Monday, February 29, 2016

What advice I would give Trump - Reforms

Posted Feb 29, 2016 by Martin Armstrong

QUESTION: Mr. Armstrong; Why do you not advise Trump as Rubio and the Media demand details from him but from anyone else as to his economic plan?
ANSWER: I do not advise Trump. If he really wanted to make an impact, he should watch the SOLUTION DVD. If he demonstrated that we need major reform or we are going broke, then he might attract more people who are on the fence. Let’s be realistic. Those supporting Trump distrust government politicians. They really do not care about his message. I at least would prefer Trump not for any policy, but any career politician will bring the same line of thinking to the table. There will be no thinking out of the box and we will be blasted with more regulation and taxes killing the economy.
FamilyObama stuffed Christine Largarde in the IMF and that has been far more devastating than any appointment to the Supreme Court. She has destroyed the global economy threatening countries to hand over info on everyone (except exempt politicians like her of course) so they can hunt money everywhere. They do not look at the net result, and only look at the world through their own eyes. I would hope Trump would look at this as a businessman and say you people are nuts.
The standard of living for families is declining. That is not because the “rich” are making more from investment, it is because of rising taxes and government robbing their savings to fund themselves and pretending they are there for their retirement. In reality, they keep lowering benefits because they stole all the money. Anyone in the private sector who did this would be in jail. We are prosecuted for fraud in the private sector, but fraud in public sector is rewarded and called “politics.”
What advice I would give Trump:
  1. We will not raise the minimum wage, we will eliminate payroll taxes and end the borrowing from the poor robbing them of interest by handing them a refund check so they think they are special
  2. Instead of QE for bankers, eliminate taxes and try QE for the people
  3. Eliminate Social Security for those under 50. Pay out those over 50. Replace Social Security with mandatory 401K investment plans
  4. Merge SEC & CFTC so advisers can provide advice on the best investment rather than just what they have a license for in equities v furtures
  5. Eliminate domestic corporate taxation. This will provide the incentive to bring jobs home
  6. Stop government borrowing. Limit the creation of new money to 5% of GDP (I do not want to hear that will be inflationary since QE failed to produce inflation which is all about confidence not the quantity of money). At times up to 70% of the national debt has been accumulated interest.
  7. Retire the national debt and stop competing with the private sector for capital
  8. Return the central bank to the original design of 1913. Eliminating government debt will do the job. During economic declines, the Fed should buy corporate short-term paper with its “elastic money” which will compensate for banks when the stop lending. Short-term corporate paper is actually paid off and that would then contract the money supply back to its original state prior to the crisis.
  9. Judicial reform is mandatory. I would retire ALL federal judges. Replacements should be nominated only by the legal profession with penalty to bribe and such appoint to be life imprisonment or death, the choice is that of the sentenced person.
  10. Expand the Supreme Court and make it an ABSOLUTE right to be heard rather than winning a lottery. Moreover, a panel of judges nominated by the legal community shall determine the constitutionality of ALL legislation BEFORE enacted. It should never be the burden of the citizen to PROVE the government is acting unconstitutionally. The Constitution is NEGATIVE and was intended to be a “restraint” upon government. ALL LIVES matter, and do this and they will.
  11. Reform the Grand Jury process. Both sides should be allowed to present ALL evidence to the Grand Jury and they alone will decide to indict. State prosecutors who protect police should themselves be in prison.
  12. Eliminate TSA at airports. You should be cleared as to who you are and no need for xrays and strip searches if you are known to be a normal citizen. If you are a foreign visitor, they alone should go through TSA.
  13. Eliminate all taxes whatsoever if you are not present to use such services.
  14. Eliminate all property taxes. You should be able to retire without having to cope with rising property taxes.
  15. No person should have to pay more than 15% of their salary to state and local government. If a government needs more, something is wrong and they need to be reformed.
  16. All government pensions must be eliminated. Part of the QE process should be the bailout of pension systems for government workers and end the process. If we eliminate taxation and social security, they will by law be required to save a portion in their own 401K
These are just for the start.

Still see the Dow at 23,000 and exceeding that, the potential to reach 40,000 remains viable for 2020-2021.

Value Investing – Good or Bad?

Blog/Basic Concepts

QUESTION: Do you think value investing is viable in today’s chaotic markets?
Much appreciated
ANSWER: No. Value investing has been a recipe for wild swings and if you do not have the stomach for long-term, it is not something to get involved in. It should also be noted that it resulted in bankruptcy pre-World War II for it could not cope with the Great Depression. The town I grew up in had a main street. It was mostly owned by my father’s friend. Why? He had cash at the bottom of the Great Depression and bought it all up at distressed prices. With TIME, it was a great trade. But unless you buy the low, most people buy the high and cannot survive the swings. We are entering a period that is chaotic; the most in our lifetime. Surviving this is more than just putting gold coins in your sock drawer. The strategy has to be comprehensive and you MUST comprehend what is going on globally to come out the other end.
Here is the opening paragraph from a 1997 transcript of a conference:
“For most people the real issue at the moment is are the stock markets too high? How do we determine value? Back in 1994, I met a lot of value investors in Europe and said that our models were showing the market was bottoming and we were looking for the Dow to go to 6,000 by 1996 with an outside chance that it would go to 10,000 by 1998. They thought we were crazy and said the US markets were over-valued at their 1994 level. Some of them went into cheap assets in Russia and South East Asia and subsequently lost up to 70% of their portfolio. So the question of value appears very subjective but it is critical to understand. Really the question of value is defined by the monetary system within which we operate. Throughout history we have had broadly two types of system – a fixed exchange rate system and a floating rate system. The current floating rate system was born in 1971 but it is by no means the first time we have had such a system.  Gold bugs argue that the only way we will survive is to return to the gold standard but this has not prevented panics in the past. Money is really the language that allows the transfer of wealth back and forward through commerce. Value is more to do with the tangible assets.”

I seriously doubt that “value investing” will work for the average person in the period ahead. It has been part of the theory behind gold that it will rise with inflation when it does not (see also Forbes study).  
Do not get me wrong. Since the S&P 500 penetrated last year’s low, we are setting up for the Sling-Shot to the upside. 
The computer will pick the timing and the Global Market Watch may hit the pattern. Then it will be time to jump in for the ride. 
We still see the Dow at the 23,000 and exceeding that area the potential to reach 40,000 remains viable for 2020-2021. You must understand, however, for that to unfold, confidence collapses in government. We are witnessing this trend unfolding. I I posted, Forbes shows that people are starting to trust the private sector more than government. This is why Donald Trump is soaring in the polls. This is all about government losing credibility.
Staff Announcement - R

Sunday, February 28, 2016

Euro for Month-End Feb 2016 -10460 level on a monthly closing basis.

Euro for Month-End Feb 2016                  
                                                                               Posted Feb 28, 2016 by Martin Armstrong

IBEUUS-M 2-27-2016

Our main number to watch remains at the 10460 level on a monthly closing basis. Our Major Monthly Bearish rests down at 9860. Our critical support begins at 10335 level during 2016. Once that gives way intraday, we can see this fall to the 98 level. We still do not see a final low for the Euro BEFORE 2018 with the potential to bottom as late as 2020-2021.

Our target for a turning point was February. That appears to have been accomplished during the Week of the 8th. Now a weekly closing below 10927 will signal the start of the decline but a daily closing beneath the 10715 level will be more definitive. We still need to look forward into March and May for turning points.

A month-end closing ABOVE 16934 will be bullish near-term.

Posted Feb 28, 2016 by Martin Armstrong

DJIND-M 2-27-2016

Technically, the Dow Jones Industrials was almost set up to make a “Channel Move” between two channels. But they interestingly over-lapped instead with no gap between. This is one reason the SP500 could break last years low but not the Dow. We made a new high for the month on Friday closing at 16,639.97. We elected a minor Monthly Bullish Reversal in the Dow last month at 16,175. Here the low remains the week of January 20th. We really need a monthly closing above 17,800 to signal a breakout to the upside is likely. We have a Directional Change in March and the target for a turning point comes in April and then June.

Keep in mind that as the Euro starts to give way, more and more capital will flee Europe into the USA. The smart money will buy the equity rather than government bonds.
A month-end closing ABOVE 16934 will be bullish. A closing beneath this level is will still bearish near-term.

Tuesday, February 23, 2016

BREXIT Reality or a Manipulated Outcome?- The demise of the London Stock Exchange cannot be ruled out come 2025.

Blog/European Union
Dear Martin,
London 23rd Feb, it is very sad, I cannot find one main stream news outlet that is backing a Brexit. They are all preaching fear, even Boris is not campaigning hard (yet only I hope) and the BBC which is meant to be unbiased is clearly Pro EU.
Is this the sound of all the irrelevant politicians, newsstands, unelected bureaucrats, top civil servants trying to save their jobs. I really hope the pendulum swing is big enough this time, what is the wait otherwise?
Best Wishes,
ANSWER: I use to live in London in Kensington. It is my favorite city. It pains me deeply to see what is unfolding. I have had many friends in London and use to stop by Margaret Thatcher’s home to say hello. Of course the mainstream press will be backing the politicians who are supporting staying in the EU. They go with the politicians joining together to keep government intact. I am glad Maggie is not here to witness this. Britain receives no benefit from being inside the EU yet gets all the garbage. This is exactly what Thatcher was against, the political union. Brussels has not been about an economic union, it is about a political union with central power.
Cameron can claim it’s the best of both worlds to stay in the EU. But Brussels demands the surrender of sovereignty behind closed doors. A little more than 15% of all laws in Britain come from Brussels (see study of London School of Economics). Yes there are claims attributing that 84% of laws come from Brussels. That comes from a reply by the Parliamentary Undersecretary of the German Parliament, Alfred Hartenbach, given on April 29th, 2005 which was limited to Germany. He stated that from 1998 until 2004, some 18,187 EU regulations and 750 EU directives were adopted in Germany whereas the German Parliament passed in total only 1,195 laws (as well as 3,055 “Rechtsverordnungen” – which are like Primary and Secondary legislation). This produced the figure of 84%, which has been bantered about.
Nevertheless, the real clash is not the number of laws, but their subject matter. All it takes is just one law to ruin the economy. Agriculture will certainly be detrimental to farmers. But Brussels wants to outlaw short-selling and control the financial markets which are going against them. Their fundamental belief is authoritarian and to force the markets to comply with their demands no matter how unreasonable they night be. The European Parliament was pushing to fast-track powers to ban short-selling of government debt by early 2011 against the interests of Britain ending a free market system. Clearly, the thinking process in Brussels is anti-democratic in every step of the way. This notion of outlawing short-selling will stop the markets declining against them is preposterous. will only fester and will destroy London as a financial hub in the world economy.The demise of the London Stock Exchange cannot be ruled out come 2025.   That will be 224 years from its founding in 1801. At the very least, we will see a major upheaval and things will change dramatically for them.
More importantly, Britain lost in the EU courts in its challenge to Brussels controlling the financial markets in London in January 2014 right on schedule. The European court held: “The power of the European Securities and Markets Authority (Esma) to adopt emergency measures on the financial markets of the Member States in order to regulate or prohibit short selling is compatible with EU law.”  … “As all the pleas in law relied on by the United Kingdom have been rejected, the court dismisses the action in its entirety.” 
The London Royal Exchange was officially opened on January 23rd, 1571 by Queen Elizabeth I whose charter she granted to  Thomas Gresham.  Sadly, 51.6 x 8.6 = 443.76 years. That brought us to also 2014. Therefore, the free markets have peaked and this too is part of the declining cycle we find ourselves in. It appears that 2025 will be the first opportunity for a bottom. This peak in our economic freedom means that not only has liquidity declined since then rather sharply, but we are in a bear market for our freedom that will spread to politics. Brussels is highly dangerous for as the markets move against them, we can expect only harsh Draconian actions, which will try to control the markets rather than reform. This is how empires, nations, and city states collapse.

stalincountthevoteI believe that BREXIT will be close, but the vote will be rigged to ensure there will be no exit. This could be why our model is quite bearish on Britain. It may be simply going down with the ship. With German elections and French elections coming up, you have a rising trend of discontent among the silent majority. The press can keep trying to keep a lid on it supporting the establishment, but eventually reality catches up. Unfortunately, that means it does not end nicely.

Monday, February 22, 2016

BREXT on Schedule - 2016

BREXT On Schedule
QUESTION: Mr. Armstrong; I attended your May 1999 seminar in London. I am the person who asked you when would Britain exit the EU. You said not before 2016. Can you elaborate on how you could have possibly foreseen this event coming in June? You have won my full attention. By the way, this is now all anyone talks about in London. Exiting the EU which is overrun with Islamic terrorists.
Timing Models
ANSWER: Well, what is really fascinating is how the fundamentals FIT the forecast. It is not trying to forecast the fundamentals. I believe it is like good news in a stock in a bear market. It still declines and the excuse is it was not good enough. Fundamentals are interpreted by the mood of the trend. It is wrong to assume you need for forecast the fundamental to get the trend. It is all about the mood and how will the public receive it.
3d_text_perspective_10915PRESELECBritain entered the EU in 1973. Half the 8.6 year cycle is 4.3. It was lining up with our forecast back then that 2016 would be the first shot at a potential third party emerging or an anti-establishment trend. That forecast perhaps gained the most attention since we warned that Ross Perot 2.0 would be coming in 2016. Again, nobody can predict that it would be Donald Trump. It is not Donald Trump that is really the issue. It could be anyone. It is the timing that make such a message resonate with the population.
Additionally, if you add 86 years to 1973, there was no possible way Europe could have lasted that long until 2059. That will probably be a major political turn for Britain once again. However, it is hard to say what from this distance in time. I would suspect that it will be some sort of reorganization of Europe which could be the redrawing of borders and dramatic change in politics and could even threaten the royalty.
BIG BANG ECM 2015.75
Therefore, adding 43 years to 1973 brings us to 2016. Britain’s exit simply lined up with everything and was part of “Big Bang” we forecast to start 2015.75. Everything was lining up to start with 2015.75. Here is the slide from the 1998 world conference tour.

Sunday, February 21, 2016

Gold & Ratios – Are They Really Worth Much? . Difference between 1930 and 1980

Dear Martin ,
I had been following the the various gold bug theories since 2009 but became disillusioned after 2011 until I came across your site . What you say makes sense and something I trust , however there is still one issue I am struggling to understand . When gold spiked during the Great Depression and then also again 1980 , the ratio of gold to the Dow was almost 1:1 in both periods of history .However , this time , although gold bugs are forecasting this ratio to materialise again in the coming years , it would appear that you are not , in that gold may go to say US$ 5000 but the Dow to about US $ 35,000 ( 7:1 ) . What I am not clear about is that if Gold only increases when there is a loss of confidence in Government , did this not happen in 1930 and also 1980 ? Or are you saying that in 1930 and 1980 this was a loss in confidence of the private sector but in those days gold was a safe haven , hence the reason gold went up as the Dow went down and therefore because this time is a loss of confidence in the public sector we will not see the ratio of 1:1 as both gold and the Dow will go up ?
I really hope you can answer this point as I think it will really explain the big difference in how you are interpreting gold now compared to 1930 and 1980 ,
I have been following his prediction for the coming slingshot with great interest and would like to ask Martin if he feels that finally within the coming months it would be smart to move cash out of the banks and into large cap gold mining shares which must surely now be at or around the bottom . As Martin says , the low for gold may not be in just yet but in principle , once he feels this is the case would large cap miners be one of the best investments in his opinion ( given that many other shares are at least fairly or possibly over valued ) .
Many many thanks for all your outstanding work . So much appreciated and by so many ,

ANSWER: The problem with trying to create some sort of fixed ratio reveals the lack of understanding about markets and the global economy. This is typically the amateur approach to analysis which demonstrates more of the lack of experience about the analyst than anything else. This amateur approach to forecasting is why such people will never be taken serious by big money no less governments. They make connections that are as primitive as saying everyone who has ever eaten a carrot has eventually died and therefore carrots are lethal. It is a true statement, but the connection between death and a carrot is obviously very a very amateurish approach to analysis.
In this context, the fatal flaw is they try to create a similar one-dimensional relationship with the Dow, Inflation, or even the quantity of money. This is such a tiny slice of reality, it is seriously flawed. In medicine, they used the same approach and assumed all disease must be introduced to the body from some external source. Thus, smoking they linked to smoking. But there are people who have smoked like a forest fire their entire life and die without a trace of lung cancer. That simple fact proves the analysis is wrong. What DNA research has proven is if you have the gene for lung cancer, smoking may accelerate the event, but not smoking will still not change the outcome. This is really why when you see a doctor they ask you about your family history. If everyone died in your family or a stroke or heart attack, your genes may be carrying your own fate and the cause is not external.
For example. James Fixx (April 23, 1932 – July 20, 1984) was the American who authored the 1977 best-selling book The Complete Book of Running, which has been credited with starting the America’s fitness revolution. He popularized the sport of running claiming this would build your heart and prolong your life. Fixx has a family history of dying from heart attacks so in theory he came up with the idea that if you ran, you would build the muscle in your heart and that would defeat the disease. Fixx died of a heart attack while jogging at 52 years of age. It was a nice theory, but it did not overcome his family genetics.
NYGOLD-Y 1920-1950
So let’s begin with your assumption that gold rally in 1930 and also 1980 both times because people lost confidence in government. This was absolutely a FALSE statement. During the 1930s, the dollar RALLIED, it did not decline. Why? Because the collapse in confidence was external, not internal. Most of Europe defaulted on its sovereign debt, so did China, and South America as usual. As other countries defaulted, capital flowed into the dollar as the safe-haven. Gold actually declined and fell below the official gold standard value of $20.67, it did not rise it was the dollar and not gold which went to a premium. The jump in gold to $35 was Roosevelt’s FIAT devaluation of the dollar which was actually government declaring the value by decree.
Gold 1970-1990 -M
In contrast, the 1980 rally was completely different. Here it was the dollar in question for Nixon closed the gold window shutting down Bretton Woods in August 1971. So the decline in confidence concerned the dollar, not external countries. Yet here too we see interesting revelations that prove the idea that gold rises with with or the expansion in money supply is dead wrong – it is always a confidence game. The inflation of the 1970s was COST-PUSH rather than DEMAND-PUSH for the first half. It was the OPEC crisis which raised the price of oil so this set off an acceleration of “inflation” driven entirely by the rise in the cost of doing business. The net impact was DEFLATION following 1974 falling into 1976. Gold collapsed from nearly $200 to $100 despite the fact the the price of everything was rising. That increase in price eventually transformed consumers between 1976 going into 1980 into a DEMAND-PUSH inflation spiral whereby they realized it was cheaper to buy now than to wait since prices would rise. Volcker at the Fed responded by raising interest rates to try to stop the demand. He created such high interest rates that investors switched from tangible assets and stocks moving into fixed income. My mother and her sister went out and locked in 10 year certificate of deposits at 20% without even asking me. So this was entirely a different set of circumstances from the 1930s. So why should there be any connection between the Dow and gold?
GC-1982 Dollars
US Natl Debt 1979-1999Markets are highly complex. Gold declined for 19 years from 1980 into 1999. The 19 year decline in gold also established clearly that the Quantity of Money Theory and Inflation had no validity at all. Here is the US national debt for the 19 year bear market in gold. The debt rose from almost $1 trillion to nearly $6 trillion which gold declined. You cannot ignore this fact and claim gold will rise based upon the quantity or money and the quantity of money will cause inflation. Both assumptions are totally incorrect.
They sound entirely logical and are based upon the original theory of supply and demand created by the Scotsman John Law (1671-1729). It took a trader to comprehend the difference between money and confidence the driving force.”I have discovered the secret of the philosopher’s stone it is to make gold out of paper.” John Law: The History of an Honest Adventurer by H. Montgomery Hyde, p83 (London 1969).
Law-JohnIndeed, John Law was just centuries ahead of his time. He could see that the system was all based upon CONFIDENCE and that was the essence of the “bank money” which emerged at the Wisselbank that he observed first hand in Amsterdam. People would accept banknotes provided they had CONFIDENCE in the bank. That is the true value of money which is entirely separate from anything tangible on a one-to-one basis. People stage a run on a bank when they suddenly fear it will close. That is this collapse in CONFIDENCE. 
Without question, all types of monetary standards eventually collapse regardless of what they are based upon. It is the CONFIDENCEwithin that system which gives way. This is what we are starting to experience once again in current times.

As you can clearly see, there is no such perfect relationship between the Dow and Gold. It moves back and forth within a three-dimensional space with more than a single one-on-one ratio. It entirely depends upon the circumstances and the dynamics of the global economy at that instant in time.
NYGCSV-Y 9-11-2015

There is also no direct connection between silver and gold either. Here also we have see wild swings with the ratio moving from 120:1 to 8:1 throughout history. There have been times when silver became scare setting off riots because silver was the domestic money and gold international as in Florence. Naturally, the promoters also pick the lowest point an base their forecasts upon that as well. They pray for the collapse in the Dow to raise the Dow-Gold Ratio. This is all very amateurish analysis which becomes sophistry.
Of course it was the silver to gold ratio that became the presidential election topic in 1896 and virtually bankrupted the country because government by decree overvalued silver at 16:1 Here are the words of William Jennings Bryan:
Audio Player

Gold Inventory COMEX
Then there is the classic inventory scam. They convince people inventories have collapsed implying there is a shortage so prices will rise. They moved silver from the US to London to pull off the Buffett Rally. That removed silver from the US inventories and they spun that as justification for the rally. There is no such correlation between inventory at COMEX and price because it has been typically manipulated to impact price. Here was a taped call during that market manipulation between myself and one of the bank dealing desks.
This is the reality of trading. Some say it is largely boring periods interrupted by moments of sheer terror when suddenly your classic theories are proven totally wrong. Perhaps. I suppose if you believe in the standard theories it can be a total confusing upset in the middle of a panic.

Audio Player

Wednesday, February 17, 2016

Filtering the Reversals – What Level to Use. Using the monthly and up

Posted Feb 16, 2016 by Martin Armstrong

QUESTION: Mr. Armstrong,
First of all, thank you for all you do.  These are crazy times and so many of us would like to thank you for your guidance through these volatile times.
The question I have and I’m sure others do as well is in regards to the election of the reversals.  I was an attendee of the Princeton, NJ conference and have been lucky enough to experience the trader level of Socrates.  I also read your blog religiously and have noticed you speak about 1209, 1309 and 1363 as major reversals for gold.  1209 for the week closing and the gap being up to 1309 and 1363 as the monthly.  My question is that while reviewing the trader level of Socrates I see many reversals between these numbers etc…  Some of them are even labeled as major and others are not labeled as major but have numbers next to the reversals.  Is it possible to get a clarification about this.  I see that the system updates for the reversals show buy and sell levels at various levels(on the blog, where you are long and short) in each market and like you have said its best to just follow the reversals.   I would like to know which reversals to follow and how you decide on which reversals are significant and which should not be traded.  Thanks in advance for your response.
ANSWER: When it comes to actually changing the trend in a market, we look at the monthly level and up; never the daily and weekly. The 1309 is where we start to encounter the yearly resistance level. So there are levels between these points on the daily and weekly level of course. Majors and Minor Reversals exist on all levels. The question becomes which way do we look at and for what purpose? You will get different results depending upon the level. Here is the computer trading ONLY on reversals without using the timing models. Thus, you will not buy the low or sell the high because this is just using reversals on an elected basis rather than selling against them using time for the filter. Note that on the Quarterly level, the computer bought the closing of December for the close of the 4th quarter. We did not elect the yearly number at 1044. You could have used that number and bout it 1045-1046 which was the low with a stop beneath 1044. But the fact the computer bought the close in the quarter level signaled, as I stated, that gold was not as weak as it appeared. I also warned in the Gold Report that it was true we should form a low on the first Benchmark which came in right on target. However, I also warned that this would probably not be the final low and that the second benchmark might be possibly the final low. Why? That was based upon timing. (Will explain in detail in the upcoming 2016 Gold Report).
Now look at how the computer did with gold on each level of time. It was different.





When I am talking about the long-term, I am obviously filtering the reversals and using the monthly and up. That is where the change in trend takes place; not on the daily or weekly. So we filter the reversals with time depending upon your objective. If you are just scalping the market then you look at the Daily, and the Weekly makes sure you do not get caught in a counter-trend reaction that can be a few weeks or 1 to 3 months.

There are additional numbers between 1209 and 1309 so there is no guarantee we will reach 1309, which is where the Yearly resistance begins. When the time is up for the rally, then whatever price we have reached will be it. Saying we had a gap between 1209 and 1309 was correct. You saw a raid $60 move, poking through 1209.

We are expanding the trader version with separate reports written for each level. This will help you to refine what is your trading objective with respect to how active do you want to be. Keep in mind, typically lowering your trading activity increases profits. Far too often, the more frequently you trade, the more you get caught up in bad trades by second-guessing yourself because of risk. That is only human.

What we are porting over is the trading system that incorporates reversals with time. Blending both and using the reversals as exit points allows you to pick the highs and lows for trading.