The Market Matrix Pure Matrix By Steve CopanWhat you need to know first In writing this book | have assumed that the reader has some basic knowledge of the financial markets, including charting using simple daily and weekly bar charts. This book is intended to take the enthusiast and existing trader into the realms of reality and to show a way of predicting future turns on the stock market with an accuracy and certainty that was never thought possible. | am a professional trader, not a teacher or writer and so my way of explaining the Market Matrix in this book may not be in the way you wish it to be, or even expect it to be. You will most likely have to read and re-read some parts of this book a few times over to fully understand what | am explaining. As | am not a writer then you may also find some of my explanations a little different to what you would expect from a normal writer. Throughout this book you will see charts that | have produced in the professional charting package called Dynamic Trader. Although most of you will already have a charting package | personally use and recommend Dynamic Trader as with the Matrix Cycles add-on it has the ability to do everything that is need for Matrix analysis. After coming to an agreement with the President of Dynamic Trader, there is now a special Matrix Cycles add-on available solely for the Dynamic Trader software. This enables you to use all the Matrix tools and Templates directly in the Dynamic Trader Software. At the time of writing this book, Dynamic Trader is the only authorised and licensed software package in the world to have the Matrix Cycles add-on available directly in the software. For more information about the Dynamic Trader software and special offers available to owners of this book then please go to the official Market Matrix website at www.themarketmatrix.co.uk Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.ukContents Chapter1 —- Chapter2 — Chapter3 - Chapter4 - Chapter5 - Chapter6 -— Chapter7 - Chapter8 —- The Matrix Foundations The MC1 Matrix Cycle The MC2 Matrix Cycle The MC3 Matrix Cycle The MC4 Matrix Cycle The MC5 Matrix Cycle The Wvic6 Matrix Cycle Matrix Cycle Spec & Info-rules Elliott Waves Fibonacci & Lucas Time Trading with Matrix Page 13 25 A 47 53 59 62 77 91 109 127 Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.UkChapter 1 — The Matrix Foundations This chapter is about the Market Matrix foundations and it is a very important part. Although this chapter is quite technical, not all of it is required to use the Matrix but itis all explained here for those of you who wish to have more detailed information It is a bit ike a car where all you need to know is how to drive it but some people will also want to know exactly how the engine and transmission work and how it is all constructed, so | have included all the technical details. The Market Matrix consists of two main parts, the first part uses specific repeatable natural cycles and the second part uses various mathematical methods to pinpoint price and time locations within these natural cycles. Time as we know it is based on the natural cycle of the earth tuning on its axis creating the day time and night time making one complete day every 24 hours. When we created our time system as we know it today where we have 24 hours to a day, we had to take into account other factors like the seasons on earth created by the earth tilting on its axis and rotating around the Sun. Although we regard a single day as being 24 hours long, in reality this is not the case. If we kept a day at exactly 24 hours in length then eventually we would end up having winter where summer is. This is because the Earth tilts on its axis throughout the year causing each day to be either shorter or longer than the expected 24 hours by a very small margin. There are also variants in time with regard to the Earth's rotation around the Sun. These discrepancies had to be taken into account, so to bring time back into sync with the earth's movement every four years we have to add another complete day to our calendar to make up the time differential and keep time in alignment with the Earth's movement around the Sun. The year with the additional day is called a leap year and the extra day is added to the month of February making it have 29 days as opposed to the normal 28 days of non leap years. This is specific to one of the natural Time cycles in the Matrix. The inner solar system consists of 9 main planets and a star. The star, or centre point, being the Sun and alll the other planets rotate around the Sun in an anti- clockwise direction. Some of the planets move around the Sun in almost perfect orbits and others in elliptical orbits. Each of the planets moves at a different speed and has different masses causing different gravitational forces on the other planets. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 1(Picture-1) The 9 main planets in the inner solar system from the Sun are Mercury, Venus, Earth, Mars, Jupiter, Saturn, Uranus, Neptune, and Pluto. This makes 9 planets that rotate around the Sun. (Picture-1) The Moon is not regarded as a planet but is the only object that orbits around the Earth and because of this and its close proximity to Earth, the Moon has the most effect on the Earth. The gravity of the Moon affects the tides by pulling at the water with its gravitational force causing the high and low tide twice a day. As we humans are made of approx 74% water then naturally we are also affected by the gravity of the moon. Each planet rotates around the sun at a different speed and because of this even though the earth rotates around the Sun and arrives in the same place it started in exactly one year, its position based against the other 8 planets is different. This all means that each planet not only has its own cycle around the Sun but it also has a cycle based against each of the other planets. This then creates a total of 81 individual natural cycles. Because time governs our everyday lives and it is the one main thing in life that remains constant then it is logical to look at time having cycles as well. There are in fact 8 time cycles that exist because of the time system on earth that we live by, thus there are 89 cycles in total. These time cycles are mathematically divisible by the planet cycles and so create a perfect balance of time and planet movement. Most of the natural cycles are too large for us to worry about and some are so large that if we were around at the start of one of those cycles then we would be many thousands of years old before we saw the finish of just one of those cycles. Copyright © 1997-2008 Steve Copan. Alll rights reserved. www.themarketmatrix.co.uk Page 2What affects us, and the markets the most is the Sun that the Earth orbits, the Earth we live on and the Moon that orbits the Earth, with the most important item being TIME. With the combination of gravity, planet movement and time there are eight repeating and perfectly synchronised time cycles. It is possible to calculate these cycles by studying the planet orbits and working out their duration in time, which means that they can be calculated as far into the future as we wish. The most important thing that we have to remember with all this is TIME because unlike everything else in life TIME is constant. Each day consists of four main parts and for most people we regard these parts as Morning, Afternoon, Evening and Night. Regardless of how different your day is compared to someone else, or even your own previous day, you will eventually still end up back at the same point each morning. This is a simple everyday human life cycle and it repeats every day and so does the internal pattern of our day. The internal pattern within the daily cycle is the getting up in the morning, going to work, having lunch, going home, having dinner and then going to bed. Even if you stay out late or work late one day causing the pattern to slightly vary, eventually you will still fall back into the daily cycle and be getting up again in the morning like you normally do and re-synchronising your pattern within the cycle Although one day is a natural daily cycle it is not actually one of the eight main time cycles but does form part of them. As we humans trade the markets, all the up and down moves within each and every market is caused by us buying and selling those markets, and that makes them share exactly the same eight natural cycles as we humans plus the internal pattern within those cycles. Once you know what the repeating cycles are and the repeating pattem within those cycles then you can predict where and when a market will tum up or down because these cycles repeat forever and what happened in the past must repeat in the future. Throughout this book each one of the eight natural time cycles is referred to as a Matrix Cycle and every high and low turn point that produces the pattem within the Matrix Cycle is a Matrix Point. So if there are 11 high and low turns on the market in one of the eight Matrix Cycles then there are 11 Matrix points in that Matrix Cycle. Each of the Matrix points has a number so in the example (Picture-2) we have 11 Matrix points numbered 1 to 11. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 3When referring to the individual Matrix points we use the following default, MC4 will refer to (Matrix Cycle) and MC1-1 will refer to (Matrix Cycle1, Matrix point 1) and MC1-2 means (Matrix Cycle1, Matrix point 2) so MC3-4 will mean (Matrix Cycle3, Matrix point 4) and so on and the prefix will also be in the correct Matrix default colour. ; Pattern f points within cycle = Matrix points ‘Start of End of Cycle 2 a 6 8 Fa Cycle (Picture-2) Each set of points has a very similar pattern within a cycle but with small variants on timing. These Matrix Cycles and points are consistent for every market in the world, The only thing that may vary from market to market is the timing of the Matrix points. This means that if one of the eight Matrix Cycles in the Market Matrix has 11 Matrix points then every market in the world will also have 11 Matrix points within that same Matrix Cycle, but each and every market will have a slightly different timing for each Matrix point within that Matrix Cycle. Another way of explaining this is if we take two people, one called Bob and the other Mike. Bob and Mike work at the same place and start work at the same time of day. Both of them get up in the morning (this is the first Matrix point) but they get up at different times as Bob has to walk his dog before going to work so he gets up one hour earlier. Therefore the Matrix point is the same but at a slightly different time. Both Bob and Mike get to work at the same time and that is the next Matrix point. This goes on throughout the day so all their Matrix points are identical but some of their Matrix points will be at slightly different times of the day Eventually both Bob and Mike finish up going to sleep at night (another Matrix point) and end up getting up in the morning at roughly the same time as the previous day, completing a Matrix Cycle. Recap - Each of the eight Matrix Cycles has a different number of Matrix points. These cycles and points apply to every market in the world. However, due to our different life styles, each of these repeating Matrix points can vary their position in time. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 4The Eight Matrix Cycles | have given simple names to the eight Matrix Cycles and a default colour to make things easier visually. For example MC1 means Matrix Cycle 1 and default colour BLUE. Every day the Earth rotates on its axis a total of 360° degrees and there are a total of 1440 minutes in a day making 24 hours. If you look carefully you will find that every 4 days the earth rotates on its axis 1440° degrees. This means that the ratio of earth time in minutes to earth rotation in degrees has a perfect 4 to 1 ratio. This also means that the earth turns 1 degree every 4 minutes. The number 4 is a very special number. It links all the Matrix Cycles and is the Master Time factor because of this planet / time relationship. The first Matrix Cycle is 4 days in length and is called MCI. MCI is (Matrix Cycle Intra-day) and as the name suggests it is used only for intra-day trading The next Matrix Cycle is the MCO (Matrix Cycle 0) and this is 4 weeks in length the same as one thirteenth of a physical year and the same as 28 days. This cycle is also very small and again is used for intra-day and very short term trading. Intra-day and very short term trading is not for everyone and | do not recommend it as it can be very stressful and requires a great deal of patience and time This book is aimed at people who want to trade with a minimum amount of stress and because of the complex nature of Intra-day trading it would require a whole book written on that subject alone. So | will not be spending any time covering the MCI and MCO Matrix Cycles in this book, This is why the other six main Matrix Cycles are numbered 1 to 6 with the first Matrix Cycle the MC1 through to last being the C6 Matrix Cycle. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 5The Moon rotates around the Earth on average once every 29.53085106 days creating a Lunar month. (Picture-3) The time it takes the Moon to go around the Earth and arrive in the same place is called a Lunar month. (Picture-3) 1440 degrees of Moon rotation or four lunar months is approx 118.1234 days. This is also one third of a Lunar year. This is the length of the first main Matrix Cycle, the MC1 (Matrix Cycle 1). The MC‘ Matrix Cycle has 11 Matrix points within it and 11 is also the difference in complete days between one Lunar year and one physical earth year. There are roughly 354.375 days in a Lunar year and 365.25636 days in an Earth year making the difference approx 11 days. The next Matrix Cycle is the MC2 (Matrix Cycle 2) and based on a complete Lunar year. This is the time it takes the Moon to go around the Earth 12 times, being approx 354.375 days and is 3 times the MC1 cycle. The MC2 Matrix Cycle has 12 Matrix points within it. The next Matrix Cycle is the MC3 (Matrix Cycle 3) and is based on the Earth rotating around the Sun (Picture-4) and creating the 4 seasons of the year but the length of the cycle is the Earth rotating around the Sun 4 times creating a total of 16 seasons. The MC3 Matrix Cycle has 18 Matrix points within it. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 6The earth rotates around the Sun in 365.25636 days and completes 4 rotations or 1440 degrees in 4 years (Picture-4) The next Matrix Cycle is the MC4 (Matrix Cycle 4). (Picture-5) This cycle shares the same cycle time length as the MC3 Matrix Cycle but has a total of 8 Matrix points within it. Both the MC3 and MC4 Matrix Cycles are 4 years in length, which is also 1460 days + 1 day for the leap year, making a total of 1461 days in length Some people will relate this to what is known as the four-year business cycle. The next Matrix Cycle is based upon the Sun, Earth and the Moon. You will see from the picture below that starting with the Sun, Earth and the Moon in a straight line (Start point), after 1 year the Earth arrives back in the same place but because of the time difference between the Lunar year and the Earth year the Moon is already part of the way through its thirteenth rotation so is not in alignment. To get back to the same alignment requires 19 years and 5 hours from the start point. This is called a Metonic cycle and is the next Matrix Cycle MC5. Start point 1 year later 19 years later (Picture-5) Copyright © 1997-2008 Steve Copan. Allrights reserved. www.themarketmatrix.co.uk Page 7The MCS (Matrix Cycle 5) is a complete Metonic cycle being 19 years in length and completes the realignment of the Sun, Earth and the Moon from its starting point. The MC5 cycle has a total of 16 Matrix points in it. The last of the main Matrix Cycles is the IViC6 (WViatrix Cycle 6) this cycle is based on the average human life expectancy and is 76.6 years in length and has a total of 418 Matrix points. Extra point / Inversion Although each of the Matrix Cycles has a pre-defined amount of Matrix points within them there is a special event that happens on a regular basis that causes an extra point to occur but only on some of the Matrix Cycles. This extra point occurs because of the time discrepancy between planet cycles and time, specifically on the MC1 and MC2 because they are Lunar based and a Lunar year is 11 days different to an Earth year. We call this extra point an inversion point as it causes. all the high and low Matrix points in a Matrix Cycle to invert making a normally high Matrix point become a low Matrix point and a low Matrix point become a high Matrix point. All extra / inversion points are marked in brackets so if there was an extra / inversion point after the MC4-1 then we would mark it MC4-(1). The following example (Picture-6) shows the Matrix points for the MC1 Matrix Cycle. There are 11 Matrix points in the MC1 Matrix Cycle and the market price will move from the MC1-1 low point up to MC1-2 as a high then down to MC1-3 and 80 on until the end of the complete Matrix Cycle. 2 4 6 8 10 " (Picture-6) An extra point can occur at the beginning or at the end of a Matrix Cycle or even both beginning and end, this means that an extra point can occur either side of the Matrix Cycle point 1. In the following diagram (Picture-7) you will see that MC1-1 occurred in the normal place in time and then the market would normally move up to the MC1-2 point. But there was an extra point causing the up move to be halted early and the market then moved down to the MC1-2 point. The MC1-2 point was again in the correct place in time but now as a low because the extra point MC1-(1) caused the MC1-2 to invert from a high to a low. This in turn inverts all the other points in the set from their original high position to a low or low position to a high position. Copyright © 1997-2008 Steve Copan. Alll rights reserved. www.themarketmatrix.co.uk Page 8(Picture-7) If the MC1-1 point inverts and causes MC1-2 to be a low then MC1-3 will be a high and MC1-4 a low and so on until after the last Matrix point in the MC1 Matrix Cycle being the MC1-11, where once again it could have another extra / inversion point MC1-(11). So once point 2 is confirmed as a high or a low on all Matrix Cycles then you will know where all the other Matrix points in the cycle will be. ‘As some of the Matrix Cycles do not invert then if point 2 is a high then it will always be a high so all the other Matrix points in that non inverting cycle will always be in the same position as a high or a low. The following example (Picture-8) again shows the extra point MC1-(1) but also an extra point after MC1-11, being the MC1-(11) extra point. Therefore in this instance the chart has 2 extra points. So if the market was moving down from MC1-11 to the MC1-1 due in the next Matrix Cycle and an extra point occurred at MC1-(11) then the market would change direction and move up to the MC1-1 in the next Matrix Cycle instead. This is referred to as a double inversion because the Matrix points have inverted at the beginning and the end of the Matrix Cycle. a) 3 5 - 9 1 (Picture-8) It is very important to understand this inversion situation as it tends to occur about 7 out of every 8 complete cycles. Therefore, to re-emphasise this situation regarding inversions: although there are two possible extra points that can occur, they can only occur at the beginning and end of a Matrix Cycle and will only cause the existing Matrix points to invert from a high to a low or a low to a high. However, these Matrix points will still occur in the same area of time regardless of being a high or a low. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 9The example (Picture-9) shows two complete MC1 Matrix Cycles one after the other where the first MC1 Matrix Cycle only had an extra point after point MC1-11 but the second cycle had an extra point after MC1-1. As explained earlier this is regarded as a double inversion because an extra point occurred both before and after the MC1-1. Second MC1 Matrix cycle 2 6 8 40 1A 3 5 (eases 9 see (Picture-9) If there had not been an extra point at the end of the first Matrix Cycle then the Matrix point MC1-1 would have been a high point on the second Matrix Cycle because the MC1 cycle has an odd number of Matrix points. If the Matrix Cycle had an even number of Matrix points then the Matrix point 1 would be a high at the start on each Matrix Cycle unless there was an extra / inversion point making all the Matrix points invert in the cycle. Throughout the two MC1 cycles shown in the example (Picture-9) regardless of an extra point occurring at the beginning or end of the Matrix Cycle the Matrix points MC1-2 through to MC1-11 will still occur in the same area in time regardless of being a high or a low from the result of an inversion. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 10Matrix Cycles Names and specifications MCI = Cycle is 4 Days in length, this is the same as 1440 degrees turn of the Earth on its axis. MCO = Cycle is 4 weeks in length, this is the same as 28 days and is one thirteenth of a physical earth year. MC1 = Cycle is 118 days in length, this is the same as 4 lunar months or 120 degrees of a lunar year. This cycle can invert and has 11 Matrix points. MC2 = Cycle is 1 lunar year in length, this is the same as 12 lunar months or 354 earth days, This cycle can invert and has 12 Matrix points. MC3 = Cycle is 16 seasons in length, this is the same as 4 years or 1461 days. This cycle can invert but if it inverts it will only double invert and has 18 Matrix points. MC4 = Cycle is 4 years in length, this is the same as 1461 days and is commonly known as the 4-year business cycle. This cycle never inverts and has 8 Matrix points. MC5 = Cycle is 1 Metonic Cycle in length, this is the same as 19 Years and 5 hours and is a total Sun-moon-earth interaction. This cycle never inverts and has 16 Matrix points. \ViCG = Cyele is 76.6 years in length, and is the same as the average human life expectancy. This cycle can invert but if it inverts it will only double invert and has 18 Matrix points. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 11Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 12 eee CCE eee eee eee ee myChapter 2 — The MC1 Matrix Cycle We are now going to solve the MC1 Matrix Cycle points for a chart that many people around the world trade every day and that is the S&P-500. The MC1 Matrix Cycle as explained earlier is 4 lunar months in length and has a total of 11 Matrix points in the cycle. As 4 lunar months is approx 118.1234 calendar days in length then if you divide 118.1234 by 11 you get almost 11 which means there is on average 11 calendar days between each of the 11 MC1 Matrix points. Each MC‘ Matrix point can vary in time from its average position by +/- 3 to 4 traded days. All MC‘ Matrix points are coloured BLUE. The chart below (Chart-1) is a daily bar chart of the S&P-500 cash index. This index is made up of the top 500 companies in the USA. S&P 500 D-D 4480.00 1460.00 1440.00 1420.00 400.00 4380.00 1360.00 Now Dec ‘May TA Feb Mar Apr Chart created by Dynamic Trader (c) 1996-2008 (Chart-1) The chart looks typical of any daily bar chart other than the vertical Red lines that | will explain in a moment. In the Matrix we do not care about any other type of chart only a simple daily, weekly or monthly (open, high, low, close) bar chart. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 13,The first thing we need to do is to place a marker at the start and end of the MC1 Matrix Cycle onto a chart. As the MC1 Matrix Cycle is 4 lunar months in length then we need to mark a Vertical Red line on the chart on a date of every 4th full moon. This is very easy to do if you are using the Matrix Cycles within the Dynamic Trader software, as this is just a simple click of a button (Picture-10). If you have the Matrix Cycles in the Dynamic Trader software then just click on MT1 in the Template list on the left and click the Template box, then click the OK button. Itis just a simple click of the mouse using the Matrix Cycles in Dynamic Trader. Pemetenes Clea Inversion (Picture-10) If you don't have the Matrix Cycles in the Dynamic Trader software then full Moon dates are available in almost every diary and it is a simple matter of drawing a vertical Red line on the appropriate date. Next we need to split the MC1 Matrix Cycle into 4 equal parts to make it easier visually to see the Matrix point positions. To do this we place a different colour line on the full Moon dates in between the Red lines already marked. This again is easily done from the Matrix Cycles menu in the Dynamic Trader software. Copyright © 1997-2008 Steve Copan. All rights reserved, www.themarketmatrix.co.uk Page 14As you can see in (Chart-2) there are now vertical colour lines splitting the MC4 Matrix Cycle up into 4 parts. | have used Blue, Purple and Green vertical lines but you can choose any colour you wish. The Matrix add-on in the Dynamic Trader software will allow you to do this and to make your own choice colour. ‘S&P 500 D-D Now Dec Feb ‘Mar ‘Apr Mav Chart crested by Dynamic Trade (©) 1996-2008 (Chart-2) Now you can see the start of the MC1 Matrix Cycle at the Red line and the first quarter of the MC1 Matrix Cycle marked with a Blue vertical line, then the halfway point in the MC1 Matrix Cycle marked with a Purple vertical line and then the three quarters point in the MC1 Matrix Cycle marked with a Green vertical line and finally the end of the MC1 Matrix Cycle which is also the start point of the next MC1 Matrix Cycle marked with the vertical Red line again. As | said earlier, the placing of these vertical colour lines is just for the purpose of solving the MC1 Matrix solution, as once solved there will be no need for them again. This will be the same process used to solve all of the Matrix points in all of the Matrix Cycles. The Matrix Cycles add-on in the Dynamic Trader software has all these functions built in. As this is the MC1 Matrix Cycle then there will be 11 main Matrix points which repeat in time in each MC1 Matrix Cycle. So what we need to do now is mark the first Matrix point on the chart, Matrix point 1, MC1-1 Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 15When solving an MC1 Matrix solution for a stock or an index then commonly the Matrix point 1 will be around the Red line area + or — a couple of days. As explained before Time is the most important part of the Matrix as it is the only thing that is constant, but due to the fact that humans control the market and we humans. have small variations in our everyday lives then the Matrix points on the markets will also have small variations in their timing. “The MC1 Matrix Cycle is based on 4 lunar months not just a single day, therefore all these daily variations in human life can cause a Matrix point to vary in time in a Matrix MC‘ cycle by +/- 3 to 4 days from its average position in time. So once you have marked what you think is a Matrix point you then check in the next Matrix Cycle in the same area of time to see that point again, In (Chart-3) you will see | have marked the Matrix MC1-1 point on the chart at the low just before the Red line. ‘S&P 500 D-D Now Dec OF Feb ‘Mar ‘Apr Chart created by Dynamic Trader_(c) 1996-2008 (Chart-3) The reason | have chosen this point is that it is a low closest to the Red line starting point of the MC1 Matrix Cycle. This is not guaranteed to be the exact position of the MC1-1 point but it looks the most likely as it is a main turning point on this chart around this area of the Red line. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 16Matrix info Bigger moves tend to occur either side of point 1 on all Matrix Cycles. Remember that on average there are 11 calendar days between each MC1 Matrix point, so looking at where | have marked the MC1-1 there is no other low turn 14 calendar days either side of it so it has to be one of the MC1 Matrix points. Remember calendar days and not traded days. Most charts do not have calendar days on them or there would be lots of gaps every 5 bars because most markets do not trade over the weekend IF you are using only traded day bar charts without weekend data and therefore without any gaps then 11 calendar days is approx 8 traded days, so you can count 8 bars on the chart. This method is one of the simple ways of finding out where the first Matrix point MC1-1 should be placed, looking to start around the Red line area. The only way to be 100% is to find an extra / inversion point to confirm where MC1-1 point is, because the Matrix rule regarding extra points is that an extra point can only occur either side of a Matrix point 1. So if you find an extra point then you will know where the Matrix point 1 is located on the Matrix Cycle. On the next chart (Chart-4) you will see that | have now marked the MC1-1 and MC1-2 and MC1-3 where they look most likely to be, bearing in mind the rules discussed earlier and counting 8 traded days or 11 calendar days from the last MC1 point. S&P 500 D-D Dec 7, Feb ‘Mar ‘Apr Mav CChatt created by Dynamic Trader (¢) 1996-2008, (Chart-4) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 17You must also remember that 8 traded days is just an average. If the next Matrix point arrives more than 8 traded days later then the Matrix point following that will most likely be less than 8 traded days away. If this was not the case then the Matrix points would become too far out in time compared to their normal average position within the MC1 Matrix Cycle. Looking at the chart (Chart-4) there was 13 traded days from MC1-1 to the MC1-2 Matrix point. Because the average is 8 traded days and MC1-2 was 5 traded days more than average, then we should expect the MC1-3 point to be approx 8 traded days from the MC1-2 less the 5 traded days over, which would then make MC1-3 approx 3 traded days from MC1-2. We would also expect that if the average is 8 traded days between two MC‘ points then there should be on average 16 traded days between three MC1 points. This means we should expect on average the MC1-3 would be approx 16 traded days from the MC1-1. ‘As you can see on the chart (Chart-4) the Matrix point MC1-3 was indeed 3 traded days from the MC1-2 and 16 traded days from the low Matrix point MC1- 1. This is an example of using simple logic to determine where a Matrix point should be on average. Once you have mastered all the Matrix rules you will find this process much easier. Now that we have 3 MC1 Matrix points on the chart we need to confirm their position on the chart by checking their position against the next MC1 Matrix Cycle. In the chart (Chart-5) | have now marked the MC1-1, MC1-2 and the MC1-3 on the next MC1 Matrix Cycle where they look to be, based upon their position in time. S&P 500 D-D | MC1-1 js a lot later than the last me1-1 | | | | ‘May 7 Feb Mar ‘Aor Chat created by Dynamic Trade fc) 1986-2008, (Chart-5) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 18,‘As you can see in (Chart-5) the MC1-2 is about two thirds the way between the Red line and the Blue line in the first MC‘ cycle and the MC1-2 is in the same place in the next MC1 cycle. The MC1-3 is a little later in the next Matrix Cycle compared to the first cycle but not sufficiently different for this to be a concem. Earlier | said that Matrix points on the MC‘ Matrix Cycle have an average of +/- 3 to 4 traded days, therefore the MC1-3 point is within this average. As you can see, using the extra colour vertical lines makes this process a lot easier visually. The problem here on (Chart-5) is with the MC1-1 point, as you can see it was just before the Red line on the first MC1 cycle but a lot later on the next MC1 cycle. What this means is that the MC1-1 on the first MC1 cycle came 3 to 4 traded days earlier than its normal average position and on the next MC1 cycle the MC1-1 came 3 to 4 traded days later than its normal average position. This means that the MC1-1 Matrix point is on average about 3 to 4 traded days after the Red line. At this point it is still not possible to confirm that the MC1-1 point is in the correct place at least not until we find an extra / inversion point to confirm it. All we can do is to keep inserting the Matrix points and using the logic of the 8 traded days, or 14 calendar days if using a chart with weekends, until we get to the Matrix point MC1-11 and start the next MC1 cycle. S&P 500 D-D MC1-Extra point Nov Dec rd Feb Mar Apr May Chat created by Dynamic Trade (c) 1996-7008, (Chart-6) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 19The next chart (Chart-6) now has all of the Matrix MC1 points in the first MC1 cycle up to the MC1-14. Considering that the last MC1-11 point in the first cycle is marked as a low point, then we would expect the market to move up to the MC1-1 as a high point next However, as you can see, we marked the MC1-1 as a low in the next MC1 cycle so that must mean that the high marked with the Blue arrow must be an extra / inversion point. Because this extra point is after the MC1-11 and before the MC1-1 then this is referred to as MC1-(11). All extra / inversion points are placed in brackets to distinguish them from normal points. Always remember that extra / inversion points can occur either side of point 1, so it is possible on the MC1 Matrix Cycle for it to have an MC1-(11) extra / inversion point or MC1-(1) extra / inversion point or both MC1-(11) and MC1-(1) or indeed no extra / inversion points at all making 4 possible outcomes. If you can not see the Matrix points clearly then just go to a different part of your chart and mark in the Matrix MC1 cycle vertical colour lines and try solving it there because it does not matter if you try solving a chart with current up-to-date data or data from 20 to 30 years ago as all the Matrix points are there and have been and always will be forever or until that market does not exist anymore. The chart (Chart-7) now has all of the Matrix MC1 points marked on it. S&P 500 D-D Nov Dec oF Feb Mar Apr Mav Chat created by Dynamic Trade {196-2008 (Chart-7) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 20On average you need to solve about 8 sets of Matrix points for whichever Matrix Cycle you are using on any one chart to be able to say with confidence that you have all the Matrix points in the correct place for that Matrix Cycle and chart. Since extra / inversion points tend to occur 7 out of 8 times then you should easily be able to find where the Matrix point 1 is. When solving a chart from scratch, there are a few specific Matrix rules to take into account. Matrix info \f a market is moving up then high Matrix points tend to arrive later than their average position in time and low Matrix points tend to arrive earlier than their average position in time. Matrix info If 2 market is moving down then high Matrix points tend to arrive earlier than their average position in time and low Matrix points tend to arrive later than their average position in time Taking these rules into account as you can see from the chart (Chart-7) the market was going up overall so the MC1-1 low point on the bottom left of the chart arrived earlier than its normal position of 3 days after the Red line in the first MC1 cycle and so did the MC1-3 low point in the first MC1 cycle. This does not mean that when a market is going up overall that every high Ma point will arrive later than its normal average position in time and every low Matrix point will arrive earlier than its average position in time. It is just a guide for solving the Matrix points and a guide for later when we are trading. | will be explaining more on this in Chapter 3. Now that we have solved the position of the MC1 Matrix points for this chart we need to be able to mark on the chart into the future where these points will occur on average again. Rather than just leaving the vertical colour lines on the screen and using your eyes to estimate where the Matrix points are in the future, we can use the special (edit Matrix Cycles) button in the Matrix Cycles within the Dynamic Trader charting software to store these details and plot the Matrix points on the chart for us at the average position into the future. To do this we need to measure where the Matrix points did occur in the past, in terms of calendar days from the Red line, and write these down. You can measure these by either counting the calendar days manually or by using the traded day and calendar day counting button built into Dynamic Trader called (Date Labels). In (Chart-8) | have measured the MC1-2 from the previous Red line and you can see the marking at the top of the chart (13TB, 19CD). This means 13 Traded Bars, in other words Traded Days, and 19 Calendar days from the Red line. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 21S&P 500 D-D 4 Nov Dec ‘May 7 eb War "Aor Chart created by Dynamic Trader _(c) 1996-2008 (Chart-8) Now we have to do the same measurement for all 11 Matrix MC1 points from the same Red line and then do the same’ again for the next 11 MC1 points in the next MC1 Matrix Cycle from the Red line at the beginning of that MC1 cycle. You need to do this for each of the 8 MC1 cycle sets that you will be plotting in order to produce a good enough average. Do not forget to measure each MC1 cycle from the Red line of that MC1 cycle set. You should now have 8 sets of calendar day counts, each set containing the number of calendar days from the Red line that began that particular cycle set of 11 Matrix points. Now we need to add all the MC1-1 points together and divide by 8. This will give you the average position in time of the Matrix point MC1-1. Then do the same for all the other Matrix points. So if MC1-1 was at 10CD past the Red line on the first set and then 7CD past the Red line on the second, then 5CD, -2CD, 3CD, -4CD, 6CD, 1CD for the other sets, adding these together would give us 26 calendar days. Dividing that by 8 would give us 3.25CD. This means that, on average, MC1-1 would be 3.25 calendar days past the Red line. Logically we round this up or down to the nearest number 0 on this occasion it would be 3CD. That is 3 calendar days past the Red line. Once you have completed this you can then put these numbers into the Matrix Cycles editor and save them. On this occasion as we are dealing with the S&P-500 cash index then we will save the file with the file name S&P-500. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co,uk Page 22If you are not using the Matrix Cycles tool within the Dynamic Trader software then you will need to keep a record of these averages numbers and then manually place them on to the chart in whichever charting software you are using or draw them onto a paper chart. Once you have all the average numbers worked out then all you have to remember is to make sure your future RED lines are in the correct place and count in calendar days from the RED line each time. So if you have the next 10 RED lines marked on your chart into the future and MC1-1 is on average 3.25 calendar days from the RED line then you need to mark a BLUE / three calendar days after each and every RED line and so on through all the Eleven MC1 points in the averages list. ‘As we are working out the S&P-500 Matrix points as we go through this book then you can use the average numbers from here saving you a good deal of time. finmnarse as As you can see from the Matrix Cycles editor box (Picture-11) | Market BEP-500 have entered all the average calendar day positions for all the MC1 Matrix points 1 to 11. | have also given the file a name in the Market box S&P-500 at the top left of the editor. All | do now is click the Save 1 button to save the MC1 - points to that file. Please note we do not need to save information or average point positions for the extra / inversion points as these are extra points and as you saw earlier there can be 4 possible outcomes from extra / inversion points and each extra point will vary in time a great deal. On this occasion we can only complete the MC-1 column for the MC1 Matrix Cycle, as this is the only Matrix Cycle we have solved so far. Later we will be entering all the other Matrix Cycles from MC2- MC4 into this editor to produce a final overall solution for the S&P-500 cash index (Picture-11) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 23Matrix info All the averages for the S&P-500 Matrix Cycles in this book are already built into the Matrix Cycles within the Dynamic Trader software. Now we can call up the S&P-500 file we have just saved from the Matrix Cycles saved files and remove the other coloured vertical lines leaving the Red vertical colour line for visual reference. ‘S&P 500 D-D go 7 Feb Mar ‘Apr Chat created by Dynamic Trader (¢) 1996-2008. (Chart-9) As you can see by the chart (Chart-9) we now have all of the MC1 Matrix points available on the chart and placed in their average time position that we calculated earlier and put in the Matrix Cycles editor. These Matrix points are placed on the chart by the Matrix Cycles tool across the top and the bottom of the chart, from the current date into both the past and the future. This now makes it so much easier to see where the future MC1 points are due and saves hours of time plotting them manually. You may wish to remove the Red lines totally now that we have solved the MC1 Matrix Cycle points as they are no longer needed but some people like to keep them there as a reference and some even like all of the colour lines stil visible. It is just a matter of personal preference. You will need to solve the MC1 Matrix points for all of the markets you wish to trade because the MC‘ is the base starting point for all the other Matrix Cycles MC2 to MICS. You will see the importance of the MC1 Matrix points being solved first, before we can successfully solve the MC2 Matrix Cycle in the next chapter. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 24Chapter 3 —- The MC2 Matrix Cycle The MG2 Matrix Cycle has a total length from beginning to end of exactly 1 lunar year. This is the same as 12 lunar months and is 354.370 calendar days. This Matrix Cycle has 12 Matrix points just like an earth year having 12 months. If you divide the 354 days into the 12 Matrix points then you get on average 29.5 calendar days between each of the MC2 Matrix points. All MC2 Matrix points are marked in the colour RED. The MC2 Matrix Cycle can invert but just like any inverting Matrix Cycle it can only invert either side of Matrix point 1. So after MC2-12 there can be an MC2-(12) inversion point then MC2-1 and again a possible MC2-(1) inversion point before the MC2-2 Matrix point. There is no specific rule regarding whether a Matrix point will invert or not but usually a Matrix point will invert 7 out of every 8 times. This means you can end up having either no inversion at all, or MC2-12 will invert, or MC2-1 will invert or both MC2-12 and MC2-1 will invert. You could, if you wanted, solve the MC2 Matrix Cycle in the same way as we solved the MC1 Matrix Cycle by placing the MC2 colour lines on the chart and working through in the same way as the MC‘ but there is a much easier way of doing this and that is why we needed to solve the MC1 cycle first. There are specific rules to follow that will make the MC2 cycle easier to solve as well as providing guidance in everyday trading once solved. S&P 500 D-D 1 oeanO sieee/aneeaee OBR tea alec 6 a. gm 4340.00 Nov ‘Dec 7 Feb ‘Mar - Apr May Jun hart coated by Dynamic Trader (c) 1996-2008 (Chart—10 ) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 25In the chart (Chart-10) we have all the MC1 Matrix points for two complete MC1 cycles. You can see that a Matrix point in one cycle will repeat in the next MC1 cycle in roughly the same place in time but some MC4 points are higher or lower on the chart than others. Looking at the first Matrix Cycle, the MC1-4 is higher in price than MC1-2 but MC4- 6 is lower than MC1-4. By looking at the MC1 points you will be able to easily see most of the MC2 points because of the following rules Matrix Info - When a market is moving from a low Matrix point to a high Matrix point then each Matrix high point in the lower cycle will go higher than the previous high point in the lower cycle. Matrix Info - When a market is moving from a high Matrix point to a low Matrix point then each Matrix low point in the lower cycle will go lower than the previous low point in the lower cycle. Matrix info All MC2 points must arrive with an MC‘ point. ‘S&P 500 D-D Dea 8 10 6 oa) i goat gn it 3.5 7 i Nov Dec |= OF Feb "Mar ‘Apr May = Jun CChatt created by Dynamic Trader (c) 1996-2008 (Chart-11) Look closely at the chart (Chart-11) | have marked various places with a Red “X” Starting at the bottom left of the chart | have marked an “X” next to the MC1-1 point, this is an MC2 point and | have marked another X where the MC1-4 point is. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 26Because of the Matrix rules the market was moving from an MC2 low to an MC2 high so MC1-4 had to go higher than MC1-2. Matrix info Every time an MC1 point goes lower than a previous MC1 point then you know the MC2 high has been and the market is moving down to the next MC2 low point so you can mark the last MC2 high point in. Matrix info Every time an MC1 point goes higher than the previous MC1 high point then you know the IMIC2 low has been and the market is moving up to the next MC2 high point so you can mark the last MC2 low point in. You can also see that MC1-7 was lower than MC1-5 so you then also know that MC1-4 had to be an MC2 Matrix point. As MC1-6 was not as high as MC1-4 then this was the first confirmation that an MC2 high had already occurred with MC1-4 and the market was now going down to the next MC2 point that then occurred at the MC1-7 low. This is following the Matrix rules because if the market was still going up to an MC2 point then the MC1-6 would have to be higher than the MC1-4 Once the MC1-6 point had occurred, and according to the Matrix rules the MC2 high must be in, then it would also suggest that the next low MC1-7 must go lower than the MC1-5 point, so long as the next MC2 low point had not occurred with MC1-5. This is where the logical Matrix rules can help you get into a market earlier and catch more of the move. Next, MC1-8 was higher than MC1-6 which confirmed that the low at MC1-7 was also an MC2 Matrix point. Then the market moved up and each high MC1 point was higher than the last MC1 high point and each MC1 low point also higher than the last MC‘ low point. This showed that the MC2 was still going up. Eventually the MC1-1 went lower than the MC1-11 low point, confirming that the MC2 high point had come in with the MC1-(41) inversion point. Matrix info Matrix points for a higher Matrix Cycle will tend to arrive when the lower Matrix Cycle is inverting A simple example of this is on (Chart-11) an MC2 high point was due somewhere near the end of the MC1 cycle. The MC1 cycle had an extra / inversion point MC1- (11) and that was where the MC2 point also arrived. This is the same for all the Matrix Cycles that invert Matrix info You can not have more than 3 Matrix high points in a row unless one of the points in that move is an inversion point and then you can only have a maximum of 4 high points. Matrix info. You can not have more than 3 Matrix low points in a row unless one of the points in that move is an inversion point and then you can only have a maximum of 4 low points. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 27You can see in the following chart (Chart-12) that from the MC2 low point marked X with the MC1-7 (bottom left of the chart) that on the way up there were three high MC1 points in a row being MC1-8, MC1-10 and finally MC1-(11), then the market moved down to the MC1-1 point that was lower than the MC1-11 thus confirming the MC2 high had arrived with the MC1-(11) inversion point. S&P 500 D-D a ® ee Possible extra poi WX 3 5 7 ait Jun Feb Mar Apr May Chat crested by Bynamic Trade (1996-2005 (Chart-12) The Matrix rules stated that no more than 3 high or low Matrix points in a row could occur unless one of the points in that move was an inversion point. The way this is worded can confuse some people so explaining another way is that if any of the five MC1 points MC1-8, MC1-9, MC1-10, MC1-11, MC1-(11) in the move from the MC2 low to the MC2 high point were inversion points then the market could Move up one more time to a fourth MC‘ high point before confirming the MC2 high was in. On this occasion one of the MC‘ points was an inversion point and that was the MC1-(11) point so the market could have come down to the MC1-1 and then gone higher to the (x) marked on (Chart-12) being the MC1-2 or MC1-(1) extra / inversion high point and that would be the fourth MC1 high in a row so making the MC2 high point. However on this occasion the MC1-1 went lower than the MC1-11 confirming that the MC2 high had already arrived with the MC1-(11) extra / inversion point. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 28In chart (Chart-13) you can see again there are 3 high MC1 high points in a row but none of these five MC1 points were inversion points - MC1-2, MC1-3, MC1-4, MC1-5 or MC1-6 - so we knew that the MC1-6 had to be the MC2 high point. S&P 500 D-D 2 4 6 8 10 24 6 BR 3highs in a row Feb Mar Apr May Chast created by Dyoamic Trader (c) 1956-2008 (Chart-13) The MC2 high point could have arrived with the MC1-4 point and the next MC2 low with the MC1-5 point because that would then allow again for another 3 MC1 high points in a row till the next MC2 point marked with the MC1-10 high but remember the Matrix rules that high Matrix points tend to arrive late when a bigger Matrix Cycle is moving up. Because the MC2 high at the top right of the chart (Chart-13) with MC1-10 was higher than the MC2 point marked with MC1-(11) then this proved the bigger Matrix Cycle, MC3, was moving up, so the MC2 highs will tend to come later than their normal average position in time. Therefore | have marked the MC2 high with the MC1-6 rather than the MC1-4. It did not matter if you had marked the MC2 point with the MC1-4 as it would have become obvious when you had applied the Matrix rules to the chart that the MC2 high was indeed with the MC1-6 high point. Once you have marked the MC2 points over at least (24) MC1 cycles, that being 8 complete MC2 cycles, then you are in the position to start numbering them. You should be able to find the MC2-1 point quite easily, because there will be an extra / inversion point appear somewhere where it did not occur on a previous MC2 cycle. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 29On the following chart (Chart-14) | have plotted the MC2 cycle Red lines and split the MG2 cycle up into 4 equal parts with the Blue, Purple and Green lines the same way as we did with the MC4 cycle. Because the MC2 cycle is 354 days in length, we then also have three complete MC1 cycles on the chart at the same time so the chart will look a bit cramped. As mentioned before the vertical colour Matrix lines are built into the Matrix Cycles utility in the Dynamic Trader software. ‘S&P 500 D-D Jul Aua ‘Sep Oct Nov Dec 07 ‘Feb Mar ‘Apr May ‘Jun Jul Aua ‘Sep Oct Chart created by Dynamic Trader (c) 1996-2008 (Chart-14) You can see that MC2-1 and MC2-2 come just after the vertical Red line at the far left of the chart. Again MC2-1 and MC2-2 are also in the same place in time just after the Red line in the next MC2 cycle on the right of the chart. Just like the MC1 cycle you will tend to find the MC2-1 Matrix point, and therefore the extra / inversion points for the MC2 cycle, around the position of the MC2 cycle Red line. You will see that on the far right of the chart (Chart-14) there are some extra MC2 points and also just before the Red line, while just before the Red line on the left of the chart there were no extra points at all. So no inversion in the first MC2 cycle but because there were extra points on the next MC2 cycle it was obvious that there had to have been an inversion. Also, on this occasion it was not just a single inversion but a double inversion, so it inverted on both MC2-12 and MC2-1. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 30In the chart (Chart-15) you should have seen the MG2-(12) with the MC1-2 point as it is a main high point before a big drop to the MC2-1 low. Again using the Matrix rules you will see the MC2-1 went lower than the MC2-12 confirming that the MC2- (12) extra / inversion point must also be the position of an MC3 point from the next higher Matrix Cycle. ‘S&P 500 D-D i! 12 ‘Jul “Au ‘Sep Oct ‘Nov Dec 07 Feb Mar Apr May Jun Jul Aua Sep Oct Chart crested by Dynamic Trader (©) 1956-2008 (Chart-15) Matrix info Bigger moves tend to occur either side of point 1 on all Matrix Cycles. You can see that when there are Matrix points from Multiple Matrix Cycles arriving at the same time then the result is a much bigger move. You will also notice that this tends to occur around the point 1 on a Matrix Cycle and more often than not at the inversion point in one of the Matrix Cycles. Matrix info. When two or more Matrix Cycle points arrive together the resulting move is a lot bigger because two or more cycles are applying force together. You should also notice in (Chart-15) another MC3 point also must have arrived with the MC2-1 low because the MC2-2 with MC1-7 was not as low as MC2-1 so the MC3 low point was also confirmed in with MC2-1. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk. Page 31S&P 500 D-D 12 ‘Jul “Aug Sep Oct Nov Dec 07 ‘Feb Mar Apr May Jun Jul ‘Auq Sep Oct Chat created by Dynamic Trader (0) 1996-2008 (Chart-16) Going through the chart (Chart-16) from the bottom left at the MC2-12. The Market moved up and we marked the MC2-t point with the MC1-6 because that is where the MC2-1 was due on average but also because we have had three MC‘ highs in a row. These were MC1-2, MC1-4 and MC1-6. Also, none of the five MC1 points MC1-2, MC1-3, MC1-4, MC1-5 or MC1-6 were inversion points so the MC2-1 would not have been able to come any later than MC1-6 as per the Matrix rules. The market then came down to the MC1-7 but immediately went back up higher than the previous MC1-6 high point. Since it can only go higher than a previous MC‘ point if the MC2 cycle is moving up then that told us that the MC2-2 had to have occurred with the MC1-7 low, so it was now moving up to the MC2-3. The market then did a similar thing again from the MC2-2 to the MC2-3 and had three MC1 highs in a row being the MC1-8, MC1-10 and MC1-(11). This time as one of the five MC1 points was an extra / inversion point MC1-(11) then the market could have moved up for another high making four highs in a row, It is obvious that the MC2-5 came with the MC1-4 and the MC2-6 came with the MC1-7 because the MC1-7 went lower than the MC1-5 proving the MC1-4 was also the MC2-6. Like before with the MC2-3 the MC2-7 came in with the MC1-(11) extra / inversion point also making again 3 MC1 highs in a row, MC1-8, MC1-10 and MC1-{11). Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 32As in the Matrix logic, bigger moves tend to occur either side of point 1 in any Matrix Cycle so again on (Chart-16) you can see the big drop from MC1-(11) to the MC1-1 point which was also the MC2-7 to the MC2-8. Again the Matrix logic stating big drops tend to occur either side of point 1 is shown clearly with the MC2-(12) inversion high point being an extra / inversion Point and having a large drop to the MC2-1 low point. Remembering the Matrix logic that bigger Matrix Cycle points tend to arrive when the lower Matrix Cycle is inverting is shown clearly again at the MC2-(12) inversion Point because the MC2-1 went lower than the MC2-12 proving the MC2-(12) inversion point was also the bigger MC3 Matrix Cycle point Just like we did with the MC1 Matrix Cycle we now need to measure the position of the MC2 points in calendar days from the MC2 Red line and work out the average Position in time for each of the twelve MC2 Matrix points. Pius Market [S8P-500 Choose Maker ey Mea [Pome 3 Point 2 Port 3 Pork 4 20 Ea as Pairk 5 43 Poin 6 Pot? Point 8 Paint 8 Pon 10 Port 17 Poin 12 Point 13 [Pont [Potts Point 16 Point 17 Port 16 Peirt 13 Point 20 Point 21 54 es 78 er 83 We need realistically at least eight complete MC2 cycle sets of Matrix points making a total of 96 Ma points, eight for each MC2 point, to be able to create a good enough average for each MC2 point so we can plot the points on the chart into the future. Be aware that the MC2 Matrix Cycle is a lot bigger than the MC1 Matrix Cycle so the average position of the MC2 points will vary a lot more in calendar day terms. Once we have calculated the MC2 Matrix point averages we then need to put these into the Matrix Cycles editor alongside the existing MC1 points so that we can get the MC2 points plotted onto the chart alongside the MC1 Matrix points. You will see in (Picture-12) | have completed all the required calculations of the MC2 Matrix point averages in exactly the same way that we did for the MC1 Matrix points and have placed them in the MC-2 column of the Matrix editor. (Picture-12) Copyright © 1997-2008 Steve Copan. Alll rights reserved. www.themarketmatrix.co.uk Page 33Once these points have been entered we simply click the Save 2 button and these points will be saved on the computer for us to use on the chart. Like the MC1 Matrix Cycle we do not need to save information or average point positions for the MC2 extra / inversion points as these are extra points and as you saw earlier there can be 4 possible outcomes from extra / inversion points and each extra point will vary in time a great deal. We are only interested in plotting the points that always exist. Now we can apply the saved S&P-500 file we have just created to the chart and remove the other coloured vertical lines as we do not need them any more, leaving the Red vertical colour line just for visual reference. S&P 500 D-D oO Ho A Hh gh th 2/46 810 246810 Set eee en SG 7 OTT 57 91 1Ot LOU @u te Mo! l “Jul ‘Aua Sep Oct Nov Dec U7 Feb Mar ‘Apr May Jun Jul Aua Sep Oct ‘ Charcrestedby Dynanie Trader (0) {9862008 (Chart-17) ‘As you can see from (Chart-17) we now have all the MC1 and MC2 points on the screen in their average position in time as measured from the Red line. The MC2 Matrix points are displayed again like the MC‘ points along the top and the bottom of the chart but in this case they are marked in a RED circle with a small line extending either side of each point. Because the MC2 points have an average range greater than the MC‘ points then the line each side of the MC2 point RED circles shows the average area that the MC2 points will occur making it possible to occur with any of 2 possible MC1 points or 3 MC1 points if one of them is an extra / inversion point. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 34For example on (Chart-18) which is a zoomed in chart of (Chart-17), on this occasion the MC2-5 has arrived with the MC1-4 point but because the MC2 Matrix points have a greater average range than the MC‘ Matrix points then the MC2-5 could have arrived with either the MC1-4 or the MC1-6. MC2-7 could have occurred with either MC1-10 or MC1-(11) and MC2-4 could have arrived with either MC1-1 or MC1-3 and MC2-6 could have occurred with either MC1-7 or MC1-9. This logic is the same with all the bigger Matrix Cycle points because the bigger the Matrix Cycle the bigger the average range for that Matrix point, so each of the Matrix points average area range can cover up to 3 Matrix points from the Matrix Cycle below it S&P 500 D-D acme 3 1) 3 as er eit SO So Nov Dec La Feb Scie eters (Chart-18) While we are looking at this chart (Chart-18) it is well worth noting all the other logical rules here. Although the MC2-6 could have arrived with either the MC1-7 or the MC1-9 it actually arrived with MC1-7. This should have been expected because as explained before in Matrix rules, when a market is moving up the lower Matrix Cycle points will tend to arrive early. As the bigger MC3 Matrix Cycle was still moving up then the MC2-6 low point arrived early with the MC1-7 not the MC1-9. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 35Again with the Matrix rules you will see that because the bigger Matrix Cycle was up then the MC2-7 high arrived late with the MC1-(11) also being the third MC1 high in a row since the last MC2 low point MC2-6 and adding to that the MC2-7 was also with the MC1-(11) extra / inversion point and as explained before bigger Matrix Cycle points tend to arrive when the lower Matrix Cycle point is inverting. Matrix info When a bigger Matrix Cycle point arrives then the lower Matrix Cycle point will tend to be on time or early. In (Chart-19) you will see this again as the MC1-2 point came earlier than it was due normally because the bigger MC2 Matrix Cycle MC2-(12) extra / inversion point arrived. S&P 500D-D —o— early as blager MC2-(12 point arrives Bay 8 é 1 10. re 2 ‘May't1 18 25 Jun'8 “15 (22 29 Jul 13 20 27 ‘Aua 10 17 ‘Chart crested by Dynamic Trader (c) 1996-2008. (Chart-19) Matrix info \f a Matrix Cycle point is going to invert then the Matrix point tends to arrive earlier than its average due date thus allowing space for the extra / inversion point within that Matrix Cycle. In (Chart-20) you can see the MC2-12 point was due with the low MC1-1 point or the MC1-3 low point. Because the MC2-12 was going to invert then the MC2-12 arrived early with the MC1-1 point allowing space for a high MC2-(12) inversion point to arrive with MC1-2 which was also early, before the next MC2 Matrix point MC2-1 arrives as a low with the MC1-3 or MC4-5. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 36S&P 500 D-D —O—_ 8 0 2 | 12) "1 i ra 9 "1 — eel Mav'1 1825 Jun’ 45. 22 29 “Jul 13,2027 ‘Aua'10 17 2 ‘Chart created by Oynamie Trader (c) 1996-2008 (Chart-20) Matrix info When a bigger Matrix Cycle point has occurred and a new change of direction is created then the first Matrix point on the lower Matrix Cycle does not have to take out the previous Matrix High or Low point. Looking at the chart (Chart-21), during the move up from MC2-8 to MC2-9 with the RED arrow each of the MC1 points will go higher than the previous MC1 points within that MC2 move. This is as per the Matrix rules. But the first MC1 Matrix Point on the move up being MC1-2 does not have to go higher than the MC1-(11). This is because the MC1-(11) is from the previous MC2 down move. Obviously if the bigger MC3 Matrix Cycle is up as well then the MC2-9 will go higher than the previous MC2-7 high point so eventually during the MC2 up move one of the MC1 high points will then go higher than the MC1-(11) point. The Matrix info rules are there for a reason and once you have leamt all the simple logical Matrix rules then you should be able to solve any market easily. These rules apply to all the Matrix Cycles from MC1 up to C6 with the only differences being the inversion rule that does not apply to the Matrix Cycles that do not invert. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 37S&P 500 D-D SS 4 1560.00 t i 3 {1540.00 MC1.2 not as high as MC1-(11) 22? 16 23 Mar 9 30 “Apr 13,2027 "May 11182 Chart created by Dynamic Trader (c) 1996-2008 (Chart-21) Now that we have finished going through the MC2 Matrix Cycle we need to look over two special Matrix rules that are very rare but do happen from time to time. When these two special rules occur they can cause major confusion because they override the existing Matrix logic but not the Matrix Cycle and only in two specific circumstances. The first special Matrix rule is that it is possible for a Matrix point from a higher Matrix Cycle to not arrive with the lowest low Matrix point on a lower Matrix Cycle and that is only when there is a Wave 4 ABCDE Elliott wave contracting triangle. If you do not know about Eliott waves then do not worry, as there is a whole chapter about it later in this book. In chart (Special Matrix Rule-1) you can see the MC2-8 was due as a low point with either MC1-9 or MC1-11. MC1-9 was not as low as MC1-7 so we would have expected that MC1-7 was in fact an MC2 point and that would have been a mistake If we had marked the MC2-8 early with the low of MC1-7 then we would expect MC1-10 to have gone higher than MC1-8. This is because the market would be going up to MC2-9 and as the Matrix rules state, each Matrix high point on the lower Matrix Cycle must go higher then the previous Matrix high point in that Matrix Cycle. Copyright © 1997-2008 Steve Copan. All rights reserved, www.themarketmatrix.co.uk Page 3819 26 Nov 9 16 23 30 Dec 14 21 28 Jan 11 1 CChatt created by Dynamic Trader (¢) 1996-2008, (Special Matrix Rule-1) If you had not realised that this was a Wave 4 contracting triangle then you could have made the mistake of placing MC2-8 with MC1-7 and then thinking MC2-9 had come very early with MC1-8 because MC1-10 was not as high as MC1-8 and then we would have needed another MC2 point for MC1-9 because MC1-11 did not go lower than MC1-9 causing you to have all the MC2 points totally wrong. Remember this can only ever happen in a Wave 4 contracting triangle. The second special Matrix rule can cause just as much confusion as the first and that is an extra / inversion point can make a new low or high without confirming the bigger Matrix Cycle. This can only happen with the extra point itself. In chart (Special Matrix Rule-2) the market was moving from a low MC2-6 up to the MC2-7 high point. On the way up to the MG2-7 we would have expected all the MC1 high points to go higher than the previous MC1 points because that is part of the normal Matrix rules. As you can see in the chart the MC1-11 inverted and the MC1-(11) extra point went lower than the MC1-10 point. Because of the Matrix rules we would then naturally have thought the MC2-7 high point had arrived with the MC1-14 high and then expected to be going down to the MC2-8 low point. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 39‘S&P 500 10 7 24 Mar 10 17 (26 31 Apr 43,2128 ‘Mav 1 Chart created by Dynamic Trader (c) 1996-2008, (Special Matrix Rule-2) What has happened is that the MC1-(11) extra inversion point has made a lower low by going lower than the MC1-10 Matrix point but has not altered the overall MC2 direction, when normally following the Matrix rules it would have done. The MC2-7 arrived much later than normal and it actually arrived with the fourth MC1 high point in a row which of course is the maximum amount of high points in a row that you can have, followed by a quick drop to the MC2-8. This can only happen in the inversion area and the point that makes a new high or new low without changing the bigger Matrix Cycle direction has to be fhe actual extra point. So that means in this chart it could only have been an MC1-(11) extra point or the MC4-(1) extra point. As | have said the two special Matrix rules are very rare but you do need to be aware of them. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 40Chapter 4 - MC3, MiC4, MC5 & \ViC6 Matrix Cycles The MC3 Matrix Cycle is 16 seasons in length, this is also the same as 4 calendar years or 1461 days. This cycle can invert but if it does invert then it will only double invert. The MC3 cycle has a total of 18 Matrix points within the cycle. Although the MC3 cycle can only double invert the Matrix rules still govern it and the biggest moves still tend to be either side of point 1. We can solve the MC3 Matrix Cycle in exactly the same way we used the MC4 Matrix points to solve the MC2 Matrix Cycle points. By using the MC2 cycle points we have already solved and the Matrix rules and logic we can easily decide where the placement of the MC3 Matrix points are. Matrix info All MC3 points have to occur with an MC2 point. . Matrix info Every time an MC2 point goes lower than a previous MC2 point then we know the MC3 high has been and the market is moving down to the next MC3 low point so you can mark the last MC3 high point in Matrix info Every time an MC2 point goes higher than the previous MC2 high point then you know the MC3 low has been and the market is moving up to the next MC3 high point so you can mark the last MC3 low point in. 57 9111 357 911 35 7 911 ae ‘@! '@! '@' '@ '@' '@t@1o! ‘Jul ‘Aug ‘Sep Oct ‘Nov Dec 07 ‘Feb Mar Apr ‘May Jun Jul Aua ‘Sen Oct Chart created by Dynamic Trader (c) 1996-2008 (Chart-22) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 41Using the existing MC2 chart (Chart-22) you can easily see the MC3 Matrix Cycle points if you just apply the simple Matrix rules. Using the Matrix rules and logic | have placed Black arrows on the chart showing the MC3 cycle moves. From MC2-2 at the bottom left of the chart up to the MC2-7, there are a total of three MC2 highs in a row and none of those five MC2 points in that move were inversion points so MC2-2 and MC2-7 had to be MC3 Matrix points. MC2-8 went lower than MC2-6 so again it proved MC2-7 was also an MC3 Matrix point. Once the market went higher than MC2-7 then again by the Matrix rules it proved the MC2-8 was also an MC3 Matrix point. MC2-1 went lower than MC2-12 so again MC2-(12) extra / inversion point was also an MC3 Matrix point. Again the fact that bigger Matrix Cycles tend to arrive when the lower Matrix Cycle is inverting was proved with the MC3 arriving with the MC2-(12) point. At this point the chart is going to start getting rather cramped if | carry on placing the next MC3 Matrix points on the chart and as we also need to see more data covering at least 4 years to be able to see a full MC3 Matrix Cycle set then | am going to zoom the chart out and remove the MC1 and MC2 points from the chart. | have now zoomed the chart out (Chart-23) to cover 16 seasons or 4 years being one complete MC3 Matrix Cycle. By using the MC2 points we have determined where the MC3 Matrix points are. S&P 500 D-D 05 Chat ceaed by Dynamic Trader) 1996-2000 (Chart-23) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 42As you can see in (Chart-23) | have placed all the 18 MC3 Matrix points onto the chart and again you can see that the MC3-1 point is next to the RED vertical start line of the MC3 cycle. We know where the position of MC3-1 is because there was an MC3-(18) inversion point and an MC3-(1) inversion. Because the Matrix rules state that the MC3 Matrix Cycle can invert and if it does then it will only ever double invert then you can see that whatever position an MC3 Matrix point is (high or a low) then it will always be in that position. So if MC3-2 is a high then it will always be a high even if there is an inversion because a double inversion will not affect its position. In (Chart-24) | have now expanded the chart over another 4 more years giving two complete MC3 Matrix Cycles. ‘SBP 500D-D 1200.00 1100.00 1000.00 100.00 4 10.00 (18)(1} 9 OO) 01 oz Oa SOU Naeee Ise OST Chart rested by Dynamic Trader (6) 1936-2008 (Chart-24) Matrix info Bigger moves tend to occur either side of point 1 on all Matrix Cycles. Matrix info Matrix points for a higher Matrix Cycle will tend to arrive when the lower Matrix Cycle is inverting. As explained before, bigger moves tend to occur either side of point 1. As you can see in (Chart-24) the MC3-(1) point was the major low in 2002. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 43Again, as explained before, bigger Matrix Cycle points tend to arrive when the lower Matrix Cycle is inverting. You can see in (Chart-24) the main low in 2002 not only was an MC3 point 1 but was specifically the MC3-(1) inversion point making the bigger Matrix Cycle IMiC4 point as well. Now that we have finished plotting the MC3 points, again following the same Procedure as before with the MC1 and MC2 Matrix Cycles, we can create the average date file for each of the 18 Matrix points within the MC3 cycle, by counting the number of calendar days from the MC3 RED line to each of the 18 MC3 Matrix points. (ues Maske [SEP Choose Make. |] Again we do not need to save —— | information or average _ point positions for the MC3 extra / inversion points. Mca You will see in (Picture-13) | have completed all the required calculations of the MC3 Matrix point averages in exactly the same way that we did for the MC1 and MC2 Matrix Cycle points and have placed them in the MC-3 column of the Matrix editor. You will probably have noticed in the Matrix editor table (Picture-13) that the MC3 points MC3-1 and MC3-2 have negative numbers. This is because the MC3-1 and MC3-2 Matrix points arrive on average just before the Red line so to save Save2 | Save3 | | | counting forwards a long distance | ic bop || have counted backwards from the sae next Red line. The Matrix Cycles ab editor allows you to do this. (Picture-13) You can either use a negative number by counting the calendar days backwards from the Red line or a positive number by counting the calendar days forward from the last Red line, as it makes no difference as long as you use the Red line to start from. This is the same for any of the Matrix Cycles. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 44Because the MC3 Matrix Cycle is a lot bigger than the MC2 Matrix Cycle then the average position of the MC3 points will vary a lot more in calendar day terms than the MC2 points. Once all the MC3 cycle Matrix points have been entered we simply click the Save 3 button and these points will be saved on the computer with the other MC1 and MC2 points for us to use on the chart. Now we can apply the new saved S&P-500 file we have just created to the chart and the software will then display the MC3 Matrix points at the top and bottom of the chart in the past present and future as in (Chart-25). [a EEE eee ee oe | Ls m| 8 OB E BbOHBE HE Bo 03 o4 05 06 hare created by manic Trader c) 1996-2008 (Chart-25) Just like all the other Matrix Cycles, by looking carefully at the Matrix points within the MC3 cycle on the chart (Chart-25) and using the simple Matrix logic you can see immediately where most of the MC4 points are. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 45Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 46The \ViC4 Matrix Cycle. The MC4 Matrix Cycle is 4 years in length, which is the same as 1461 days. The MMIC4 cycle never inverts and has 8 Matrix points. Because the ViC4 cycle never inverts then it can be a little harder to determine exactly where point 1 should be placed but again look around the RED line area. Because the WNiC4 Matrix Cycle never inverts then IViC4-1 is a high and it will always be a high. The Matrix rules govern the WVIC4 cycle and the biggest moves still tend to be either side of point 4. Matrix info All C4 points have to occur with an MC3 point. Matrix info Matrix points for a higher Matrix Cycle will tend to arrive when the lower Matrix Cycle is inverting Matrix info Every time an MC3 point goes lower than a previous MC3 point then you know the MC4 high has been and the market is moving down to the next MiC4 low point therefore you can mark the last IIC4 high point in. Matrix info Every time an MC3 point goes higher than the previous MG3 high point then you know the IVIC4 low has been and the market is moving up to the next C4 high point so you can mark the last IMIC4 low point in. I have drawn arrows where the IC4 points are on the chart (Chart-26) by using the simple logic of the Matrix rules. SBP 500 D-D 05 hare crested by Dynami Trader (c) 1996-2008 (Chart-26) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 47The MC3-(18) inversion point went lower than MC3-17 so MC3-18 high was an MC4 point and the MC3-1 went higher than MC3-18 so the MC3-(18) inversion point was also an MIC4 point, Although MC3-9 did not go lower than MC3-7, the MC3-10 was not as high as MC3-8 so MC3-8 was an MC4 point and MC3-9 was also an MC4 point, this was also proved because the MC3-11 low point was not as low as MC3-9. The move from MC3-(1) low point to the MC3-8 high has 4 high Matrix points in 2 row being MC3-2, MC3-4, MC3-6 and MC3-8 so this is not possible under the Matrix rules unless one of the points in this up move is an inversion point. As the main low was an inversion point MC3-(1) and there were no inversion points on the move up then there had to be another two ViC4 points on the way up so | have marked them at MC3-4 and MC3-5. You can see from the up move starting at MC3-(18) inversion low point that there are also 4 highs in a row to the MC3-6 high point at the top right of the chart (Chart-26) but on this occasion one of the Matrix points on the way up was in-fact an inversion point MC3-(1) so the next MC4 point will be marked at the MC3-6 high We need to see more data and solve more MC3 cycles to be able to know 100% if there were indeed another two IMiC4 points in between the last up move. If you look closely at the arrows | have marked in 2003, you will see that | already have marked an NIC4 point at MC3-4 and MC3-5 so we should be able to expect these to appear again with the MC3-4 and the MC3-5 in 2007 but we have to wait for confirmation because of the inversion point in case the MC4 point did arrive late with the MC3-6 high point in 2007. There is no point trying to save time when solving a market by only working out a couple of sets of Matrix points as this will cause inaccuracy with the Matrix points averages. You must spend some time and you must work out at least 8 complete sets for each of the Matrix Cycles for whatever market you wish to solve. As the cycles get bigger you can sometimes get to the stage where there is not enough data existing for a particular market you wish to solve to be able to solve & complete sets of points. So before you begin solving a Matrix Cycle and spending the time required to solve it, you need to consider what Matrix Cycle you wish to trade and how much data you will require to solve it. Most people will tend to be trading the MC Matrix points over a few days at a time so there is no real need to solve a Matrix Cycle bigger than the MC3. Those who wish to trade the bigger swings over a longer period of a few months like the MC3 Matrix points will need enough data to work out at least the MC4 cycle and 8 MCé4 cycle sets requires at least 32 years of data. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 48In the chart (Chart-27) using the Matrix rules | have now completed placing all the MC4 Matrix points on the chart and expanded the chart to cover 9 years of data so we can easily see two complete MC4 Matrix Cycles. ‘S&P 500 D-D casi] $ 8 3 © 8 02 5009 cu chat crested by Dynamic Trader (c) 1996-2008, (Chart-27) Look at the chart (Chart-27) closely as it holds a lot of information that you need to remember for when you solve other charts and can often be easier to remember when displayed visually in chart format than in written rule format. All the Matrix points on the chart will adhere to the specific individual Matrix rules. When the MC4 cycle is moving up then the lower MC3 cycle high points will go higher than their last high point. In 2003 from the MC4-2 low point to the MC4-3 high point the MC3-6 went higher than the MC3-4 and the MC3-8 went higher than the MC3-6 point. At the same time the low MC3 point must also go higher than the last MC3 point so MC3-7 was higher than MC3-5. When the MC4 cycle is moving down then the lower cycle MC3 low points go lower than their previous low point. In 2000 from IMC4-3 high down to MiC4~4 low the MC3-11 went lower than the MC3-9 point and the MC3-13 went lower than the MC3-11 point. At the same time the MC3 high points must also go lower than the previous MC3 point so MC3-10 was lower than MC3-8 and MC3-12 was lower than MC3-10. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 49You can see that Point 1 on both the MC3 and WMiC4 are around the area of the RED line as it should be. The last point in the MC4 cycle MC4-8 tends to arrive when the lower Matrix Cycle MC3 is inverting. iC4-8 arrived as a low in 1998 with the MC3-(1) inversion point and again in 2002 with the MC3-(1) inversion point and once again in 2006 but this time with the MC3- (18) inversion point. When you have a bigger Matrix Cycle point arriving with a lower Matrix Cycle inversion point it can often mark a significant tum and it is usually also a bigger Matrix Cycle point at the same time. All the ViC4-8 Matrix positions in (Chart-27) were also MCS cycle points as you will see in the MCS charts later. Don't forget all the Matrix Cycle points from MC1 and up adhere to ie uneere sy Maket [P5002 || the Matrix rules, so you can not r ~ have more than 3 high or low points fern = = = in a row unless one of the points in ee the move is an inversion point and ome then you can only have 4 as per the ee Matrix rules. Pores | e lena You must also take into account that lear some of the Matrix Cycles do not Pe] invert and therefore will never have rons | more than 3 high or low points in a Point row. ‘Pore 17 [Poet2_| Just like before with the previous ener _| Matrix Cycles we can work out the [Pareta averages for all 8 of the C4 points counting from the RED line in calendar days for each point and put these into the Matrix Cycles editor. You will see in (Picture-14) | have completed all the —_required _saw3 | saved |} calculations for the MC4 Matrix point averages in exactly the same way that we did for the other Matrix points and have placed them in the MC-4 column of the Matrix editor (Picture-14) Once these points have been entered we simply click the Save 4 button and these points will be saved on the computer for us to use on the chart. Copyright © 1997-2008 Steve Copan. Alllrights reserved. www.themarketmattix.co.uk Page 50Now we can apply the new S&P-500 file we have just created to the chart and display the points at the top and bottom of the chart in the past present and future as in (Chart-28). Sata ooo ‘o! 99 00 o1 02 03 oO 05, 06 oF Chart created by Dymanic Trader (c) 1586-2008, (Chart-28) Once again just like all the other Matrix Cycles we can look at the C4 Matrix points and determine where the MC5 Matrix Cycle points are by using the simple logic and the Matrix rules. As explained before, when you are looking to solve a market on a bigger Matrix Cycle then you are going to need a lot of data. As you can see on (Chart-28) the data that is shown covers 9 years and you do really need 8 complete cycle sets to solve the ViC4 properly so ideally 32 years worth of data. If you cannot get 32 years of data for the market you wish to solve because it may not have existed that length of time then a minimum of 4 complete NIC4 cycle sets being 16 years should give you a good enough base for the solution. If even 16 years of data is not available then you really can only rely on the lower Matrix Cycles to tell you when a bigger Matrix Cycle point has occurred so you really have no choice but to trade only the lower Matrix Cycle points. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 51Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 52The MC5 Matrix Cycle. The MC5 Matrix Cycle is 1 Metonic Cycle in length, this is the same as 19 Years and a few hours and is a total Sun-Moon-Earth interaction. This cycle never inverts and has 16 Matrix points. Because the MC5 Matrix Cycle never inverts and MC5-1 is a low point then MC5-1 will always be a low point. The Matrix rules govern the MC5 Matrix Cycle and the biggest moves still tend to be either side of point 1. Matrix info All MC5 points have to occur with an MC4 point. Matrix info Every time an C4 point goes lower than a previous IMC4 point then you know the MC5 high has been and the market is moving down to the next MC5 low point so you can mark the last MCS high point in. Matrix info Every time an MC4 point goes higher than the previous MIC4 high point then you know the MC5 low has been and the market is moving up to the next MC5 high point so you can mark the last MCS low point in In (Chart-29) following on from the previous solved C4 chart (Chart-28) and by using the Matrix rules | have marked with a dark Green arrow where the MC5 Matrix Cycle points must have occurred. ‘S&P 500 D-D Seas asa ls Poo 9 9 9 9 9 9 2 01 02 as ee Os Nae gay, Chart created by Dynamic Trader (c) 1936-208 (Chart-29) Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 53Going through this logically the main high in the year 2000 was an WiC4-3 point and because the next MIC4 low point IC4~4 in 2001 went lower than the MC4-2 low point in 1999 then the IMiC4-3 had to also be an MC5 point. The iC4-8 low in 2002 was the third IC4 low point in a row and as the NIC4 can not invert then this also had to be an MCS point. The WiC4-2 low in 2003 was not as low as the WIC4-8 low in 2002 and the WiC4-3 high in 2004 was higher than the MC4~1 high in 2003 again confirming that IViC4-8 low in 2002 was indeed an MC5 point. The MC4-3 high in 2004 was an MC5 point as this was where an MCS point was in previous history and once that high was surpassed with the MC4-5 high in 2005 then that also confirmed the IViC4~4 low in 2004 was also an MC5 point. The MC4-7 high in 2006 and the IViC4-8 low in 2006 were also MC5 points based on their average position in history. Because of the amount of data required to produce a multi-year chart it is not possible to show a daily bar chart in this book covering 19 years or it would look like a squashed mess, so in (Chart-30) we now have all the IViC4 Matrix points covering 21 years by using monthly bars. | have also applied the MC5 colour line template to the chart (Chart-30) and placed the MC5 Matrix points on it that we found from the previous chart (Chart-29). S&P 500 D-M 10 | 3 | ‘a7 ‘as ‘a9 “90 91 92 '93 94 95 96 ‘97 ‘98 ‘99 ‘00 01 02 03 O4 05 06 O7 Chart created by Oynamic Trader (¢) 1996-2008) (Chart-30) Copyright © 1997-2008 Steve Copan. Alllrights reserved. www.themarketmatrix.co.uk Page 54Using the approach that point 4 is around the area of the RED line | have marked MC5-1 as a low point just after the RED line in the year 2006. Taking into account the Matrix logic that bigger moves tend to occur either side of point 1, and considering the big drop and stock market crash in 1987 being just after the RED line then the start and end of the MC5 cycle becomes quite clear. Because of the market price movement being much greater now than in the late 1980's a lot of people could have make the mistake of thinking the MC5-10 high was the MC5-1 point because bigger moves tend to occur around point 1. Taking this scale problem into account it is easy to rescale the chart into a Log chart using the log function button in the Dynamic Trader software as | have done in the next chart (Chart-31) ‘S&P 500 D-M 10 3 1 ‘a7 ‘a8 ‘a9 ‘90 '91 92 93 ‘94 95 ‘96 97 98 99 ‘OO 01 02 03 04 05 06 07 ‘Chart created by Dynamic Trader (¢) 1996-2008 (Chart-31) Now that the chart is in log scale you can see clearly the big drop that was the market crash of 1987 and how quick it actually was compared to the long slow drop from the MC5-10 high in the year 2000 to the MC5-13 low in 2002 making the 1987 RED line position an obvious place for the MC5-1 point. It is always important to consider the price movement on a chart when looking at and trying to solve larger Matrix Cycles. Even when a chart is covering just a small time length like a year and using daily bars it is well worth placing the chart in to Log mode just to see if it makes it clearer for you to identify the Matrix points. Copyright © 1997-2008 Steve Copan. All rights reserved. www.themarketmatrix.co.uk Page 55