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Wave Ž

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There will be times when the Wave 2 retraces at a steep rate. This is the time when you
should use in the pitchfork tool. With this button toggled to the ON posi-
tion, the pitchforks automatically adjust the direction and spacing of the pitchforks to
compensate for the steep Wave 2 retracement. You should pick the normal Base and
drawing points, and GET will "Modify" them for you.

Before Modify




After Modify




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Combining Median Lines With Wave 3

Once the Median Line is drawn on Waves 1 and 2, you can now use the Median Line
technique to predict the top of Wave 3.

Wave 3 will usually end on either the Middle Line or the Upper/Lower Parallel Line.

Wave 

Wave Œ
Wave 

Wave Ž

Wave Œ

Wave Ž

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Wave 3 tends to have a Fibonacci relationship with Wave 1. We can calculate this pro-
jection in advance.

The Median Line method tends to catch the top of Wave 3. By combining the two tech-
niques, it is possible to predict a time period during which Wave 3 will top out.

Once Wave 1 and Wave 2 is in place, draw a Median Line from the base of Wave 1
through the Midpoint of Wave 2. Draw the Upper and Lower Parallel Lines as before.
Now add the Fibonacci Projections to the chart. The Fibonacci Projections will cross
the Median Lines. Each of these crossings are a potential time period for the top of
Wave 3.


X= Target for Wave 3






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How to use it, and trade with it
The Regression Trend Channels are very useful in defining and containing the trend of
the market. When the prices break a well established Trend Channel, the market usually
changes Trend. However, it was a tedious task to draw the Channels, so we decided to
automate this process. First, let me discuss a problem that some traders encounter when
using the Regression Channel.


In the Trend Regression Menu, the GREEN light on the Standard Deviation Box has to
be turned ON. When it is turned ON, the software calculates the standard deviation for
the upper and lower channels. If the Standard Deviation is turned OFF (no Green light),
then the software simply finds the highest and lowest bars, and draws the upper and
lower channels using these high/low peaks. To use the Trend Regression Channel as
discussed in this material and in the seminar tapes, you need to TURN THE STAN-

PREFFERED Uses highest
bar for Upper

Channels with
Standard Deviation
Channels with
Turned ON.
Standard Devia-
tion Turned OFF.

Uses lowest
bar for Lower

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We tried several different methods and settled on the following: The user defines the last
Pivot from which the software draws the Auto Channels. For longer term Trend, use the
Primary or Major setting. For real short term Trends, use the Intermediate or Minor
settings. We recommend this study be used by selecting the Primary or the Major Pivot.
Otherwise, the Auto Channels will be constantly re-drawn every time a minor pivot is
made. This constant switching will make the Auto Channels useless. The following ex-
amples will make the Pivot selection clear.


By selecting Primary
Pivot as the minimum
pivot, the software looks
for the previous Primary
pivot and draws the Trend
Regression Channels
from this Primary Pivot.
Auto Channels with
When a new Primary
Pivot is labelled, the
Channels are automati-
cally re-drawn from the
Channels are drawn from the
§ previous Primary Pivot.
new pivot.

MAJOR PIVOT Major Pivot è

By selecting Major Pivot §
as the minimum pivot, the
software looks for the pre-
vious Major pivot and
Channels are drawn
draws the Trend Regres-
from the previous
sion Channels from this
Major Pivot.
Major Pivot. When a new
Major Pivot is labelled,
the Channels are auto- Auto Channels with
matically re-drawn from MAJOR pivot
the new pivot. selected.

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The following trade is in the September Canadian Dollar using Elliott Wave analysis,
Auto Regression Trend Channels and the Elliott Oscillator.

Key Points to observe:

#1 The Oscillator pulled back to zero and stayed above the max drop allowed.

#2 Profit Taking Index is at 48 (greater than 35). This means that there are good
odds for a rally to Wave Five. Buy Sept Canadian Dollar at the break of the Auto
Trend Channels.

CANADIAN DOLLAR Profit Taking Index
greater than 35.


Wave Four
channels holding

Oscillator pulled back
below zero. But stayed
above max allowed.

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Expert Trend Locator - XTL

The need for XTL:
Advanced GET does an excellent job in identifying Elliott Wave counts. When combined with
studies such as the Profit Taking Index, Wave Four Channels, Trend Channels etc., a very
effective Mechanical trading strategy is available to GET users. This Mechanical strategy fo-
cuses mainly on:
a) Trading the Wave Four to Wave Five segment in Type One Trades.
b) Trading the end of Wave Five in Type Two Trades.
While this has been very productive, we still lacked a Mechanical type entry into some of the
massive Wave Three swings generated in the market. So far, this was accomplished by staying
in Type Two Trades entered at the end of a Wave Five and waiting for the Wave Three to
develop. On numerous occasions, many of our users requested that we come up with a tech-
nique that allows early entries in Wave Three swings.
After some extensive research, we released the Joseph Trend Index in 1995. The JTI was de-
signed to confirm Wave Three swings once the swing matured. It performed this task by pro-
ducing an exponential curve in Major Wave Three swings. However, in some cases, the confir-
mation was accomplished a little too late for the user to take full advantage of the entire Wave
Three swing, specifically in terms of an early entry.

The Task:
Since the last release of Advanced GET 6.0 in March 1995, I have dedicated my research
exclusively to find a reasonable solution to identify Wave Three swings at its early stages. The
result is XTL - Expert Trend Locator.

The Theory behind XTL:

If we carefully look at any chart, you will find periods where the market tends to trade back and
forth without any clear direction with swings that reverse at random. Looking back, many of
these swings can be classified as noise. The following example on the next page shows Feb 96
Gold trading sideways without any real Trend in the market.

For discussion purposes, this is a market that is trading in a random fashion. If you sim-
ply trade this market using a Trend following system, you would get whipsawed by buying at
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the highs and selling at the lows. Trend following methods generally do not work well in a
sideways market. However, a trading approach using over bought/over sold indicators may
work well in these periods.

Feb 96 Gold
Trading Sideways

However, as soon as you switch to an over bought/over sold trading strategy, the market will
also switch to a Trending mode (or so it seems). This cycle never seems to change and can
literally make a grown man cry. Once the market breaks into a Trend Mode, the prices trade in
one direction with strong momentum and as the momentum continues, the swing is classified
as a Major Trend. In Elliott Wave terms, this swing is labeled a Wave Three.

Feb 96 Gold


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The objective is to identify when the market is trading in a random fashion and when it is
trading in a Major Trend. There are two additional requirements.

1) The Major Trend Mode has to be detected at any early stage so one can trade it
2) Minimize the false signals

We developed a Statistical model that checks for randomness in a given set of data. The model
is somewhat similar to the Runs Test for Randomness (found in Advanced Statistical books).
Our Statistical model calculates a value between 0 and 1 for any given run of data. (0 being
completely random and 1 being completely biased.) In addition to this, we also developed a
way to measure a threshold level. If our test for Randomness for a given set of data
exceeds this threshold level, we conclude that the market is potentially running or
trading with a bias in the early stages of a Major Trend.

When a downward bias or Down Trend is detected, the bars are displayed in Red. When
an upward bias or Up Trend is detected, the bars are displayed in Blue. If the Trend is
neither Up or Down, the bars are displayed as usual in Black.

May 96 Crude Oil
with XTL (21 per)
Elliott Waves generated
by Advanced GET.
shows Up Trend.

Regression Trend
shows Down Trend.

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Any study is valid only if it is portable to other markets. The Statistical model we developed for
the XTL meets this criteria. It works on all markets (Stocks and Futures) and for any time
frame without any modification.

Compatibility with Elliott Wave analysis:

Almost all Wave Three swings generate strong and extended momentum to be classified as a
Major Trend. In a majority of the cases, the XTL can identify the Major Trend at the early
stages of a Wave Three. Since the XTL is a Statistical model and does not use Elliott Wave
logic, it provides an independent confirmation and early entry tool for Wave Three type


Perhaps the single most valuable use for the XTL is to identify the early stages of a Wave
Three type rally or decline. Elliott Wave analysis alerts the user of a potential Change in
Trend and the XTL detects or identifies this Change in Trend. Thus the combination of
Elliott Wave analysis and the XTL provides the added luxury of both anticipating and
confirming the Trend.

On the next several pages, we will discuss how to use the XTL and explain some of the recom-
mended trading rules. We suggest you use the training mode and test our recommended ideas
on various markets. Then form a plan that fits your trading style.


There is only one user setting (input) required for calculating the Expert Trend Locator (XTL)
study. This is the number of bars of data used to test for Randomness. The default setting is 35
periods and we highly recommend this. Using a 35 period setting reduces the number of false
break out signals. However, using a 21 period setting allows the XTL to identify the Major
Trend at a much earlier stage.

Thus, while the 35 period XTL offers less false signals, the 21 period XTL identifies the Major
Trend one or two bars earlier.

Which setting (35 period or 21 period) you use is your personal preference. The best way
to decide the best setting, use the training mode to back test on past data and find the
setting that suits your style of trading.

We have also enclosed examples using both settings to further illustrate the advantages
and drawbacks of both.

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How to use XTL
Since XTL is a tool that identifies Major Trends, you can use it in a number of ways to
enhance your trading. From our testing we have found the following method to be very
reliable. When there is no Major Trend, the bars are plotted as regular bars in black. As
soon as a Trend is detected, the color of the bar is changed to Red (Down Trend) or Blue
(Up Trend).

The first bar that changes the color
Add 1/2 of Bar length
is called the FIRST BREAK OUT
Add half the length of this Break FIRST BREAKOUT
Out Bar to obtain a BUY LEVEL. BAR

Buy (go long) when the market penetrates the BUY LEVEL provided the
following holds true: a) XTL does not detect and display a bar with the opposite
Trend color. In the above illustration, the buy was generated with an Up Trend signal.
Therefore, you should not see any Red color bars prior to the prices penetrating the BUY
LEVEL. Neutral (Black) bars are okay and does not alter the strategy. b) The STOP
is not taken out. (See next page for discussion of STOPS).

We suggest Adding 1/2 the length
of the Break Out Bar. Please feel
free to back test using the training
mode and find a length you are
§ BUY most comfortable with.
Add 1/2 of Bar length

For aggressive entries, you could
even set the BUY LEVEL just
above the high of the Break Out
« Bar.
BAR You could enter the market with a
Buy Stop at the selected level.
GET Applying Technical Analysis

In the following examples (unless stated otherwise) we will use a 35 period
setting for calculating the XTL. We are also adding 1/2 the length of the Break
Out Bar. (See Below)

This is the March 95, D-
Mark as of Feb 13, 1995. March 95 D-Mark
The XTL has detected a as of Feb 13, 1995
potential run in the market.
35 Per XTL

This bar is displayed in
Blue showing an Up Trend. BUY LEVEL
This bar is also called the Add 1/2 of Bar length

First Break Out Bar.
Now add 1/2 the length of BREAKOUT
the Break Out Bar to obtain

Since the First Break Out Bar, the XTL did not a) detect an opposite Trend
and b) the Stop was not taken out. Therefore, a long (BUY) position is estab-
lished when the market trades through the BUY LEVEL.

There are a number of
ways to enter. The
March 95 D-Mark most ideal would be
as of Mar 2, 1995
to enter on a Buy Stop
at the BUY LEVEL.
Blue Bars
35 Per XTL

Note: Prior to trading
through the BUY
LEVEL, Neutral
® (Black) bars may be
displayed. Black bars
do not alter the trad-
ing strategy.

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Although there are a number of ways to handle Stops, here is a method we have found
useful. Set a stop the length of the Break Out Bar below the low of the Break Out Bar.

We suggest you use the
training mode and find
a STOP method that fits BUY LEVEL
your trading style. Add 1/2 of Bar length

If you feel the Stop is too
small, then use twice the
length of the Break Out
« Subtract the length of
Bar. Likewise, if you
the Break Out Bar from
feel the Stop is too large, FIRST
BREAKOUT the low of the bar.
then use half the length
of the Break Out Bar.
For example: The First Break Out bar has a range of High=7650 and Low=7630. The
length of the Break Out bar is (7650-7630) = 20 points.

Up Trend BUY signals:

To obtain the BUY LEVEL you add 1/2 the length to the Break Out bar. In this case
1/2 the length of the Break Out bar = (20 points * .5) = 10 points. Add this to the high of
the Break Out bar to obtain the BUY LEVEL = (7650 + 10) = 7660.

To obtain the suggested STOP, you subtract the length of the Break Out bar from the low
of the Break Out bar = (7630 - 20) = 7610. This is the suggested SELL STOP.

Down Trend SELL signals:

For Down Trend signals, you do the opposite. Using the above example, 1/2 the length
of the Break Out bar is 10 points. Subtract this from the Low of the Break Out bar to
obtain the SELL LEVEL = (7630 - 10) = 7620.

To obtain a suggested STOP, you add the length of the Break Out bar to the high of the
Break Out bar = (7650 + 20) = 7670. This is the suggested BUY STOP.

GET Applying Technical Analysis


Where one takes profits is different from trader to trader. However, once you have some
decent profits in the trade, we suggest you use Advanced GET's built in Regression
Trend Channel. You can use them on the auto mode or simply originate it from the
previous pivot. These channels are excellent for bracketing a trending market.

One of the major
strengths of the Regres-
OEX as of
sion Trend Channel is to
Nov 15,1995
bracket a trending mar-
ket. When a trending
35 Per XTL
market breaks the chan-
© nel, this usually indicates
the end of the Trend.
Take Profits when
Trend Channels are

è broken.
With this in mind, we
suggest that profits
« FIRST should be taken when
the prices break the

The XTL can also be
used to identify Major May 96 Bean Oil
Down Trends. as of Nov 10, 1995
35 Per XTL
The example shown is
the May 96 Bean Oil.
Take Profits when
Once again, we suggest FIRST Trend Channels are
that profits should be BREAKOUT broken.
taken when the prices
break the Regression
Trend Channels.

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Trade Continuation:
When using the Regression Trend Channels to protect profits, you may from time to
time be stopped out of a market that continues to Trend in the direction of your original
trade. When prices break the Trend Channels, it usually indicates the end of the current
Trend or at least a temporary change in direction (bias).

It is extremely hard to
March 96 Coffee 35 Per XTL
forecast whether a
breaking of a Trend
Channel is an actual Take Profits when
Trend change or just a Trend Channels are
temporary change.
Therefore, we recom-
mend taking profits. If SELL
the original Trend con-
tinues, you can still get
back in as shown be-

As long as the Major Trend displayed by the software does not change (in this case the
bars should not change from (Down Trend) Red to (Up Trend) Blue), you can re-enter
the market in the original direction when prices break the newly drawn Trend Channels.
Neutral (Black) bars are okay and does not alter the strategy. The new Trend Chan-
nels are drawn from the previous pivot.

March 96 Coffee

New Trend Channel
® The new entry is
from previous pivot.

taken on the break of
the Trend Channel.
35 Per XTL

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Guidelines for Trade Continuation
1. The Major Trend displayed by GET should not change. Example: In a downward
trending market, the bar colors should be Red (down) or Black (neutral) and should
NOT change to Blue (up) indicating a possible change in bias (up trend). The oppo-
site applies to a market in a rally phase.

2. Once a Pivot is established, draw Trend Channels from this pivot as shown on the
previous page. You could also use the Auto Channels feature in GET (please note
that the Auto Channels key off the most recent pivot selected by the user -- Major,
Primary, etc.; you may have to adjust this setting to get the proper results).

3. Once the prices break the newly drawn Trend Channel in the direction of the original
trend, a new trade can be established with a stop above/below the previous pivot (as
illustrated below).

March 96 Coffee
35 Per XTL

Take Profits
when Trend
Channels are
¬ ê

Once you re-enter the market, treat this as a new position. When
the trade becomes profitable, use the Regression Trend Channel
to protect profits.

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Using Different Settings for XTL

On this page we will show the difference in entries using a 21 period XTL and a 35
period XTL. The 21 period XTL setting offers early entry in the markets. However, the
main disadvantage of using a 21 period setting is the numerous false signals that are
generated as shown on the next page.

May 96 Crude Oil
USING 21 period
using 21 period XTL
Usually the First Break
Out Bar is generated a few
bars earlier by using the 21
period XTL.

This in turn can also pro-
vide numerous false sig-
First Break
Out Bar. è
nals as shown on the next

May 96 Crude Oil
USING 35 period
using 35 period XTL
When using the 35 period
Add half the length
XTL, the false signals are
of the Break Out
Bar to obtain the
kept to a minimum.
è The First Break Out Bars are
usually generated later (by a
First Break
è bar or two) when compared
Out Bar.
to the 21 period XTL setting.

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Using Different Settings for XTL

USING 21 period July 95 Coffee
using 21 period XTL
In this example, the July
95 Coffee is in a Major
Down Trend.
The 21 period XTL pro-
vided two different Buy
Blue Bars
Levels which turned out
to be False signals.

The major drawback of
using the 21 period XTL
is the potential of False

USING 35 per XTL:
July 95 Coffee
using 35 period XTL Using the 35 period XTL,
the False Signals were
avoided. This is the major
advantage of using the 35
© © period XTL.
NO FALSE With these examples, we
SIGNALS have shown both the ad-
No Blue Bars vantages and disadvan-
tages of using the 21 pe-
riod and 35 period XTL.
You, the user will have to
make a decision on which
one to use based your
style of trading.

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March 96 Jap Yen
Examples on 35 Per XTL

using XTL Take Profits
¬ when Trend
SELL Channels are


IBM - Stock

35 Per XTL
Take Profits
¬ when Trend
Channels are

June 96 SP 500
Take Profits
when Trend
35 Per XTL Channels are

broken. BUY

Prices did not break

below the First Break
Out Bar. No short
Trade taken.

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¬ Chemical Bank-Stock
35 Period XTL
BUY Take Profits
when Trend
® Channels are

® í SELL
Apple Computer
35 Period XTL SELL

March 96
German Bunds
35 Period XTL
From October 1995,
the Mar 96 German
Bunds indicated a
Strong Up Trend.

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Nikkei Index
21 Period
Take Profits
when Trend
Channels are
BUY broken.

April 96
Comex Gold

BUY Take Profits
® March 96
when Trend
Crude OIL
Channels are

35 Per XTL

60 minutes

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MOB (Make or Break) Study With Time Marks
The MOB and the other new studies are very efficient when used correctly. Every effort has
been made to explain them in this technical section. However, we highly recommend that you
watch the 1996 Seminar Videos. At the seminar, these studies were discussed in detail and
numerous examples were provided that showed how to use them either as stand alone
studies or in combination. It is impossible to substitute the Seminar Videos in this technical
section. It is also not possible to explain to each customer on the telephone. Bottom line: If
you do not take the time to watch the 1996 Seminar Videos, you may not have a thorough
grasp on how to use these new studies. And that would be your loss.

The MOB (Make or Break) Study takes the momentum, acceleration and other ratio models to
define a price projection zone.

The IBM Weekly chart is shown
on the left. The various swings are
IBM Weekly assigned separate momentum val-
ues such as Momentum 1,2,3.

Using the ratio of these various



momentums, Advanced GET cal-




culates a price projection zone.






This price projection should pro-

om —


vide major resistance for the cur-


rent rally.

a) The prices should rally to the
MOB projection
MOB projection.
Projected from
b) Approximately 70% of the time,
prices will trade to the MOB pro-
jection level and reverse.

c) The rest of the time the prices
will reach the MOB price projec-
tion and continue to trade through
with stronger momentum. Hence
the name Make or Break. Prices
IBM Weekly
will either reverse or go through
with increasing momentum.

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IBM Weekly
MOB projection
Projected from

In this case, prices
a) reached the MOB
projection and
b) reversed sharply.

The price projection zone is determined based on the momentum of the current swing and the
previous two swings.

Where to draw (originate) the MOB calculations: The simplest way is to initiate the MOB
calculations from a previous pivot (Primary or Major). In the above example of the IBM
Weekly, the MOB levels were initiated from a Major (J) pivot. The Pivots can be calculated
and displayed by the software by selecting the Pivot Study.

The MOB can be initiated from several levels. For example when a Fifth Wave is being com-
pleted, one can initiate the MOB study from the previous Wave Three Pivot. Basically, any
time you have a Major or Primary Pivot, MOB price levels can be initiated. At times, even
smaller Pivots such as Intermediate or Minor can be used for the projection.

Major (J) or
Primary (P) pivot HIGH
Initiate MOB from here

Major (J) or
Primary (P) pivot LOW MOB
Initiate MOB from
GET Applying Technical Analysis

MOB (Make or Break) Example with Elliott Waves

The Daily Live Cattle
chart for the Dec 96 con-
Live Cattle
tract is shown on the left.
1996 Dec
In this case, the The MOB is initiated from
MOB projection the Previous Pivot Low.
was given at a very Using the ratio of these
various momentums, Ad-
early stage before
vanced GET calculates a
the low was taken
price projection zone.
This price projection
should provide major sup-
port for the current decline.
Projected from MOB projection

MOB Projection zones usually provide the termination point for a Five Wave Elliott se-
quence: In this case the previous pivot low was the Wave Three low. The MOB projection
from this Pivot Low provided the support (MOB projection zone) for the final Wave Five.
Also note how early the projections were given.

In this case, prices
a) reached the MOB
projection and
b) reversed sharply.

Live Cattle
1996 Dec

MOB projection
Projected from

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MOB (Make or Break) Example with Elliott Waves/Trend Channels

Bean Oil Here the MOB projection
1996 May coincided with a TYPE 2
Buy at the end of a Five
Wave Sequence. Use the
Trend Channels for entry

MOB projection
Projected from

The chart shown above does not require much explanation. The May Bean Oil was trading in
a Five Wave Sequence. The MOB projections from the previous pivot low (in this case it was
a Wave Three pivot) provided the major support for the prices at the end of Wave Five.

Here the market set up a Type 2 Buy after the completion of a Five Wave sequence. The MOB
projection provided further confirmation by providing a Major Support level.

Additional tools such as the Regression Trend Channels can be used to provide a clear cut en-
try in the direction of the trade.

In addition, one could have used the XTL (Expert Trend Locator) to add on positions once the
Wave Three was in progress.

The MOB (Make or Break) study is a very valuable tool that can enhance one's trading pro-
vided it is used correctly. There are times the projections fail to hold. In such cases the market
breaks through the MOB levels with increasing strength. These are usually Wave Three type
swings. One can avoid some of these situations by knowing the Elliott Wave count at that
time. Let us look at an example.

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MOB (Make or Break) - An example of when prices Break through

Crude Oil
Here the prices rallied
1996 May
through the MOB level with
increasing momentum. The
Elliott Oscillator confirms
this strength and the rally is a
Wave Three swing.
Projected from

MOB projection

In this example, the MOB projection was generated from the Previous Pivot High. In this case,
the previous Pivot High was a Wave One.

When prices reached the MOB projection zone, it hung around for a while and then broke
through with increasing momentum.

Once again, this is why I call it the Make or Break Study. It either runs into the MOB zone and
changes Trend. In other cases it will make through the MOB zone with increasing momentum.

In most cases where the market makes or goes through the MOB zone, tools such as the Elliott
Oscillator will help to identify such breakouts prior to it happening. When the market is trad-
ing in a Wave Three, the MOB price zone simply becomes a level where the market breaks
through with increasing momentum. One could also use the XTL to identify such situations.

If you ever get an "*" showing up at the beginning of the MOB, this means that there
isn't enough data for the MOB to be 100% certain that this is the level. Keep erasing and
redrawing the MOB as each bar comes in until the "*" is gone.

I suggest you take the time to master this study. Also watch the 96 seminar videos. I have
discussed several methods of how to use this study. T-151
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New Time Marks Added to the MOB study.

We released this new addition to the MOB study at the Cleveland Seminar (Nov 10, 1997). In the past
the MOB provided price levels at which the market had tendencies to reverse. However, it did not
provide any sense of time as to when the prices can arrive at the MOB level.


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