Market Commentary: An Introduction To The Wheel Of Price .

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Tuesday, October 8, 2002Page 1Page 3Page 10Page 13Market Commentary: An Introduction to the Wheel of Price and TimeThe DayTrading Report: MMSI, STE, SPW, LSTR, ETN, AMGN and ObservationsThe Swing Report: SPY, WAT, Observations and Trailing StopsNotes and GuidelinesMarket Commentary:An Introduction to the Wheel of Price and TimeW.D. Gann, the legendary trader and market conceptualist of the first half of the 20th century, believedthat all tops and bottoms of consequence were mathematically related. He believed "they vibrated offeach other." As Gann described it, the Law of Vibration rules price movement.Gann believed that a cause-and-effect relationship existed between tops and bottoms of variousdurations, much in the same way a rock thrown into a pond corresponds to its counterpart ripples.One of the tools Gann used to observe the vibrations between tops and bottoms is the Gann Square ofNine Chart, or what I refer to as the Wheel of Price and Time.The square of the first odd number, 3, equals 9 and completes the first square, or cycle in the Square ofNine Chart; hence, the name. (Because the number 1 squared equals itself, it is not counted).Think of each square as a cycle or course, as in the courses or steps around the Great Pyramid. Oneway to conceptualize the courses or steps in the Square of Nine Chart is to visualize yourself in ahelicopter hovering over the apex of the Great Pyramid, with the top of the pyramid being the number 1.The Square of Nine chart is essentially a two-dimensional pyramid circumscribed by the dates of theyear. The angles running down from the top of the pyramid (or the vectors running through the twodimensional Square of Nine Chart) divide the year and the Square of Nine Chart into four quadrants of90 degrees each. These 90-degree divisions also define the squares of odd and even integers, whichoccupy the corners or angles running down from the top of the pyramid.So the Square of Nine is essentially a grid of numbers, starting with 1 in the center, which spirals out inclockwise motion, forming a vortex or "9," similar to the Milky Way or a nautilus shell.As mentioned, the first cycle or square around the center is complete with the number 9. Likewise, allnumbers and all forms are derived from the original nine integers. Once you find a "zero point," or theinitial impulse from which a stock's ripples emanate, the geometry for potential highs and lows in thefuture can theoretically be determined. The important thing to remember is that not only are highs andlows in price related, but also the dates of highs and lows are related, and that the dates of highs andlows are related to the prices of highs and lows.(Continued on the next page)PLEASE SEE IMPORTANT LEGAL DISCLAIMER ON LAST PAGE1 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002When these harmonics of time and price dovetail, or square out, a turning point can be expected. Thegreater the cluster of time and price harmonics, the more significant the turn. It also is important toremember that one must not only use the major all-time highs and lows on the yearly chart to key off,but also highs and lows on the monthly and weekly swing charts when projecting price and time cycles.For a look at some of the historical relationships between price and time, click here.After all, we are all traders, and we must trade the moves that a market makes within the year andwithin the month. That is why Gann said to key off the weekly chart. The highs and lows on the weeklyswing chart interact with the big picture, or Master Numbers, which give us some insight as to themarket's direction. All trends consist of a major and a minor impulse slugging it out concurrently. Themajor and the minor trend coexist like yin and yang, like the two spirals of DNA, like the marriage ofheaven and hell.S&P 500 10-Minute(An early rally attempt (chart above) failed at our 798 pivot (A). However, constructively, after carvingout an Inverse Head and Shoulder bottoming formation, the S&P broke out (B) before coming back tosettle (C) on this crucial Square Out of the March 2000 high.)2 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002THE DAYTRADING REPORTChart 1Merit Medical .80Expansion BreakoutComments: Cheapie du JourrdPattern: Power Surge (3 higher low).3 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002Chart Expansion Breakout / 1804 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002Chart ardComments: Tuesday's Lizard on SPW is interesting as it cameon a test of a test of the July lows, and on a pickup in volume.Alternatively, look to buy SPW if it pulls back early in the morningtoward 93.00 and use a 1-point stop.rdPattern: Power Surge (3 higher low).5 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002Chart 4Landstar System nsion PivotComments: Alternatively, look to buy on an early pullbacktoward 52.60.rdPattern: Power Surge (3 higher low).6 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002Chart izardComments: Alternatively, look to buy on a pullback toward61.00.rdPattern: Power Surge (3 higher low).7 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002Chart 40Solid Continuation SetupComments: AMGN looks poised to pivot out of a Low LevelCup and Handle pattern. Note, today was an accumulation day.Alternatively, look to buy on any early pullback toward 45.75.rdPattern: Power Surge (3 higher low).8 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002OBSERVATIONS-- Ordinarily, I don't show this many setups, but the market looks interestinghere.-- Zoll Medical (ZOLL:Nasdaq) (long) from yesterday worked nicely.-- Chubb (CB:NYSE) (short) never triggered.-- Oceaneering (OII:NYSE) (long) still looks interesting for Wednesday.9 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002ay’s Close: 24.00 [Up .86]THE SWING REPORTChart 1SPDR Trust(SPY:Amex)LongEntry:Stop:Initial Target:Pattern:81.3579.3583.35LROD (Large Range Outside Day)Comments: Alternatively, look to buy on any pullback toward79.40 with a 2-point stop. Today's reversal in the SPDRS is alsoin the spirit of a Soup Nazi 1 buy signal leaving what looks likea test of a test of the July low.10 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002Chart 2Waters(WAT:NYSE)LongEntry:25.60Stop:23.60Initial Target: 27.60Pattern:Expansion Pivot / Mini Rule-of-4 BreakoutComments: WAT is wound up in a triangle, and today's increasein volume suggests a Low Level Breakout from a Low LevelWeekly Cup and Handle.11 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002OBSERVATIONS AND TRAILING STOPS-- Potash Corp. of Saskatchewan (POT:NYSE) (short) never triggered.-- On Tuesday we covered half our position on Capital One Financial(COF:NYSE) (short) for a 1.00 profit, and were stopped out of the second piecefor a scratch.-- On Tuesday we were stopped out of FTI Consulting (FCN:NYSE) (short) foran approximate 70-cent loss.-- Although Hillenbrand (HB:NYSE) (short) got close to our initial target of 51.30yet again, we were stopped out of the position late in the session for about a 65cent gain.-- Tuesday was day four in Omnicom (OMC:NYSE) (short). We covered one-halfour position at our initial target of 49.85 for a profit of [ 2.00]. Lower the stop onyour second piece to 51.75.12 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002Notes and GuidelinesDayTrading Report:Trades marked indicate stocks that are considered small cap, trading 500k shares or less.As you know, thin stocks are generally more volatile and trade with a wider spread.Trades marked * indicate patterns that don’t conform to the original rules of the patternbut are defined as “in the spirit of” their namesakes.The 1 Point Gap Rule: Any stock recommendation that opens 1 or more points above thelisted entry price (for longs) or 1 or more points below the listed entry price (for shorts) shouldbe ignored for the day. Please note that history suggests that entering a stock on a gap openincreases your potential for a loss.Reminders: A signal is not valid unless the stock trades at or above the listed entry price forlongs and at or below the listed entry price for shorts. If a position moves one point in yourfavor in this choppy environment, it is a good idea to sell half the position and moveyour stop on the remaining position to break even.The Swing Report:Trades marked indicate stocks that are considered small cap, trading 500k shares or less.As you know, thin stocks are generally more volatile and trade with a wider spread.Trades marked * indicate patterns that don’t conform to the original rules of the patternbut are defined as “in the spirit of” their namesakes.The 2 Point Gap Rule: Any stock recommendation that opens 2 or more points above thelisted entry price (for longs) or 2 or more points below the listed entry price (for shorts) shouldbe ignored for the day. Please note that history suggests that entering a stock on a gap openincreases your potential for a loss.Initial Target: Target price at which you should look to sell/cover half your position.Reminders: A signal is not valid unless the stock trades at or above the listed entry price forlongs and at or below the listed entry price for shorts. If a position moves two points ormore in your favor in this choppy environment, it is a good idea to sell half the positionand move your stop on the remaining position to break even.13 1996-2002 TheStreet.com, Inc. All rights reserved.

Tuesday, October 8, 2002Contact Info Customer Service:Please email tradingreports@thestreet.com, or call1-800-562-9571 Mon.– Fri. 8 a.m. to 6 p.m. ETReader Feedback and Questions:Please email Jeff directly atjeff.cooper@thestreet.com. Again please directall account related inquiries to customer service.Legal InformationThis information is confidential and is intended only for the authorized Subscriber. Please notify us if you have received this document in error bytelephoning 1-800-562-9571.Jeff Cooper, writer of The Trading Reports, is a financial markets author and trader, and a regular contributor to RealMoney, the premiumsubscription site of TheStreet.com.At the time of publication, Mr. Cooper will not, directly or indirectly, have a position in any security that he discusses in The Trading Reports.HOWEVER, MR.COOPER MAY ENTER ORDERS TO PURCHASE OR SELL SECURITIES MENTIONED IN The Trading Reports AFTER10:30 a.m. ET. ON THE TRADING DAY FOLLOWING THE DATE ON WHICH THE SECURITY IS MENTIONED IN The Trading Reports. IFYOU ENTER ORDERS TO BUY OR SELL SECURITIES AFTER 10:30 a.m. ET., IT IS POSSIBLE THAT MR. COOPER MAY HAVEPURCHASED OR SOLD THE SECURITY AT A PRICE MORE ADVANTAGEOUS THAN THE PRICE YOU WILL OBTAIN.Mr. Cooper is not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission orwith any state securities regulatory authority. The Trading Reports contains Mr. Cooper’s own opinions and is provided for informationalpurposes only. You should not rely solely upon The Trading Reports for purposes of transacting securities or other investments, and you areencouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make anyinvestment. None of the information contained herein constitutes, or is intended to constitute a recommendation by Jeff Cooper orTheStreet.com, Inc. of any particular security or trading strategy or a determination by Jeff Cooper or TheStreet.com, Inc. that any security ortrading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice,such information is impersonal and not tailored to the investment needs of any specific person.14 1996-2002 TheStreet.com, Inc. All rights reserved.

After all, we are all traders, and we must trade the moves that a market makes within the year and within the month. That is why Gann said to k

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