrapoint CD.  The Book is a professionally published 234-page hard cover book.

This page on Ensign's web site has testimonials and a couple more Pyrapoint illustrations.  Go to:  http://www.ensignsoftware.com/help/pyrapoint.htm